Western Standard - Austerity or activism？ Carney’s budget will try to be both

00:00:00.000 Good evening, Western Standard viewers, and welcome to Hannaford, a weekly politics show

00:00:21.320 of the Western Standard. It's Thursday, October 30th. Next Tuesday, Canadian Finance Minister

00:00:27.420 François-Philippe Champagne, presents Canada's first budget in more than 18 months.

00:00:33.360 They're supposed to be once a year.

00:00:35.280 And the conventional wisdom is that there's no money, few choices, and a record deficit

00:00:40.640 is likely.

00:00:41.980 With me today is our old friend, Yaroslav Baran, co-founder of the Pendulum Group, and

00:00:46.340 in a past life, a communications director to Prime Minister Stephen Harper.

00:00:51.220 Welcome to the show, Yaroslav.

00:00:53.320 Always good to be here, Nigel.

00:00:54.560 Thanks.

00:00:55.860 Jaroslav, Mr. Carney was out there last week managing expectations for his budget,

00:01:01.700 calling for sacrifice, and so on.

00:01:04.580 I don't like the sound of that.

00:01:06.360 How bad do you think it's going to be?

00:01:08.300 And for whom, exactly, is it going to be worst?

00:01:12.080 Well, it all depends on your point of view.

00:01:14.420 And also, lots of it depends on political spin.

00:01:17.700 For example, people decry excess deficit spending as a bad thing.

00:01:23.220 But those same people might be convinced that generational strategic investments are a good thing.

00:01:29.860 Same thing.

00:01:30.740 It's all about the packaging.

00:01:32.320 So is this going to be a huge deficit budget or is there going to be a generational investment budget?

00:01:37.520 It's all in the eye of the beholder.

00:01:39.240 But look, there are going to be winners and losers, that's for sure.

00:01:41.740 And it's going to be an unusual budget, Nigel, in that ironically, it's going to be both an austerity budget and a big spending budget.

00:01:50.820 You know, traditionally, budgets will fall into one of two categories, either an austerity budget when governments try to get deficits under control or the opposite extreme, what I like to call the Christmas tree budget.

00:02:04.760 Usually you get those before an election, you know, a gift for everybody under the tree, you know, spread, spread the wealth.

00:02:11.300 This one is going to be a hybrid of those two approaches.

00:02:15.800 And here's what I mean by that.

00:02:17.740 is going to be deep spending, Nigel, in very targeted areas,

00:02:24.440 defense, housing, nation-building infrastructure,

00:02:27.080 and relief for sectors hard hit by Trump tariffs.

00:02:31.620 But outside those four categories is going to be pretty scant spending,

00:02:37.060 if not cuts.

00:02:38.240 It's going to be a lot of not now or even cuts.

00:02:42.220 And for the public service, for example, definitely cuts.

00:02:45.440 This is the budget that introduces an expected 7.5% budget haircut across the board, across government departments.

00:02:56.180 Well, now, you mentioned defense as being one of the areas likely to see an immediate investment.

00:03:04.320 My recollection of our time in Ottawa was that it was one thing to say you were going to spend money and even to allocate it.

00:03:11.580 It was another to actually buy the equipment that you said you were going to buy.

00:03:17.220 It's easy enough to give the troops a pay raise, and I believe that's in the works.

00:03:20.300 But in terms of actually taking delivery of ships, aircraft, and guns, for that matter,

00:03:28.620 it's one thing to say, and it's another to do it.

00:03:30.980 So how quickly do you think that that particular investment could actually start to make a difference?

00:03:37.180 Well, the government made a commitment that is going to hit 2% of gross domestic product value in defense spending by March 31st of next year.

00:03:49.640 I'll believe it when I see it, because you're quite right.

00:03:53.560 Our armed forces have been depleted to the point where we don't even really have the receptor capacity to spend more even if we want to.

00:04:03.260 And you're quite right in noting the pay raises.

00:04:07.180 uh by and large you know the there's an average pay raise of 20 across the armed forces not

00:04:12.780 complaining about that at all lord knows they deserve it uh they're they're the ones who uh

00:04:18.140 work hard serve this country more than anybody else and often put their lives on the line for

00:04:22.540 for their fellow canadians but that's the lowest hanging fruit you can you know in with the stroke

00:04:27.500 of a pen you can spend a whole lot of money giving people pay raises it's harder to actually recruit

00:04:33.980 retain, re-equip, and get stuff delivered between now and March 31st.

00:04:39.260 So, for example, recruitment, the armed forces are depleted so much

00:04:43.820 that even the recruitment centers are understaffed.

00:04:46.460 They can put a help wanted sign, but there's nobody to actually process the new recruits.

00:04:52.200 So it's pretty bad, and it's going to be a real aggressive move

00:04:56.260 to try to hit that defense spending target.

00:04:58.620 Well, if that's true of the defense spending, is it also true of the other things which you were talking about as major accomplishments and major investments that the budget would bring forward?

00:05:15.200 that's going to be a little bit tougher for the government to manage alone.

00:05:20.940 I mean, infrastructure investments, by and large,

00:05:24.100 are going to be partnerships with the private sector.

00:05:26.760 And in fact, most of that investment is going to be coming from the private sector.

00:05:31.260 The government's role is largely going to be to clear away red tape,

00:05:35.800 to streamline approvals, and in some significant cases, investing billions as well.

00:05:41.900 But government doesn't have the agency to do that alone.

00:05:45.200 So it's going to be a bit of a dance.

00:05:47.720 And how quickly can they get their collective act together to get shovels in the ground and get to project completion, you know, even within the lifetime of this parliament?

00:05:59.280 I don't know.

00:05:59.860 Well, you know, Yarris left one way that they could get things rolling fairly quickly is to authorize pipelines.

00:06:07.760 We have an industry here in Alberta that's ready to go.

00:06:12.440 And amazingly, Bill Gates, Bill Gates has just walked back the importance of climate change.

00:06:19.620 He says it's not going to kill us anymore.

00:06:22.040 It's important, but other things are more important.

00:06:25.300 You know, Mr. Gates and Mr. Carney think alike in a lot of ways.

00:06:29.540 I think they know each other fairly well.

00:06:31.220 Do you think Mr. Carney is going to take any permission from Mr. Gates to actually change his stance?

00:06:37.800 Let's get rid of the no pipelines bill and the tanker ban and a number of other things, emissions cap, but are holding the industry back.

00:06:48.440 Yeah, there must be something in the water because everybody is suddenly starting to sound a lot more like a conservative, aren't they?

00:06:57.000 Bill Gates is saying, no, no, no, it's no longer a nine alarm fire.

00:07:02.100 would each focus more on green, green energy, you know, greening industry, but not being

00:07:11.040 anti-industry, anti-development. We're seeing a lot of the same kind of stuff from Mark Carney.

00:07:17.060 I mean, heaven knows, compared to Justin Trudeau, Mark Carney sounds like a conservative. He wants

00:07:24.920 to build stuff. He wants to get back into the natural resources game in Canada. These are

00:07:32.080 good signs. The question is, what will the delivery look like? Are we going to get these

00:07:39.020 projects actually built? And you're quite right in noting some significant holdouts in policy

00:07:44.760 change. As long as we have a tanker BAM on the Pacific coast, then we can build all the pipelines 0.93

00:07:51.260 we want. Not that we're building any yet, but we can build all the pipelines we want. But if you

00:07:56.860 can't ship out of the west coast then what's the point and well the the the government of british

00:08:04.320 columbia currently is still adamantly opposed to make any changes to the to the tanker ban

00:08:10.860 well they are but in the end it's not their call so uh it needs a it needs a federal government

00:08:20.040 and i can't believe i'm i'm saying this because i'm not a fan of overwhelming federal exercise

00:08:26.580 of power, but the Constitution is pretty clear about whose decision it is that you do or you

00:08:33.240 don't allow the tankers on the coast. Yeah, and Nigel, we've been hearing a lot about the need

00:08:40.360 to diversify our export markets. Asia is hungry, hungry, hungry for Canadian energy. If we want to

00:08:47.660 get it to those Asian markets, we need to build those pipelines. We need to build those LNG

00:08:52.240 compression terminals, and it's going to be through the West Coast. We're not going to ship to

00:08:56.200 We're not going to ship LNG to Vietnam or China through the port of Halifax.

00:09:03.420 It's not going to happen.

00:09:04.480 It doesn't make sense.

00:09:06.260 Now, you know, Mr. Carney has been in power since the 14th of March.

00:09:11.400 He was sworn in.

00:09:12.540 That's more than seven months.

00:09:14.880 And other than the sleight of hand removal of carbon tax,

00:09:18.740 taking it off the price of the pump and putting it on the upstream,

00:09:23.740 and this sort of somewhat disingenuous announcement

00:09:28.740 of five major projects through the Major Projects Office in July.

00:09:33.900 We're already well on the way.

00:09:37.260 What has Mr. Carney actually got to show for seven months in office?

00:09:44.980 Let me try to be fair.

00:09:46.900 Yeah, actually, this is a time to try and be fair.

00:09:49.720 Serious question.

00:09:51.360 No, I always try to be fair.

00:09:52.740 um like the there's been a lot of architecture but we're waiting for results and no i don't

00:10:02.500 consider establishing a new home building agency to be results that is means to eventual results

00:10:11.620 but that's not results that's not building new homes yet so what has he done so far the main

00:10:18.020 accomplishment so far is again um the the new major projects office this was the highlight of

00:10:26.900 the spring and summer they announced this new major projects office frankly it was largely modeled

00:10:33.860 uh after the old major project management office that that was created by former prime minister

00:10:40.660 stephen harper largely for energy projects and natural resources project so you know he took

00:10:46.500 mark carney took harper's template expanded it a little bit and so that's a big deal but it is

00:10:53.380 creating the ability to actually get results it's not the same as getting results i'm hopeful i

00:10:59.380 think it's heading in the right direction the policy approach the attitude towards development

00:11:04.580 seems to have shifted so i'm i'm hopeful that this is gonna gonna lead to stuff um another thing that

00:11:10.500 he's done is he's created the uh the new home building agency build canada homes here again

00:11:18.740 he's built something but that's not the same as actually as as bricks and mortar are actually

00:11:24.020 being delivered or roofs delivered for for canadians who need homes and but on the policy

00:11:30.820 direction with this one i'm a little bit less impressed overall and here's why 95 of homes

00:11:40.980 that are built in this country are built by the private sector i would rather see

00:11:47.380 tax incentives like accelerated cost appreciation things like that that will prime the pump of the

00:11:54.100 private sector coupled with you know zoning reform and streamlined approvals to let the

00:11:59.700 private sector do what it does best which is go go go instead we're seeing a new agency that's

00:12:05.380 basically going to act as a crown developer to directly build new homes and repurpose old built

00:12:12.340 like it seems a little bit like a 1970s approach that it must be the state that is the agent of

00:12:18.980 all good i i don't subscribe to that economic model so have they done it yes is it starting to

00:12:25.780 is it starting to do it to apply its craft and and build homes yeah they announced our

00:12:30.660 first major project but ask me again when we actually see walls and roofs delivered to house

00:12:38.740 canadians and beyond that i think you're oh sorry you wanted to jump in on that i was going to ask

00:12:45.380 you whether they okay so they've got a new uh project going have they found a way to get around

00:12:52.900 the municipal restrictions, which in so many cases are what is really holding back the

00:13:00.100 delivery of new homes.

00:13:02.440 Yeah, that's going to take ongoing negotiations with not directly municipalities, because

00:13:10.860 that'd be kind of outside the outside constitutional norms, with the provinces as intermediaries

00:13:16.240 to deal with municipalities.

00:13:18.080 And some of it is zoning restrictions. That's true. But the biggest problem, by and large, from what I hear from municipalities is they want to build homes, too, because they're the ones on the front lines of a housing crisis.

00:13:32.760 So municipalities tend to want to build homes too. Their problem is investments in critical infrastructure, things like water, wastewater treatment, sewer systems, the kind of stuff you need to build homes.

00:13:50.180 You can't take a field and build homes on it. You can build a cottage on a field. You can't build a home on a field. You need sewer. You need hydro lines. You need all that core infrastructure that makes a residential, you know, four season home a home.

00:14:05.940 and municipalities simply do not have the resources to do that. Municipalities by law

00:14:10.880 are not permitted to run deficits. They can't incur debt. They don't have the tax base

00:14:16.380 to be able to invest in major critical infrastructure. That's where the federal

00:14:22.100 government comes in. And that's going to be a pretty important role for provincial governments

00:14:26.600 and federal governments to allow municipalities to unleash home building.

00:14:30.500 i think you're being very generous to some of the municipalities at least the i thought the line is

00:14:37.620 that in vancouver there's something like eight hundred thousand dollars of any new house goes

00:14:43.700 to the city of vancouver in various fees and development charges and you know the land the

00:14:52.740 bricks the mortar the wood they cost this tack on another eight hundred thousand yeah so there are

00:14:59.140 outliers there some municipalities are more problematic than others but also the reason

00:15:04.020 they charge the these development charges is theoretically that's how they build that that's

00:15:09.220 how they that's how they connect new homes to to grids to to water and wastewater and sewage and

00:15:15.060 whatever because the provinces and the federal government have not been uh contributing enough

00:15:20.180 to to make that possible so all right um i yeah i mean i did a part part of me feels for for the

00:15:26.500 the municipalities because they're trying to do what they can with one hand tied behind their back

00:15:31.140 because they don't have they don't have the tax base the federal government does it's what do

00:15:34.820 they use it on do they use it wisely on not exactly sexy stuff like building new or or upgrading

00:15:41.860 sewage systems but that's that's the kind of stuff that's most needed okay now as long as we're in a

00:15:48.580 segment of the show where we're going to be fair i want to run past something past you that uh

00:15:53.860 conservative leader Pierre Poitier said very recently. I think he put this out as a tweet

00:15:59.300 that if Mark Carney had kept his promise to handle Trump and negotiate a win and get a deal

00:16:07.980 by July the 21st, we would not be facing the latest tariff hike. Now, of course, this is a

00:16:14.240 little background to this. Mr. Ford, Premier of Ontario, in my opinion, recklessly put out a

00:16:20.620 provocative ad, it wasn't so much the ad itself, but the fact that he chose to do it at all that

00:16:26.840 was provocative. And of course, President Trump responded by guillotining any process that might

00:16:35.560 have been in progress. Now, Mr. Poliev says, if Mr. Carney had kept his promise to handle Trump,

00:16:44.780 he wouldn't be dealing with this. Do you think that's a fair criticism? Nobody handles Trump.

00:16:50.620 Well, but but you know what? I do think that's a fair criticism. And it's not so much a comment on Mark Carney's failure. It's more a comment on Mark Carney himself having set unrealistic expectations for his own government. He himself set the bar where it is.

00:17:10.880 um he won the election as the self-proclaimed trump whisperer he said elect me i'll be able

00:17:19.740 to handle this i can tame the beast canada will be okay in terms of trade relations with the

00:17:26.860 united states if you if you elect me and a continuation of liberal governance so he mark

00:17:33.520 carney himself said i'm going to be the savior elect me i'll get it done and he hasn't yet so

00:17:39.300 there's got to be some accountability for setting the bar um you know so much in politics as you

00:17:45.400 know nigel so much of it comes down to expectation management and in this case i think he did the 0.97

00:17:51.840 opposite of what one ought to have done in a volatile kind of dealing with trump world we all

00:17:58.800 know that donald trump can wake up one morning and say yeah yeah sure negotiations with canada

00:18:04.840 back on and then on thursday friday saturday he could wake up again and say no forget canada you

00:18:10.320 know that's a reality so why on earth politically would you set the kind of expectations of elect

00:18:16.240 me and i'll get this done by christmas no problem and we'll all go have a beer together well i want

00:18:20.800 to run by you a crazy conspiratorial theory uh the news reports indicate that mr ford showed

00:18:28.440 Mr. Carney these ads before he ran them, and Mr. Carney didn't tell him not to. They must both

00:18:35.820 have realized that quoting Ronald Reagan, whether done accurately or with selective editing,

00:18:43.140 was going to be like poking a stick into Mr. Trump's ear. And yet they went ahead and did

00:18:51.980 it anyway with the predictable result that things are shut down right before mr carney goes to the

00:18:59.600 apex conference in south korea and meets his old chinese friends couldn't get a deal with the

00:19:06.280 americans the chinese were more than pleased to see us do you think there's something going on

00:19:11.900 with china oh geez china's a tough one and look this is it's a really tough nut to crack 1.00

00:19:21.980 and the prime minister is meeting with chinese president uh xi and but this this follows several

00:19:28.620 years of deep reason relations as you know prompted by a major foreign interference scandal

00:19:33.820 state kidnapping of two canadian diplomats extraterritorial harassment of chinese canadians

00:19:40.620 on our on our shores but you know china is also our second biggest trading partner after the us

00:19:48.040 And as we see volatility, unpredictability, and trade hostility from the U.S., there are

00:19:54.820 understandably going to be voices and public sentiment in Canada saying that we should

00:20:00.560 re-engage with China, we should trade more with China as a hedge. 0.91

00:20:04.740 And overall, there's a push from the government and from the public at large to diversify

00:20:12.300 export markets because of all this stuff with Trump.

00:20:15.420 So it kind of makes sense that he's going to China, our second biggest trading partner,

00:20:19.720 saying, let's kind of get things back on track and trade more.

00:20:23.560 But also, let's get some perspective.

00:20:26.840 Our trade with the United States is at least 10 times greater than our trade with China.

00:20:32.700 You cannot offset that overnight.

00:20:34.400 You can't offset in a decade, let alone overnight.

00:20:38.240 And so for all the talk and energy into expanding non-US markets, how much can we really shift to China?

00:20:48.800 And do we really want to?

00:20:51.240 Because remember, three years ago when the government launched its Indo-Pacific strategy, it was all about moving away from China and largely towards India.

00:21:03.040 But then, of course, you know, the excrement hit the fan, our relations with India also sunk to rock bottom. So it really creates a problem. You know, we want to diversify, but the countries that we see as the biggest diversifying potential aren't really that reliable either.

00:21:20.880 And don't forget that China is not as predictable and stable as they let on.

00:21:28.140 China has been very notorious, especially vis-a-vis Canada, for waking up one morning and saying,

00:21:34.200 oh, we don't like your hogs, we don't like your pork, we're banning them. 1.00

00:21:37.120 Or we don't like your canola.

00:21:38.960 And it's never about viruses or weevils or whatever they try to pin it on.

00:21:43.460 It is always geopolitical.

00:21:46.320 What about it?

00:21:47.040 I mean, they dropped the tariffs on canola, and as the Americans have taken their motor industry back, we have to take Chinese cars.

00:21:57.380 Is that the deal that's coming up?

00:21:59.060 That's what they've pitched.

00:22:00.680 I mean, the Chinese have explicitly said this to several of our premiers and to our federal government.

00:22:06.520 You drop the Canadian tariffs on electric vehicles from China, and suddenly your canola will magically be safe again and let the trade roll.

00:22:15.780 So that's not any more reliable in terms of a rules-based, stable trade environment than, you know, the kind of stuff we've been seeing with Trump over the last half year.

00:22:27.340 Yaroslav, we're fast running out of time here, I'm afraid.

00:22:30.520 But let's get to the big question here in Alberta.

00:22:35.920 Daniel Smith gave Mr. Carney six months to meet Alberta's demands.

00:22:39.880 You know, we've heard it all before.

00:22:41.280 Getting rid of the anti-pipeline laws, the tanker ban, much else.

00:22:44.560 You know, does Gates's recent withdrawal of his enthusiasm for climate change narrative give Mr. Carney room to move?

00:22:58.960 And related to that, is this budget when we get to decide whether Mr. Carney is doing a good job?

00:23:05.540 When will we know that Canadians picked or didn't pick the right person earlier this year?

00:23:11.860 it's back to look am i holding my breath for the tanker ban to be lifted anytime soon

00:23:17.100 i'll be i'll be stunned if that's in next week's budget um the you know some of the

00:23:22.420 anti-development legislation that's the legacy of the of the justin trudeau government i think

00:23:28.380 mark harney thinks he is fixing that is he fixing enough of it and and is he doing it quickly enough

00:23:34.600 um you know some of this is technical questions um we'll see we'll see what the development

00:23:40.720 community. We'll see what the private sector says. Do they feel that they're empowered to do what

00:23:45.080 they do best under a Mark Carney legal and regulatory regime? Time will tell. Is this the

00:23:53.140 budget where we get to start giving Mark Carney a report card? Probably a little bit too early.

00:24:02.580 We're half a year into the government post-election, but this government should

00:24:09.840 contain some important signals about the policy direction i in some respects i've been impressed

00:24:16.560 with the direction this government is heading in in terms of incentivizing major projects allowing

00:24:22.400 the private sector to do what it does allowing major projects to go forward but we haven't seen

00:24:28.240 the results yet we've seen in some cases some shovels almost ready to go into the ground but

00:24:34.560 ask me again when we start to see some of these major projects coming to completion how smooth

00:24:40.080 the process was and how quickly it happened so how long do we give him well the reason we have

00:24:46.960 four-year uh election terms is that's a reasonable life cycle to be able to give somebody uh somebody

00:24:53.200 a report card but again mr carney and his team have set the bar really high let's see if they

00:24:59.680 can meet that yeah that that bar that they were pretty confident in themselves in okay yaroslav

00:25:07.440 i think i'll believe it when i see a formation of f-35s doing a low pass of the abbotsford air show

00:25:14.240 but anyway right now we don't have them and we do have mr carney and we have a budget

00:25:21.520 we have a trade negotiation to complete every time you come on i always feel a little wiser

00:25:27.840 at the end so thank you very much for your perspectives today my pleasure for the western

00:25:35.360 Standard, I'm Nigel Hannaford.

Western Standard - October 31, 2025

Austerity or activism？ Carney’s budget will try to be both

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