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

00:00:21.640 It is Thursday, September 18th. Parliament resumed earlier this week, and a budget is

00:00:27.200 set to be tabled on November the 4th, the first budget we've seen since April the 16th, 2024.

00:00:34.320 The Prime Minister also announced the first five projects to be fast-tracked through the

00:00:39.400 Major Projects Office that he has established, and we took note that the Conservative opposition

00:00:44.600 has been more focused on cost-of-living issues than major projects. I'm sure a lot of Canadians

00:00:51.040 would like to think that adults are back in charge. Perhaps they are, but what are they

00:00:56.520 doing with all that power? What could a budget possibly look like? What is the outlook for

00:01:01.560 industrial development that is important but doesn't qualify as a major project? With me today

00:01:07.920 to talk about it is Dr. Tim Sargent, an economist and former federal deputy minister who is now

00:01:14.500 Director of Domestic Policy at the famous McDonnell Laurier Institute in Ottawa. Dr. Sargent,

00:01:20.940 welcome to the show thank you for having me good to see you dr sargent five mega projects roll out

00:01:28.220 of the major projects office as parliament resumes how impressed are you well this isn't just low

00:01:36.380 hanging fruit this is fruit that's fallen to the ground and it has been neatly arranged in piles

00:01:41.180 for people to pick it up the reality is that these five projects were already through the system

00:01:47.660 and Darlington and Makovena are already being built. That's how far along they are.

00:01:52.860 Kitimat, it's an issue of financing. ContraCare is almost done. So there's really nothing special

00:01:59.340 about these projects. There's not a lot that really needs to be done. The risk, of course,

00:02:03.980 is that some of these project proponents may turn around and ask the government for

00:02:08.380 a financial contribution given how important the government thinks they are. Now, of course,

00:02:14.620 you did also have other projects talked about in that press release um but they are really at the

00:02:21.020 other end of the spectrum um the government's talking about the pathways project port of

00:02:26.780 churchill high-speed rail i mean these are projects that are really not not really thought out at all

00:02:32.620 i mean some of them are just a glint in a politician's eye at this point they all have

00:02:37.740 massive cost overrun written on them. So for me, I was hoping to see projects that are in the

00:02:45.100 middle of the spectrum, projects that are rail prospects where the proponents have put them

00:02:49.820 forward, but that are still trapped in the environmental assessment system that we have

00:02:54.700 in this country. Take a project like Deltaport, for instance. This assessment started about five

00:03:01.500 years ago. It's still only in stage two of the five-stage process for environmental assessments.

00:03:07.740 The time limit that the Impact Assessment Authority has put on that is 2028.

00:03:13.580 So we're talking about eight years for approval for a major expansion of the Port of Vancouver

00:03:19.100 that could have enormous economic benefit for the whole country.

00:03:23.820 Well, I thought the idea of the Major Projects Office would speed things up.

00:03:29.420 So I guess not necessarily.

00:03:33.900 Well, it's certainly not being used for that right now.

00:03:37.740 perhaps they'll have a role. But the challenge is you're adding a level of bureaucracy onto

00:03:42.260 a bureaucracy that's already overbuilt, that already has lots of levels. So you're just

00:03:46.840 introducing a new character into this play, as opposed to a wholesale reform of the system.

00:03:53.740 And so what we're ending up with is, yes, there's a couple of projects that end up on the wish list

00:03:58.940 that the prime minister likes, prime minister's office likes, some provincial premiers like,

00:04:04.280 and the system is focused on them,

00:04:06.520 but what about all of the other projects that are out there

00:04:09.400 that could really provide quite a big boost to the economy

00:04:12.120 if they were all able to move forward a lot faster?

00:04:15.500 Well, that, of course, is one of the things that we thought

00:04:18.060 right from the very beginning.

00:04:19.900 And I think sort of from the economic studies that we took 50 years ago

00:04:24.500 or 20 years ago, there's an assumption that the big projects

00:04:30.340 will start the ball rolling

00:04:34.000 and all the little projects

00:04:35.660 will just get swept along with it

00:04:37.820 because it's spinoffs, isn't it?

00:04:41.080 But that's not what I'm hearing you say.

00:04:43.320 These major projects may or may not go far fast,

00:04:47.400 but the other ones are getting left behind.

00:04:51.140 Well, that's it.

00:04:51.900 And the reality is what Canada needs to do

00:04:54.460 is it needs to change the investor sentiment

00:04:57.760 towards Canada.

00:04:58.840 It needs to change the story about Canada out there in the world, which is that you just can't get projects done.

00:05:05.820 And if we're going to convince people that we really have turned the page and that we really are now serious about moving ahead and developing our resource sector and our energy sector in particular,

00:05:17.220 we're going to have to show people that all of the things that got in the way of projects, all of the political opposition,

00:05:25.300 And that we're willing to stand up to that and actually say, no, we're making a choice as a country that we're going to value the resource sector more and we're going to work a lot harder to develop it.

00:05:37.320 And we're going to stand up to people who, for various reasons, don't want development to go ahead.

00:05:43.440 And the FAQ projects that are announced, this isn't showing that Canada has the intestinal fortitude and the government has the intestinal fortitude to stand up to all of these special interests.

00:05:53.700 because they're all ones that everybody supports.

00:05:56.980 One of the special interests is obviously the indigenous interest,

00:06:01.300 and it's indeed built into the major project's office.

00:06:07.860 It seems to me and has seemed all along that Mr. Carney is very good about stating an intention

00:06:14.340 but then putting a condition on it.

00:06:17.380 When we come to these very large projects that we want to see and would be good for the country,

00:06:22.420 would be a great flywheel to generate activity. Nevertheless, there's always, well,

00:06:29.540 there's an indigenous office that has to be satisfied. There are provincial interests

00:06:33.940 that need to be satisfied. Does he have a plan for getting around that, or is that his actual

00:06:44.500 get-out-of-jail-free card when he finds himself confronted with something that's not in accord

00:06:49.380 with his green plan. What was he sort of promised to do? What do you think is going on there?

00:06:55.540 Well, I think the Prime Minister has made the transition to being a politician in the sense that

00:07:01.940 politicians like to be all things to all people. And they don't want to annoy anybody. They want

00:07:07.940 to live in a world where everyone will be happy with the decisions that they take.

00:07:11.860 And that's not the reality of governing. The reality is that, as the French Prime Minister

00:07:16.100 once said to governors to choose um i'll put another way thomas soul the great economist once

00:07:22.060 said um there are no solutions there are only trade-offs um so at the end of the day you're

00:07:27.740 going to have to you if you're wanting a lot of projects to get done um you're going to have to

00:07:31.600 make some of those trade-offs um at the moment though what we seem to see is you know a project

00:07:37.220 needs to not only do all indigenous people anywhere near the project have to agree to it 0.75

00:07:42.660 We also have to have provincial agreement. So that means the province of BC has to sign off on any pipeline that goes to tidewater from Alberta. And there's also a Greenland. So you've got these three constraints. So I don't think there's a lot of camels that can go through the eye of that needle.

00:07:59.900 And I think the instinct from politicians, and I think the prime minister is in this space, is, well, if there's a problem, we're going to throw money at it.

00:08:11.380 And so we're just going to provide a subsidy here or a subsidy there to move the project along.

00:08:17.860 So a year ago, as we all remember, Mr. Carney was advising the former prime minister, Mr. Trudeau.

00:08:24.340 So many of the things that he has inherited are the consequence of the years during the decisions taken during the time that Mr. Trudeau was Prime Minister.

00:08:37.340 And I myself am still wondering whether Mr. Trudeau was given good advice that he ignored, or that the advice that he took came from Mr. Carney, and we are now witnessing the consequences of that advice.

00:08:56.520 Do you care to speculate upon that?

00:09:00.000 Well, you know, at the end of the day, what matters is the actual results.

00:09:06.140 And, you know, we have, you know, a system, an environmental system, assessment system that is very, it was already complicated.

00:09:15.980 The Trudeau government made it even more complicated, even more inaccessible.

00:09:22.000 Certainly, you know, Mark Carney, before he was prime minister, was pressing very hard for Greenland to worry very much about climate change impacts.

00:09:31.540 You know, we haven't really heard him backtrack on that.

00:09:34.280 So, you know, in some ways, yes, I mean, this is a system that he has certainly been involved with.

00:09:41.320 But I will say that it's probably only now that he's getting to grips with exactly what this system is doing to resource development in this country.

00:09:51.260 And, you know, you see him with the Bill C-5, for instance, look for a way to get around the system.

00:09:58.560 But the reality is what's really needed is a wholesale reform of this system.

00:10:02.740 And a big part of that would be getting the federal government out of a lot of areas where it's really the province's responsibilities.

00:10:11.900 Do you think Mr. Carney is behaving like somebody who thinks there is a business case for selling Alberta natural gas to Germany?

00:10:22.620 Yes, I think we are.

00:10:25.420 We're talking about somebody who has obviously a lot of a lot of economic experience, a lot of financial experience.

00:10:30.400 And I think who gets that the resource sector is important to Canada's economy.

00:10:36.700 If you look at the objectives that he laid down in the letter that he sent to all ministers in a speech from the throne,

00:10:44.460 I mean, they're the right objectives.

00:10:45.800 They are developing the resource sector, talks about cutting the size of government.

00:10:50.320 There's a bunch of other things that I think every economist would agree with.

00:10:54.580 The real question is, how are you going to get there?

00:10:57.440 And, you know, if you're going to make this omelette, you know, what eggs are you willing to break?

00:11:03.380 So, everybody has, before he became prime minister, everybody liked to call him a technocrat.

00:11:11.280 And certainly somebody who has managed two, not one, but two national banks probably is something of a technocrat.

00:11:19.180 But if we then translate technocracy into running a country, do you see in the things

00:11:28.820 that he says and the actions that he has so far taken, the mind at work of somebody who

00:11:36.180 thinks that government is best advanced when decision-making is concentrated in a small

00:11:43.960 group of people but that small group of people are the most competent and the cleverest and

00:11:50.360 of course the most virtuous then that they will make good decisions and everybody else

00:11:55.400 will will come along i mean this is a government that seems to want to make

00:11:59.640 investments decisions that would normally made by private companies again what do you think his

00:12:06.200 game is here well i mean prime minister comes from central bank world i mean that's kind of

00:12:13.480 the pinnacle of technocracy. You have a very, very small group of people that are deciding on

00:12:18.920 interest rates, which is crucial for the economy, very much shielded from political input, and

00:12:24.680 there's a lot of good reasons to do it that way. But that's in the context of the Bank of Canada

00:12:29.080 or the Bank of England. These are elite institutions, they're full of PhD economists,

00:12:34.840 and at the end of the day, you're looking at just one segment of the economy. The federal government

00:12:41.560 is a very very different beast it's it's it's huge you're talking about more than 400 000 public

00:12:46.440 servants um and of course he's not just thinking about interest rates he's there's a whole range

00:12:51.880 of policies tax transfer substitutes all kinds of things so you're dealing with something that's an

00:12:56.200 order of magnitude more complicated and you know i think certainly uh you know he certainly you're

00:13:05.240 a very competent individual. He has a great CV, as we all know. But you just can't manage

00:13:11.960 the government of Canada even the way you manage a central bank. And the federal government can't

00:13:17.320 manage the Canadian economy the way a central bank can manage interest rates. Just too big,

00:13:22.520 it's just too complicated. Okay, I want to turn shortly to the budget that's coming on November

00:13:28.680 the fourth but before we go there two things the united states has backed away from the green

00:13:34.840 agenda even europe is backing away from it but mr carney seems to want to stay green

00:13:45.080 even as everybody else is changing their minds um does he know something that they don't know

00:13:51.800 I think it's more that Mark Carney has written a whole book in which climate change featured

00:14:02.200 very strongly. He spent a lot of years invested in a climate change issue, especially since he

00:14:07.160 left the Bank of England, putting together coalitions of businesses to advance net zero.

00:14:13.440 So when you invested a lot in an idea, it's hard to move away from it, certainly hard to move away

00:14:20.420 from it very quickly. But the reality is, as you say, the rest of the world by and large is moving

00:14:27.920 away from it. And we've seen the prime minister having to move away from some of the elements of

00:14:35.480 that agenda, at least like the EV mandate, for instance, because he's reduced the consumer

00:14:40.480 carbon tax to zero. But we haven't yet seen him go all the way on a lot of that agenda. I think

00:14:48.960 He's still hoping that by making these kinds of concessions, by making a few changes like this,

00:14:56.880 that he'll still be able to have something that he can hold up as a proper green agenda.

00:15:01.260 But he's going to be in a pretty lonely spot internationally doing that.

00:15:06.040 In Alberta, we have some hopes of what Premier Daniel Smith calls the grand bargain.

00:15:12.620 And that is where somehow we find a way to bury enough carbon dioxide to achieve net zero as we increase production of oil and natural gas.

00:15:26.560 I'm told that it is technically feasible.

00:15:30.340 Do you have any sense of whether this is something that Mr. Carney is advancing, not just Premier Smith?

00:15:38.640 Do you think they can actually make money at it?

00:15:41.160 Or is this just another exercise in bait and switch?

00:15:44.640 Well, the last price tag I saw for this was $16.5 billion.

00:15:48.680 And I don't think anybody believes that that would be the final number.

00:15:52.620 I'm sure it would be much higher than that.

00:15:54.480 Technically feasible is not the same thing as economically feasible.

00:15:58.900 The reality is companies are only going to get involved with this

00:16:02.500 if the governments pick up the tab for that cloud and capture and storage.

00:16:06.540 and I wouldn't be surprised if Premier Smith thinks the federal government's going to pay that

00:16:12.080 tab and the federal government thinks the Premier Smith is going to pay that tab and I think the

00:16:17.600 reality is fiscally provider level of government that's just that's just not on so the thing about

00:16:25.560 carbon capture and storage is it's it's this mythical beast that will solve everyone's problems

00:16:31.780 It allows the prime minister to be able to say he's still fully on with a net zero agenda, while at the same time providing Premier Smith with a way to providing that social license from the federal government to ship hydrocarbons to Tidewater.

00:16:52.280 So the politicians very much want this to exist.

00:16:55.340 They want it to be feasible.

00:16:57.300 But at the end of the day, I'm not sure anybody's really willing to pay for it.

00:17:01.780 Well, it's pure speculation as to what it might do to the price of a barrel of oil,

00:17:07.480 but one thing is for sure, it would apply to Alberta oil,

00:17:11.300 but I'm not aware of any plan to apply it to oil that is imported

00:17:17.740 from places where net zero is not a consideration,

00:17:21.820 which of course would be the case in eastern Canada.

00:17:24.120 Do you know if there's any plan to square things up and make it a fair fight?

00:17:29.080 um i don't think so i mean you you hear ideas and the european union was thinking about putting

00:17:36.980 tariffs on uh things that come in that have a high carbon content but in the current environment i

00:17:43.540 can't see is putting tariffs on on imported oil and even if we did we'd just be shooting ourselves

00:17:48.660 in the foot because we're making just making life more expensive for our for our businesses and for

00:17:53.340 our consumers so um as you say it's just uh putting a a disadvantage on on alberto oil

00:18:02.660 unless you know some um some fairy government is going to come along and just pay for this

00:18:08.080 okay dr sergeant let's switch through the budget obviously we've all been told to expect

00:18:15.380 that it's going to be a frightening announcement when it comes hundreds of billions of dollars

00:18:22.940 in deficit, accumulated deficits are already north of $2 trillion.

00:18:28.860 How much worse is it going to get?

00:18:31.960 But really is the question, confronted by this kind of enormous cost overrun,

00:18:40.800 it seems like any government, this one in particular,

00:18:46.120 has the choice between raising taxes, cutting expenses, or allowing inflation to run its course

00:18:56.720 and pay off what they owe in devalued dollars.

00:19:02.420 From all that you have seen, what do you think is the most likely strategy to be followed by this government?

00:19:12.420 I think the most likely strategy is going to be the latter. I mean, that's what governments

00:19:20.700 usually do, at least for as long as they can get away with it. You know, you have higher inflation

00:19:27.120 that reduces the real value of your debt, and your revenues go up, it enables you to pay your

00:19:32.300 debt. The other things are really hard to do. Raising taxes, I think Prime Minister is smart

00:19:38.540 enough to know that taxes are already pretty high in this country and you know the more the higher

00:19:43.500 you raise them the more people are going to find ways around paying those taxes or you know just

00:19:47.740 simply not work simply not invest cutting spending i mean you know that most economists would say that

00:19:54.300 would be the place to go but you know it's this government certainly a lot of the prime minister's

00:20:00.940 cabinet colleagues are the ones who helped massively increase spending over the last 10

00:20:05.260 years because we saw public service grow by about 40% or 0% over that period. So it's hard for me

00:20:14.140 to see that they're going to drastically reduce the size of civil service, even putting it back to,

00:20:20.300 even on a per capita basis, back to where they were. So I suspect that the easier roads will be,

00:20:27.820 the politically easier road will be the one that they follow in the near term until the financial

00:20:33.180 markets say enough and that's usually how this ends. Well, it's hard to make a cheerful picture

00:20:39.420 out of any of that, so let's just say the average person who's got a little bit of

00:20:45.180 financial flexibility, is there anything? What do they do? Buy gold? What can a person do to

00:20:52.060 insulate themselves somewhat from this tide of bad news that's coming our way?

00:20:58.940 Well, they don't call economics the B.L. science for nothing.

00:21:03.580 And I don't have a lot of good news for people.

00:21:06.060 I mean, it used to be that the U.S. Treasury bills, for instance, where U.S. debt was a safe haven.

00:21:13.960 But you look at the U.S. now and the deficit is huge.

00:21:19.240 I don't think the U.S. is going to default, but I think they're seeing inflation creep up as well.

00:21:25.340 So there aren't really a lot of good places left to put your money.

00:21:30.680 I mean, gold could certainly be one, but even that can be quite volatile.

00:21:37.280 The first best would be that we actually had sensible fiscal policy,

00:21:42.900 and so people could invest with confidence in Canada.

00:21:47.880 But during the financial crisis, when it was really the property sector,

00:21:53.160 which was ground zero, you could move into government bonds.

00:21:56.640 I mean, those were relatively safe.

00:21:59.780 But I think this time around, it's government itself

00:22:02.960 that's the most vulnerable to financial markets.

00:22:06.660 Well, isn't this a cheerful way to conclude an interview?

00:22:10.520 We're all doomed.

00:22:13.200 Dr. Sargent, I suspect that people will be buying gold or buying silver.

00:22:21.900 i'm not recommending it but it is uh there seems so few options unless you trust bitcoin but uh it

00:22:29.820 is uh perhaps we can have you come back again on november the 5th after the after the budget has

00:22:36.220 been presented and uh we'll just go over and see whether all our all our doom and gloom was

00:22:41.580 justified thank you so much for coming on the program thanks for having me oh it's been fun

00:22:48.460 For the Western Standard, I'm Nigel Hannaford.

Western Standard - September 19, 2025

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