Western Standard - HANNAFORD： Buy now while prices last

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

00:00:21.440 It is Thursday, September 18. Parliament resumed earlier this week, and a budget is set to be

00:00:27.680 tabled on November 4, the first budget we've seen since April 16, 2024. The Prime Minister also

00:00:36.000 announced the first five projects to be fast-tracked through the Major Projects Office that he has

00:00:41.680 established, and we took note that the Conservative opposition has been more focused on cost-of-living

00:00:47.120 issues than major projects. I'm sure a lot of Canadians would like to think that adults are

00:00:53.120 back in charge. Perhaps they are, but what are they doing with all that power? What could a budget

00:00:58.880 possibly look like? What is the outlook for industrial development that is important but

00:01:04.160 doesn't qualify as a major project? With me today to talk about it is Dr. Tim Sargent,

00:01:11.040 an economist and former Federal Deputy Minister who is now Director of Domestic Policy

00:01:16.720 at the famous McDonnell Laurier Institute in Ottawa. Dr. Sargent, welcome to the show.

00:01:21.760 Dr. Tim Sargent, welcome to the show. Thank you for having me.

00:01:23.760 Dr. Tim Sargent, five mega projects roll out of the Major Projects Office as Parliament resumes. How impressed

00:01:32.480 are you? Well, this isn't just low-hanging fruit. This is fruit that's fallen to the ground and it has

00:01:39.520 been neatly arranged in piles for people to pick it up. The reality is that these five projects were already

00:01:46.000 through the system. Darlington and Makovena are already being built. That's how far along they are.

00:01:52.800 Kitimat, it's an issue of financing. ContraCare is almost done. So there's really nothing special

00:01:59.280 about these projects. There's not a lot that really needs to be done. The risk, of course, is that some

00:02:04.400 of these project proponents may turn around and ask the government for a financial contribution given

00:02:10.880 how important the government thinks they are. Now, of course, you did also have other projects

00:02:16.960 talked about in that press release, but they are really at the other end of the spectrum.

00:02:23.040 The government's talking about the Pathways Project, Port of Churchill, High Speed Rail. I mean,

00:02:29.280 these are projects that are really not thought out at all. I mean, some of them are just a glint in a

00:02:34.880 politician's eye at this point. They all have massive cost overrun written on them. So for me,

00:02:41.200 I was hoping to see projects that are in the middle of the spectrum, projects that are rail prospects,

00:02:48.160 where the proponents have put them forward, but it is still trapped in the environmental assessment

00:02:53.920 system that we have in this country. Take a project like Delta Port, for instance. This assessment

00:03:00.560 started about five years ago. It's still only in stage two of the five-stage process for environmental

00:03:06.400 assessments. The time limit that the Impact Assessment Authority has put on that is 2028. So we're talking

00:03:14.080 about eight years for approval for a major expansion of the Port of Vancouver that could have enormous

00:03:20.480 economic benefit for the whole country. Well, I thought the idea of the major projects

00:03:26.320 office would speed things up. So I guess not necessarily.

00:03:32.640 Well, it's certainly not being used for that right now. Perhaps they'll have a role, but the

00:03:39.840 challenge is you're adding a level of bureaucracy onto a bureaucracy that already has lots of levels.

00:03:46.160 So you're just introducing a new character into this play, as opposed to a wholesale reform of the

00:03:52.720 system. And so what we're ending up with is, yes, there's a couple of projects that end up on the

00:03:58.240 wish list that the prime minister likes, prime minister's office likes, some provincial premiers

00:04:04.000 like, and the system is focused on them. But what about all of the other projects that are out there

00:04:09.600 that could really provide quite a big boost to the economy if they were all able to move forward a lot

00:04:13.840 faster? Well, that, of course, is one of the things that we thought right from the very beginning.

00:04:19.600 And I think sort of from the economic studies that we took 50 years ago or 20 years ago,

00:04:27.840 there's an assumption that the big projects will start the ball rolling and all the little

00:04:35.200 projects will just get swept along with it because it's spinoffs, isn't it? So, but that's not what

00:04:42.080 I'm hearing you say. These major projects may or may not go far fast, but the other ones are getting

00:04:49.360 left behind. Well, that's it. And the reality is what Canada needs to do is it needs to change

00:04:55.920 the investor sentiment towards Canada. It needs to change the story about Canada out there in the

00:05:02.320 world, which is that you just can't get projects done. And if we're going to convince people that

00:05:07.920 we really have turned the page and that we really are now serious about moving ahead and developing our

00:05:13.520 resource sector and our energy sector in particular, we're going to have to show people that all of the

00:05:19.840 things that got in the way of projects, all of the political opposition, that we're willing to

00:05:26.880 stand up to that and actually say, no, we're making a choice as a country that we're going to value the

00:05:33.440 resource sector more and we're going to work a lot harder to develop it. And we're going to stand up to

00:05:38.560 people who, for various reasons, don't want development to go ahead. And the FAD projects

00:05:44.560 that are announced, this isn't showing that Canada has the intestinal fortitude and the government has

00:05:49.680 the intestinal fortitude to stand up to all of these special interests, because they're all ones

00:05:54.800 that everybody supports. Well, one of the special interests is obviously the Indigenous interest,

00:06:01.280 and it's indeed built into the major project's office. It seems to me, and has seemed all along,

00:06:10.960 that Mr. Carney is very good about stating an intention, but then putting a condition on it.

00:06:16.640 And so when we come to these very large projects that we want to see, and would be good for the

00:06:21.680 country, would be a great flywheel to generate activity, nevertheless, there's always, well,

00:06:28.320 there's an Indigenous office that has to be satisfied. There are provincial interests that

00:06:34.160 need to be satisfied. Does he have a plan for getting around that, or is that his actual get

00:06:44.720 out of jail free card when he finds himself confronted with something that's not in accord with his green

00:06:50.160 plan, but which he has sort of promised to do? What do you think is going on there?

00:06:54.240 Well, I think the Prime Minister has made the transition to being a politician in the sense that

00:07:02.000 politicians like to be all things to all people. And they don't want to annoy anybody, they want

00:07:08.000 to live in a world where everyone will be happy with the decisions that they take. And that's not

00:07:12.480 the reality of governing. The reality is that, as the French Prime Minister once said, to govern is to

00:07:17.680 choose. I'll put another way, Thomas Sowell, the great economist once said, there are no solutions,

00:07:24.000 there are only trade-offs. So at the end of the day, you're going to have to, if you're wanting a

00:07:28.960 lot of projects to get done, you're going to have to make some of those trade-offs. At the moment,

00:07:34.320 though, what we seem to see is, you know, a project needs to, not only do all Indigenous people anywhere

00:07:41.040 near the project have to agree to it, we also have to have provincial agreement, certainly as the

00:07:45.440 province of BC, has to sign off on any pipeline that goes to tidewater from Alberta. And there's

00:07:51.760 also Greenlands. So you've got these three constraints. So I don't think there's a lot of

00:07:56.960 camels that can go through the eye of that needle. And I think the instinct from politicians, and I

00:08:04.560 think, you know, the Prime Minister is in this space is, well, if there's a problem, we're going to throw

00:08:09.840 money at it. And so, you know, we're just going to provide a subsidy here or a subsidy there to move

00:08:15.920 the project along. So a year ago, as we all remember, Mr Carney was advising the former Prime Minister,

00:08:23.360 Mr Trudeau. So many of the things that he has inherited are the consequence of the years during,

00:08:31.840 decisions taken during the time that Mr Trudeau was Prime Minister. And I myself am still wondering

00:08:43.440 whether Mr Trudeau was given good advice that he ignored, or that the advice that he took came from

00:08:51.040 Mr Carney, and we are now witnessing the consequences of that advice. Do you care to speculate upon that?

00:08:58.640 Well, you know, at the end of the day, what matters is the actual results. And, you know,

00:09:07.520 we have, you know, a system, an environmental assessment system that is very, it was already

00:09:14.560 complicated. The Trudeau government made it even more complicated, even more inaccessible. Certainly,

00:09:22.480 you know, Mark Carney, before he was Prime Minister, was pressing very hard for Greenlands to

00:09:28.400 to worry very much about climate change impacts. You know, we haven't really heard him backtrack

00:09:33.680 on that. So, you know, in some ways, yes, I mean, this is a system that he has certainly been involved

00:09:40.640 with. But I will say that it's probably only now that he's getting to grips with exactly what this

00:09:47.200 system is doing to resource development in this country. And, you know, you see him with the Bill C5,

00:09:54.080 for instance, look for a way to get around the system. But the reality is what's really needed

00:10:00.720 is a wholesale reform in this system. And a big part of that would be getting the federal government

00:10:06.560 out of a lot of areas where it's really the province's responsibilities.

00:10:10.400 Do you think Mr. Carney is behaving like somebody who thinks there is a business case for selling

00:10:17.440 Alberta natural gas to Germany?

00:10:22.800 Yes, I think we are, you know, we're talking about somebody who has obviously a lot of a lot of

00:10:28.240 economic experience, a lot of financial experience. And I think who gets that the resource sector is

00:10:34.400 important to Canada's economy. If you look at the objectives that he laid down in the letter that

00:10:41.120 he sent to all ministers in the speech from the throne, I mean, they're the right objectives. They

00:10:45.840 are developing the resource sector, talks about cutting the size of government. There's a bunch of

00:10:50.800 other things that I think every economist would agree with. The real question is, how are you going to

00:10:56.800 get there? And, you know, if you're going to make this omelette, you know, what eggs are you willing to break?

00:11:03.280 Sir, everybody has, before he became prime minister, everybody liked to call him a technocrat. And

00:11:11.760 certainly somebody who has managed two, not one, but two national banks probably is something of a

00:11:18.400 technocrat. If we then translate technocracy into running a country, would you

00:11:27.200 do you see in the things that he says and the actions that he has so far taken the mind at work

00:11:34.240 of somebody who thinks that government is best advanced when decision-making is concentrated

00:11:43.360 in a small group of people, but that small group of people are the most competent and the cleverest and

00:11:50.400 of course the most virtuous, then that they will make good decisions and everybody else will come

00:11:56.640 along. I mean, this is a government that seems to want to make investments decisions that would normally

00:12:01.920 be made by private companies. Again, what do you think his game is here?

00:12:08.720 Well, I mean, prime minister comes from central bank world. I mean, that's kind of the pinnacle of

00:12:14.640 technocracy, right? You have a very, very small group of people that are deciding on interest rates,

00:12:19.600 which is crucial for the economy, very much shielded from political input. And there's a lot of good

00:12:25.360 reasons to do it that way. But that's in the context of the Bank of Canada or the Bank of England.

00:12:30.160 These are elite institutions, they're full of PhD economists. And you know, at the end of the day,

00:12:37.440 you're looking at just one segment of the economy. The federal government is a very, very different

00:12:42.800 beast. It's huge. You're talking about more than 400,000 public servants. And of course, he's not

00:12:48.720 just thinking about interest rates. There's a whole range of policies, tax transfers, substitutes, all kinds

00:12:54.080 of things. So you're dealing with something that's an order of magnitude more complicated. And, you know,

00:12:59.920 I think certainly, you know, he certainly a very confident individual, he has a great CV, as we all

00:13:08.480 know, but you just can't manage the government of Canada even the way you manage a central bank. And you

00:13:15.280 can't, the federal government can't manage the Canadian economy the way a central bank can manage

00:13:21.040 interest rates. Just too big is just too complicated.

00:13:24.800 Okay, I want to turn shortly to the budget that's coming on November the 4th. But before we go there,

00:13:31.520 two things. The United States has backed away from the green agenda. Even Europe is backing away from

00:13:39.760 it. But Mr. Carney seems to want to stay green, even as everybody else is changing their minds. Does he know

00:13:50.480 something that they don't know?

00:13:53.920 I think it's more that, you know, Mark Carney has written a whole book in which climate change

00:14:01.840 featured very strongly. He spent a lot of years invested in a climate change issue, especially since

00:14:06.960 he left the Bank of England, putting together coalitions of businesses to advance net zero.

00:14:13.200 So, you know, when you invested a lot in an idea, it's hard to move away from it, certainly hard to

00:14:19.920 move away from it very quickly. But, you know, the reality is, as you say, the rest of the world,

00:14:25.840 by and large, is moving away from it. And, you know, we've seen the Prime Minister having to move

00:14:33.200 away from some of the elements of that agenda, like the EV mandate, for instance, because he's

00:14:39.600 reduced the consumer carbon tax to zero. But we haven't yet seen him go, you know,

00:14:46.320 all the way on a lot of that agenda. I think he's still hoping that by making these kinds of

00:14:52.800 concessions, by making a few changes like this, that he'll still be able to have something that he

00:14:59.040 can hold up as a proper green agenda. But he's going to be in a pretty lonely spot, internationally,

00:15:04.640 doing that.

00:15:06.480 In Alberta, we have some hopes of what Premier Daniel Smith calls the grand bargain. And that is where

00:15:15.520 somehow we find a way to bury enough carbon dioxide to achieve net zero as we increase production

00:15:24.000 of oil and natural gas. I'm told that it is technically feasible. Do you have any sense of whether

00:15:32.480 that – and this is something that Mr Carney is advancing, not just a Premier Smith – do you think

00:15:39.680 they can actually make money at it? Or is this just another exercise in bait and switch?

00:15:44.800 Well, the last price tag I saw for this was 16.5 billion. And I don't think anybody believes that

00:15:51.200 that would be the final number. I'm sure it would be much higher than that. Technically feasible

00:15:55.840 is not the same thing as economically feasible. The reality is companies are only going to get

00:16:01.600 involved with this if the governments pick up the tab for that carbon capture and storage.

00:16:07.600 And I wouldn't be surprised if Premier Smith thinks the federal government is going to pay that tab,

00:16:12.400 and the federal government thinks the Premier Smith is going to pay that tab. And I think the reality

00:16:18.000 is fiscally provide a level of government, that's just not on. So the thing about carbon capture and

00:16:26.320 storage is it's this mythical beast that will solve everyone's problems. It allows the Prime Minister

00:16:35.120 to be able to say he's still fully on with the net zero agenda, while at the same time providing

00:16:40.320 Premier Smith with a way to providing that social license from the federal government to ship hydrocarbons

00:16:49.760 to Tidewater. So the politicians very much want this to exist. They want it to be feasible. But at the

00:16:57.920 end of the day, I'm not sure anybody's really willing to pay for it. Well, it's pure speculation as

00:17:04.880 to what it might do to the price of a barrel of oil. But one thing is for sure, it would apply to

00:17:10.240 Alberta oil. But I'm not aware of any plan to apply it to oil that is imported from places where net zero

00:17:20.160 is not a consideration, which of course would be the case in Eastern Canada. Do you know if there's any

00:17:26.720 plan to square things up and make it a fair fight?

00:17:29.040 I don't think so. I mean, you hear ideas from the European Union was thinking about putting

00:17:36.960 tariffs on things that come in that have a high carbon content. But in the current environment,

00:17:43.360 I can't see us putting tariffs on imported oil. And even if we did, we'd just be shooting ourselves in

00:17:48.800 the foot because we're just making life more expensive for our businesses and for our consumers. So as you

00:17:55.920 say, it's just putting a disadvantage on Alberta oil, unless some fairy government is going to come

00:18:06.800 along and just pay for this.

00:18:09.360 Okay, Dr. Sargent, let's switch to the budget. Obviously, we've all been told to expect that

00:18:16.080 it's going to be a frightening announcement when it comes. Hundreds of billions of dollars in deficit,

00:18:24.800 accumulated deficits are already north of $2 trillion. How much worse is it going to get?

00:18:31.920 But really is the question, confronted by this kind of enormous cost overrun,

00:18:40.720 it seems like any government, this one in particular, has the choice between raising taxes,

00:18:48.480 cutting expenses, or allowing inflation to run its course and pay off what they owe in devalued dollars.

00:19:02.800 From all that you have seen, what do you think is the most likely strategy to be followed by this

00:19:12.000 government?

00:19:12.640 I think the most likely strategy is going to be the latter. I mean, that's what governments usually do,

00:19:21.440 at least for as long as they can get away with it. You have higher inflation, that reduces the real

00:19:28.640 value of your debt. Your revenues go up, it enables you to pay your debt. The other things are really

00:19:33.920 hard to do. Raising taxes, I think the Prime Minister is smart enough to know that taxes are already

00:19:40.240 pretty high in this country, and the higher you raise them, the more people are going to find ways

00:19:45.520 around paying those taxes, or just simply not work, simply not invest. Cutting spending, I mean,

00:19:53.040 most economists would say that would be the place to go, but it's this government, certainly a lot of

00:20:00.160 the Prime Minister's Cabinet colleagues, are the ones who helped massively increase spending over

00:20:04.640 the last 10 years, because we saw public service grow by about 40%, or zero percent over that period.

00:20:12.560 So it's hard for me to see that they're going to drastically reduce the size of civil service,

00:20:18.560 even putting it back to, even on a per capita basis, back to where they were. So I suspect that

00:20:24.960 the easier roads will be, the politically easier road will be the one that they follow in the near

00:20:31.680 term, until the financial markets say, enough, and that's usually how this ends.

00:20:35.840 Well, it's hard to make a cheerful picture out of any of that. So let's just say the average person

00:20:43.440 who's got a little bit of financial flexibility, is there anything, what do they do, buy gold? What can

00:20:49.840 a person do to insulate themselves somewhat from this tide of bad news that's coming our way?

00:20:58.000 Well, they don't call economics the big old science for nothing. And I don't have a lot of good news for

00:21:05.680 people. I mean, it used to be that, you know, the US Treasury bills, for instance, where US debt was

00:21:12.800 a state haven, but you look at the US now and their deficit is huge. You know, I don't think the US is

00:21:20.240 going to default, but I think they're seeing the inflation creep up as well. So there aren't really

00:21:27.600 a lot of good places left to put your money. I mean, gold could certainly be one, but even that,

00:21:33.840 you know, can be quite volatile. You know, the first best would be that we actually had a sensible fiscal

00:21:41.840 policy. And so people could invest with confidence in Canada. But, you know, during the financial

00:21:50.320 crisis, when it was really the property sector, which was ground zero, you know, you could move

00:21:55.680 into government bonds. I mean, those were relatively safe. But, you know, I think this time around,

00:22:01.840 it's government itself that's the most vulnerable to financial markets.

00:22:05.280 Well, isn't this a cheerful way to conclude an interview? We're all doomed.

00:22:13.440 Dr. Sargent, I suspect that people will be buying gold or buying silver. I'm not recommending it,

00:22:23.200 but it is, there seems so few options, unless you trust Bitcoin. But it is, perhaps we can have you

00:22:32.240 come back again on November the 5th after the budget has been presented. And we'll just go over and see

00:22:39.040 whether all our doom and gloom was justified. Thank you so much for coming on the program.

00:22:45.760 Thanks for having me.

00:22:47.120 Well, it's been fun. For the Western Standard, I'm Nigel Hannaford.

00:22:56.400 Thank you.

00:23:09.040 Thank you.

00:23:09.920 Thank you.

Western Standard - September 21, 2025

HANNAFORD： Buy now while prices last

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