Canadian Prime Minister Mark Carney pledged a bold blueprint for “generational investment” to boost the economy and tackle a trade war with the United States. But for some analysts, this is a missed opportunity.
The budget presented by Carney on Tuesday fell short on ambition, limited in part by the reality of leading a minority government that depends on political rivals to survive, analysts said.
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“This is not a generational budget,” said Theo Argitis, senior vice-president of policy at the Business Council of Canada. “It goes in the right direction on some fronts, but I think it wasn’t as ambitious as Carney wanted it to be.”
Argitis said it was not enough to spur the level of private investment needed for significant growth.
“If you are looking to transform the economy, this budget will not do that,” he said.
Slow growth, US tariffs
Canada is struggling with slow economic growth and its effects Rate US President Donald Trump imposed.
Carney said the tariffs and the uncertainty they create will cost about 1.8 percent of gross domestic product (GDP), pushing back against the notion on Wednesday that he was being too cautious.
“This budget is a major change in the government’s approach,” he told reporters, noting his pledge to slow official spending and make unprecedented changes to the tax system to boost business investment.
But with a growing number of Canadians struggling to put food on the table, Carney is not necessarily a politician, said Elizabeth McCallion, assistant professor of political science at the University of Toronto.
“Canadians know there are many things out of Carney’s control,” she said. “They’re more angry at Donald Trump than Carney.”
Without enough seats in his minority government to pass the budget, Carney will likely rely on the small, left-leaning New Democratic Party, which has just seven legislators, little money and no permanent leader.
If they avoid a budget vote expected after November 17, Carney’s government will be done.
“This budget is not going to trigger an election unless anyone gets into it. No party wants to go now. Not even the Liberals. And the voters? They’re ready to punish anyone who tries,” said pollster Darrell Bricker, global CEO of Ipsos Public Affairs.
A Nanos Research poll this week found that Carney is the preferred prime minister for nearly half of Canadians, compared to 27 percent for official opposition Conservative Party leader Pierre Poilievre.
New Democrats welcomed some of the proposed measures, such as infrastructure spending tied to union jobs, but said public sector worker cuts and other provisions were “a step in the wrong direction.”
Boost infrastructure, cut costs
The budget commits to spending $280 billion Canadian ($200bn US) over five years to build new infrastructure while cutting $60 billion ($42.6bn) in government spending.
Another point of contention is the proposed deficit, which Ottawa has projected at $78 billion Canadian ($55.3bn US) for the next fiscal year, or double last year’s deficit. By 2030 it will drop to $US57 billion ($40.4bn).
Poilievre had previously made several key budget demands, including keeping the deficit below $42 billion Canadian ($29.8bn).
Poilivere also criticized the budget on Tuesday for placing taxes on food, work, energy and housing.
But one Conservative MLA, Chris D’Entremont of Nova Scotia’s Acadie-Annapolis district, was convinced. He announced on Tuesday that he had joined Carney’s Liberals, though the government would remain with a minority. Political defection is relatively rare in Canada.
Robert Asselin, who once served as an adviser to Liberal ministers and now heads the Institute of Research Universities, said Carney would have spent more on growth, but that would probably have pushed the deficit past $100 billion Canadian ($71bn).
Drew Fagan, a visiting professor at Yale University who specializes in global affairs, said: “You can’t turn around the world’s 10th largest economy with just one budget.”