What happened to the Mark Carney who promised to make things better?

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1:04I'll be with you every step of the way. One in four was a fraud paying American, not anymore. Save up to 40% your first year. Visit lifelock.com slash podcast term supply. Mark Carney has been Prime Minister for just over a year. He was elected on many promises, but mainly that he would be the guy that could look after the economy. He would be the guy that could deal with Donald Trump. Has it worked out? Hello, and welcome to the full comment podcast. My name is Brian Lilly, your host. Today, we will try to do an honest assessment of Prime Minister Mark Carney's first year. Is he hitting the marks that he needs to? Is he helping the Canadian economy, as he said, think big, act bigger, and move its speeds, not seen in generations? To help me understand all of this is Bill Robson. He is the president emeritus of the CD Howe Institute. Recently, send me retired, as I like to tease him about, and joins me now here in Toronto.

2:05Bill, thanks for the time. My pleasure, Brian. We've got a difficult topic to unravel, so let's get out of it. Look, I have said since everyone started talking about this a week or so ago that he's had some good moves. He's not hit the mark on something. If you were giving him a grade off the top before we get into the nitty-gritty, how is Canada doing economically, and how is he doing, handling all of it? The report card is a good way of thinking about it because it brings out a tension that I think is going to run through this conversation. In terms of levels like where we're at, it's pretty hard to argue for better than a C. Canada's economy is struggling and the federal government's not doing anything like the things that it should to kind of turn the situation around decisively. On the other hand, I would give Mark Carney credit

3:11for doing a good job in a tough situation, so you would be in one of those situations where you'd be saying in terms of levels, not so great. In terms of moving in the right direction, yes, but to get us up to a B or an A is going to take a lot more. A politically, the public is obviously liking what they're seeing, so whether he's getting results or not is another matter, but you look at the polling and the average polling as put up by aggregator 338.com right now is the liberals are at 46%, the conservatives are at 36%, the NDPs at 8, so the public is clearly okay with what's going on, but when we look at that issues like the unemployment rate, the inflation rate, which was down in February but is going to skyrocket in March, things are overall, the fundamentals aren't doing well, are they?

4:12No, they're not. The Canadian economy has been struggling now for a decade, really, and the thing that I would highlight as a critical to this underperformance is that we have very feeble business investment, and all through our history, and if you look around the world, hiving high levels of capital, the forkers are well equipped to be productive and earn high incomes, then you're going to get ahead, and Canada has just not been in that category for a decade, and until we see that turn around, there is going to be this fundamental problem of people not seeing real increases in their living standards, and that shows up like an affordability problem because people naturally react to higher prices, but the root cause of it really is that our income growth has been so feeble, GDP per person stagnating. So just to quickly jump to what you had said about the good polling results, I think what people like aside from the fact that Donald Trump has really changed the whole kind of conversation we're having in Canada, there's a bit

5:16of rallying around the flag that's been going on there, is we've seen a nice change in tone, and I give Mark Carney a lot of credit for this, and it's not necessarily the key thing in the polling, but you see a kind of crispness, his impatience with people, I'll just go to some, you know, it seems like cosmetic stuff, he's impatient when people are late for meetings, he wants people to show up on time, he's used to kind of a high performance organization around him, and I think to some extent people are responding well to that. The question though is how do you get that kind of energy at the top that kind of desire for execution to change the way the federal government operates and to make a few things change that are going to have that economic impact? It's a very long way from that change in tone at the top to seeing the results that we need to see. You mentioned the change in tone and style, I've talked to several premieres about that,

6:18and they all give him high marks, but that might be because we lowered the bar so much with the past guy, and the description that I've been given is that Justin Trudeau would show up late for meetings with the premieres, not listen to them, would lecture them for the first 20 minutes, ignore what they said for the rest of the meeting, and then leave early. And Mark Carney shows up on time so much so that one premier I spoke with said they were doing a virtual meeting, and they were just so used to Trudeau being late that they showed up a couple of minutes late, for example, the meeting was supposed to start at 11. They logged in at 11.02 as the second person, and the first person there was Mark Carney waiting for the other people to join. So I think he's getting a lot of high marks there, but you said that our economy has been stagnating

7:18for a long time, and you mentioned GDP per capita. There was a big debate a couple of weeks back. The Globe and Mail did a big take out that Canada is poorer than Alabama, and those of us that have been paying attention to GDP per capita for some time weren't shocked by that, but it sparked a conversation saying, okay, how did this happen, but also is GDP per capita a good measurement of the economy? And lots of folks came out saying, that's a horrible way to measure the economy. What about our health care? Well, that's not doing so great at the moment as well, and there's other things. But is GDP per capita a useful tool, one of many useful tools, is it a good measuring stick for an economy? It doesn't tell us everything we want to know, but it tells us a lot. GDP per capita is correlated with a lot of the things that we care about. It's correlated with employment, it's correlated with wages, it's correlated with how able we are

8:21to afford the necessities of life and going beyond the necessities of life. One of the things that's convenient is that it's measured in very similar ways pretty much around the world. So if you want to see how you're doing relative to the United States, if you want to see how you're doing relative to Europe, it's a number that everybody kind of understands, or at least accepts, whether we all understand it or not. That's another question. But if you want to compare, for example, growth in average earnings of people who are working over time, GDP per capita is going to give you a pretty good read on that. And I like it partly because of the comparability around the world, and you're able to say, what is it that seems to support high living standards and growing living standards over time, and that's where you get to what I was talking about with respect to capital investment. And the problem, it's a little bit of a boiling frog syndrome. This decline has been going on for a long time, and the way that it sort of shows up in your daily life, it's a bit of

9:28at one remove from some of the key drivers of the economy over time. You go to the supermarket, you notice that coffee's gotten way more expensive, and you notice that beef's gotten way more expensive if you're the gas pump lately. You notice that up 13.9 percent last month. Well, if our wages were growing at the rate that they used to, if you were getting two or three percent real growth in your earnings, so on top of inflation, you wouldn't experience those things the same way. And I think Mark Carney has talked a good game. I do want to go back. I mean, thank you for that comment about the meetings with the premieres. I think the tone of the top matters a great deal. One of the things that is frustrating about the federal government over a long period of time now is how poorly a lot of it functions. The CRA, Love them or Hate them. They're at least there are some metrics out there that they're trying to beat, not always successfully, but other parts of our economy or the federal government's apparatus that you once would have said

10:31worked tolerably well, like immigration. It's a complete mess. And when it comes to making coherent policy and delivering on time, and for example, this whole project with the major projects office and trying to clear the way for infrastructure projects, I mean, we're simply not seeing the kind of action that we would need to see. And I think it's very helpful to have a prime minister who sets that kind of tone at the top. But he must find it. I haven't spoken to him about this. And I won't put words into his mouth. But he does have a reputation for being a bit impatient. And I imagine it's enormously frustrating for him to be trying to make this machinery move a little better. And maybe one of the things that people are responding to positively in this change at home is that they, you know, here's the guy who occasionally he lets it show. And it's not a good thing for him to be, you know, snapping at people in public and its own right. But it certainly shows that he's motivated and that he's trying to make a difference. And I think whatever our

11:34views are about some of his priorities or, you know, if you might be partisan one way or the other, it would certainly be nice to see a prime minister who's a little more able to make the things that need to happen. We want the CRA, you know, the tax side of things to work well. We want the federal government to be sending out its payments on time. We want them to be paying the public servants, whether they're paid too much or too little, but at least, you know, that ought to be working. We want the immigration system to work a little better. And these are all areas where the federal government has struggled for a long time. Well, the Phoenix pay system, which is how civil servants are paid has been a disaster for more than a decade. And I lived in Ottawa when that was really a huge issue. And well, if you live in Ottawa, you know a lot of civil servants. And I talked to people who were not getting paid for weeks or months. I talked to other civil servants who suddenly had $100,000 show up in their bank account. And they called and said, you've got to take this back and it wouldn't work. That was a pay system that was put into development

12:42under the Harper government. It wasn't ready. They were told it wasn't ready. So they didn't implement it. When the Trudeau government came in, they said, well, just go with it. And 10 years later, it still isn't fixed. And civil servants aren't being paid properly. That's a government that's putting up with incompetence. As opposed, you know, I agree with you, the new guy, such as he is, still a new guy a year in, doesn't seem to want to put up with that level of incompetence. You know, I got the access to information document showing that the Trudeau guys were warned. It's not ready. And they still said, go. And then spent, you know, we're here a decade later. But I do want to go back to the numbers and the GDP per capita. So I'm looking at our world and data. This is run by Oxford University, very reputable website. And they've got a, so I pulled up a comparison chart of Canada versus the USA

13:47on GDP per capita. And it's all US dollars at 2021 prices. So that's, that's their parameter. So everything is in 2021 dollars USD. And they go back to 1990. And in 1990, US GDP per capita was $44,000. Canadian was 40,000. You go up to 2010. And they were 59. We were 52. So the gap was already growing. But by 2024, it was $75,000 versus $56,000. How do you change that? How do you fix that? I mean, we are significantly poorer than our closest neighbor, the people that we trade with the most, the people that we compare ourselves with the most, regardless of the, the ongoing tension between Canada and the US, that's still our biggest comparison. How do we fix that?

14:47The roots of bad investment in Canada, this feeble level of capital investment that I mentioned, that I think is at the root of this decline, this relative decline are, are many, but there are some that really stand out. And because you were talking about the recent comparison with the United States and how the gap is wide. And I'll mention taxation. We tax capital investment much more heavily than they do. It's a tougher environment in Canada to make investments in machine or in equipment. Intellectual property products, which is a major category of investments that it's really surging in the United States, a little more complicated. But in general, I would say we have an urgent need in Canada to make our tax system more competitive in Donald Trump's first term. They did a lot of important changes to the US tax system that took a long standing tax disadvantage. I mean, the US used to get away with a lot because they're such a big

15:48dynamic internal market. They didn't worry so much about their competitiveness against other parts of the world. But as the competition for capital has kind of gotten more intense around the world with so many more countries now kind of in the race than used to be, the United States really changed the way that it thought about its investment position. And they made some changes that really undid a lot of the advantages that Canada had developed over the course of the 1990s. So corporate tax, that's going to be an interesting example of leadership for Mark Carney because it doesn't necessarily work all that well as the proverbial kitchen table issue. But he is in a position to make a convincing case that he's committed to doing something on this front that we are not going to turn this relative decline around until we do something that is going to spur investment. Now, how do you make it? You didn't ask this question directly. But just to interrupt, Bill,

16:50the argument from a lot of people is, well, no, companies need to pay more. We should tax them more. They need to pay their fair share. And I used to have a chart on my website years ago where I showed the corporate tax rate under Jean Crèchand and how, as he lowered it, starting in the late 1990s, except for the .com bubble bursting in the very early 2000s, he consistently lowered the tax rate and the amount of money taken in by the federal government from corporate taxes went up. And folks don't believe that. We had a government for the last 10 years that consistently used the Occupy Wall Street rhetoric of the 1 percent need to pay their fair share. And we've had all kinds of tax sites. We've got special taxes on banks and insurance companies, a surtax on them. We increased corporate taxes. April 1st, the alcohol

17:57escalator tax every year, the excite tax just on alcohol goes up. We've done all these things to make us less competitive vis-a-vis the US. And you can go back to Sir Wofold-Laurier and the Canadian tax policy regarding corporate taxes, whether it was a liberal or a conservative government for far more than a century was, we need to be lower than the Americans to make us competitive. Are we competitive still? Well, we're not competitive on corporate taxation and we're certainly not competitive on personal taxes as well. We've got a top marginal rate that's over 50 percent in the major pro-most of the major province is certainly in Ontario right now. That's for individuals. For individuals, yes. And they do run together. I mean, when you look at the parts of the economy that are really booming in the United States right now and you think about what's happening in the tech economy, I think you can make an argument that the taxation system, both for individuals and

19:02for businesses matters because the entrepreneurs that are moving to the United States, and that's a problem in Canada that we've faced for years, but it seems to have become more intensely lately. They're responding to both of those things. They're responding to the ease with which you can build up your capital, how well you're treated if you reinvest in the business, and also what the personal tax rates look like. So you made the point that I just want to come in and support you on this point about what I would describe as the elasticity of the tax base. The corporate income as a share of GDP, it doesn't change that much. When you raise the rates, the base shrinks, and you raise less per unit of activity there. When you lower the rate, then the base expands. It's the same with high income earners. It's a losing game to raise those marginal rates because you do see the base shrink. And one of the reasons it shrinks, if you're Canadian, is the activity

20:05goes to the United States. So we really need to get some urgency about that. One of the things, and just to take it back to Mark Carney and the change in tone, I'm sorry that when it comes to some of the fiscal messaging that he hasn't done more of what he has done when it comes to major projects, getting the investments moving, getting the economy moving, and diversifying trade. Because in those areas, he has said very clearly some things that people needed to hear. And even if it's taking a long time to get it going, you can see the effect of that kind of verbal leadership and maybe just a bit more than verbal when it comes to what the federal government is talking about with respect to trade diversification and getting some major projects moving. He should be saying the same things on the fiscal front because if the federal government, if he doesn't lead on that, then the objections, and you cited a few of them, some of the things that people are saying, that's what everybody is hearing. And we're not going to get past this idea that yeah, we should hammer the rich harder. And if they leave big deal, I think that's a big gap

21:12in the federal fiscal leadership that Mark Carney could should turn around. We hear a lot, if you pay attention to American media, we hear a lot about how California is a high-tax jurisdiction and a lot of people are leaving. They recently brought in a billionaires tax and a whole bunch of people in the tech world and Hollywood moved elsewhere. They made their principal residence elsewhere. I did a couple of quick calculations maybe six months ago. And, you know, Ontario's not great but not bad within the Canadian scenario. I think Alberta has the best tax rates for high-income earners, but just someone making it in the US to be considered 1%, you've got to be making almost a million dollars a year or more. In Canada, you get there just over 200,000. We do not have high-income earners in part because we punish you for earning high-income. So I did a $250,000 personal income tax compared Ontario to high-tax California. In high-tax

22:21California, you would keep more of what you earned than in Ontario and pretty much every other jurisdiction in this country. We are on the personal side, completely non-competitive. Do you see Mark Carney making any moves in that direction? You know, I've never had a conversation with the man about this sort of thing. So I don't know of red values, which doesn't necessarily drill down on that, but what would your assessment be? Would he look and say, look, we need to increase investment. We need to make it more competitive for corporations, but we also need to make it more competitive for eye-income earners. Do you see him ever lowering the corporate or personal income tax rate at the high level, as opposed to the low-hanging fruit is always at the lowest level, which everyone gets that? But do you see him potentially ever saying the hard part out loud,

23:21which is we're unfair to people at the top? We want to attract and keep these people at lower rates. I'm sure he thinks about us. He knows as well as anyone what talented people earn on the Canadian side of the border versus the US side of the border and how much they get to keep after tax. He's worked in international businesses. He has kids. Everybody that I know of thinks about the attractions for their kids of staying in Canada versus going and working somewhere else. I guarantee that it's on his mind. I can't read his mind in detail, but I guarantee he thinks about these things. The problem that I have, and this is where I would not give a high mark, to the new federal government, if we can still call it that, is on fiscal leadership. The federal budget is showing massive deficits as far ahead as the eye can see,

24:27and they're taking more and more risks as well. When you run up high debt, you run an obvious risk that the interest rate is going to go up and that's going to squeeze you, but also they're using their balance sheet very aggressively. They're investing in stuff that I suspect is going to turn out not to be very good investments. A lot of the stuff in green energy we know about on defense. We're just getting started, but I'm very concerned that the federal government's fiscal situation is headed nowhere good, and that's one of those areas where you would really like to see a bit more leadership on the part of the prime minister to say we've got to turn this around instead. If you just look at the baselines for spending that were set by the Trudeau government, this current government is overshooting them just as the Trudeau government repeatedly overshod its own baselines. If you don't do something about that, how are you going to find the room to lower taxes? He's got to get control over that spending. He's got to get control over that

25:29boring. He was critical of the Trudeau government for, in his own words, I don't have the direct quote in front of me, but he was critical saying that they increased spending on average 9% a year, and then he was bringing in his austerity budget. When you look at total spending, not just program, because I believe you have to look at total spending, including what we're spending on servicing the debt, total spending, his austerity budget, still increased spending by 7%. That's unsustainable. Yes, one of the things that really disappointed me was this latest move to turn the GST credit into a renamed benefit. Having groceries, other people have pointed this out, I'll just underline it, putting groceries into the name of the benefit was all the more ludicrous because there is no GST on groceries. This is an increase in an income

26:36support program that when you're running these big deficits, it's paid for with borrowed money. And so it's just viewed in isolation. It's an unsustainable thing. You're giving this new kind of enhanced welfare program. You're putting it in place on the basis of money that you're borrowing. So you know that in the long run, you're going to have to reneg on some of these promises. That was a crazy move under current circumstances, and it was an unforced error. There was no reason that they had to do it that way. There were other things that they could have done to address the affordability issue. Such as what? What else could you have done? Because I would argue that if you're paying for people's groceries, if a government has to pay for your groceries, that's an admission of failure that the economy isn't working for people. Yeah, absolutely. Well, the problem with this slow rot that we're experiencing as a result of weak business investment and therefore people's earnings aren't growing because we're not getting

27:38any more productive is that's not really how it manifests to people. As I was saying earlier, you're not so aware of how your paycheck is doing relative to inflation. I mean, people are disappointed if they don't get a decent increment at the end of the year, but what, but you know, that's once a year and the visit to the grocery store, that's once a week. So the high prices are kind of what hit you between the eyes. But we've seen situations before where you had some real leadership on the part of the federal government to try and lead the conversation in a more productive direction. And I'm going way back here, but given the fiscal situation, I hope people will forgive me. Back in the 1990s, the federal government, they had these kind of hokey ads on TV where you would see a loony and you'd see a laser cutting a chunk out of it. And they would say, this is how much interest payments are taking out of your tax dollar. We're not seeing anything like that from the federal government now. It's all about how we're going to make your life better by giving you

28:41more money. We're going to subsidize this. We're going to subsidize that. And there, we're a bit addicted to it by now. It's like that GST holiday. I was thinking, this is fiscal junk food. You know, if you keep getting fed this sort of stuff, it changes your taste and food. And I think the federal government needs to be a lot stronger in saying the root of our problem is not going to be solved by more subsidies to consumption. That's not what we need. We need more subsidies to production or we need to punish production less. We need to reward investment more. And so we're going to change the conversation. That hasn't happened. All right. We need to take a quick break. But when we come back, we'll talk about the labor force, the unemployment rate and how fast the public sector is growing vis-a-vis the private sector back in moments. There were so many missed opportunities to catch this before the devastating thing happened. The third of them we found literally in

29:44the phone book. These people were not afraid. They knew that nobody was effectively hunting them. They knew they had escaped justice. That they were going to die in their beds. When I give talks to law schools is that the charter ultimately is empowering a minority. And it's empowering a minority that's a guild across the country. And it's a fairly elite guild and the guild is lawyers. The families who were split by referendum and brothers and sisters who never talked to each other for years after we referendum. Because they were so angry at each other because of the emotions on both sides. The reason he was assassinated was not because he was trying to put a satellite into space, but because the gun that he was creating had other applications that made him and the gun very dangerous. It's finally here. A new season of Canada did what? Post media podcast that revisits the big Canadian political events you might think you remember and tells you the real story you never knew. I'm Tristan Hopper. The voices you just heard are from

30:46our brand new season two. We will unpack some of the pivotal moments that helped to find our country. Often without a vote, usually without a plan, and sometimes without anyone admitting what they've done. We'll find out how Canada became a welcoming paradise for untold numbers of Nazi war criminals after the Second World War. We let them build monuments to their wartime exploits and even ended up honoring a Nazi fighter in the House of Commons. And I'm sorry to say that none of that happened by accident. We'll bring you the little known story of a troubled Canadian rocket sciences who turned to a sinister life of selling giant guns to terrible people. And if that sounds like a spy novel, it ends like one too. You'll hear the behind-the-scenes story of Quebec's attempted secession from Canada and how very close we came to a political crisis that would have made Brexit look like a picnic. You'll hear about how the much celebrated charter of rights and freedoms turned into something its creators never wanted and how many of the most extravagant

31:48warnings about the document were all quickly proven true. And you'll even hear about how authorities bungled multiple chances to stop the deadliest terrorist attack in our country's history, and then proceeded to pretend it never happened. These aren't dusty history lessons. There are stories about power, ambition, madness, and the things about Canada that a lot of people would rather ignore. But not you, you won't want to miss an episode. Subscribe to make sure you get all of season two starting March 2026 anywhere you get your podcasts. America leads the world in medicine development. It matters. We get new medicines first, nearly three years faster. Five million Americans go to work because we make medicines here at home, and not relying on other countries keeps us safe. But China is racing to overtake us. Will we let them or will we choose to stay ahead? When America leads, America cures. Let's tell Washington to keep

32:49us in the lead. Learn how at AmericaCures.com. Pay for by Farma. Protein is now at Starbucks, and it's never tasted so good. You can add protein, cold foam to your favorite drink or try one of our new protein lattes or matcha. Try it today at Starbucks. Here's a quick podcast for all you true crime fans. The case of the missing Reese's. It was me at the store with my mouth. Motive, um, their Reese's. What was I going to do? Stop myself. Tune in next time to see if I do it again. Spoiler, I will. Wow, that had everything. Reese's suspense. Reese's. Despite what the minister of artificial intelligence had to say in the House of Commons recently, the unemployment rate in Canada is not rising due to the war in Iran. Last week or so,

33:51the unemployment rate rose to 6.7%. We added 347,000 people to the population 15 and over that they measure for the unemployment rate over the last year 82,000 entered the labor force. There were 51,000 who got a job and 30,000 were added to the unemployment roles. But when you look at where those 51,000 new jobs came from, it was almost all the private sector 49,000 private sector jobs added between February 2025 and February 2026. Bill, um, is that the sign of a healthy economy? It has been a very disturbing to see how the growth of public sector employment in Canada has outpaced growth in private sector employment. And so much of it is deliberate. I mean, it's, I think people, a quick comparison, it was 49,000 were added in the public sector. 49,900,

34:5922,900 were added in the private sector, but there was a drop in self-employed people of 21,000. So pretty much the only growth was in the public sector. Yeah. And over time, over the last decade, the public sector has increased its share of employment in Canada fairly relentlessly. I mean, we're now back to where we were ahead of all the fiscal problems that we ran into in the 1990. So the progress that was made in slimming down the public sector has essentially reversed since then. The federal government is particularly at fault here. I have some sympathy with the provincial governments. We could run our health care system more efficiently. It's true, but over time, it does make sense that there'd be more employment delivering health care services because the population's getting older and we're able to treat things more than we used to be able to do education. Again, maybe we could be more efficient with what we're doing in that sector, but it's

36:02very labor intensive. You do need people providing education, and there are a lot of front line services, especially, you know, provincial municipal level. However, efficiently, they're delivered. There's no question. You need cops on the street. You need people out there working on the roads. The reason I go on at some length about that is because the federal government is so different. The federal government has a few duties that do require people on the front lines. And so we would miss them if they didn't provide us with defense. In fact, we'd like them to do more that. There are certain types of things when it comes to administering things at the border, administering the tax system, and so on. We might not love them, but they're necessary, and we need them done, and they require people. But the explosion and employment at the federal level, so much of it has been in sort of policy departments. These aren't front line people. These are people that are right. They're not delivering those services. They're not delivering services. And I think that the federal government is actually long past the point where adding a person

37:05adds any output at all. I think they've gotten so big that it's dysfunctional, and you've got a lot of people who are just using up each other's time, you know, in communications, outward looking communications, because the federal government is such a communications oriented organization, rather than service delivery, writing each other emails. They could actually do a better job if they were slimmed down. The true government ramped up hiring like crazy. I think perhaps it was quite I think it was at 40% under control. Yes, the head, the headcount expanded dramatically, and there is no way you can argue. And with the parliamentary budget office, that's a very strongly word of comments about this, that there was anything like a proportional increase in the value of services that we got. And so you could trim that way back. And Mark Carney has talked about that. The difficulty that he faces is that when you turn to the public sector and you say, okay, now

38:05where would you trim? There's a bit of a, there's an old story about how the RCMP's musical ride was first on the chopping blot back in the 1990s. It's kind of a vivid example. They will not serve up to you the areas that will be the easiest to chop. They will serve up to you some of the painful areas first. And so we're hearing stories about the federal government cutting back in areas that we would probably say are useful to get like statistics or some of the fundamental research that they do. And that's something that Mark Carney has to get a handle on. Because it is crowding out the private sector. I have said already and I'll say it again, we have a problem with private sector investment and productivity in this economy. One of the reasons that we are seeing people losing their jobs in the private sector is because we are losing competitiveness. We've got a big trade war going on with the United States as everybody knows. We've got other parts of the world that have continued to power ahead. And we're not equipping our workers properly. And one of the reasons we're not equipping our

39:08workers properly is because the public sector is crowding it out. For every dollar that you spend on something in the public sector, consumption of all the things that governments use up as including paying people, that's a dollar less that's available for private sector consumption and private sector investments. So there's a bit of a slow strangle going on here when it comes to the private sector in Canada, just getting less room to breathe, less nutrition if you like and less money available for investment because of the growth of the public sector. Can you explain a bit more how that crowding out works? Why does the public sector spending so much hurt the private sector? How and why? If you think of an economy that's operating over time at capacity, so leaving aside the effective cycles and with inflation, having been around target now, it's clear that the Canadian economy on average has been operating close to capacity for a while.

40:09So under those circumstances, if one thing grows, something else has to shrink. We can only produce so much output at a time. And what concerns me in Canada is that we have become a very consumption oriented economy. The government, of course, they talk about investment. They like to use the word investment. But when you look at what government is doing, mostly it's providing, you know, it's paying wages and salaries of public servants. It's using things up. The amount of actual investment that yields lasting benefits over time in the public sector is actually quite small. In the private sector, you've got investment that happens in plant and equipment and machinery that businesses invest in. You also in Canada, this is a big deal for us. There's a lot of investment in housing. You add all those things up. It all has to work out. We can produce so much. And so you look, okay, how much of it's getting consumed? How much of it's getting invested one way or another?

41:09And over time, what we've seen is that the public sector has just generally gotten bigger. One of the things that really concerns me about all this deficit spending is that the same thing is happening in a way that's a little harder to see. If the government tells you, we're going to provide this new income support and we're going to pay for it with borrowed money, then at the time, there's no additional tax raise to pay for it. You get to the end of the year, you might have in your portfolio, you got a few more government bonds, you feel richer. But the country isn't richer because they took that money and they turned it, they gave it away and most of it got consumed. So over time, it really does matter how much you invest versus how much you consume. And as the government sector has gotten bigger, we've seen less investment and more consumption. Well, the the amount that we're spending on that government overspending is unreal. This year, it's going to be $55.6 billion in this fiscal year. That's more than a billion a week just to pay off the minimum payment on the national credit card. Next year,

42:13it'll be $60 billion, then going up to $66, then $71. That crowds out spending that could be going into actual frontline services. Yes, it does. And the fact, so Mark Carney promised he would get that under control and his own projection say he won't. No, that is an area where there has been no significant change in direction. We've had two problems that have continued. One is that the projections were always kind of irresponsible. Yeah, the ratio of debt to GDP is going to level off after a while and then go down sometime in the out years. So that was never made any kind of sense of urgency. There's nothing like in my in my view, there's nothing like a balanced budget to exercise some discipline. If you're targeting the debt to GDP ratio, that doesn't speak to anybody. That's not a serious constraint. So that was one problem. The other problem was that they always overspent. The projections we learned over time just weren't anything that you could bank on

43:16because you knew that at the end of the year, they would jam all this spending in the last minute. And so that has continued and that's very disturbing to see. I think that what is on many people's minds right now is they look around the world and they say, well, everybody's doing it. Just look at the fiscal inferno that's burning south of the border. No, that's true. But to me, that doesn't say, oh, it's okay for us to be the same. What that says is there's way too much hyper extension of governments all around the world. That's why we're seeing long-term interest rates moving up. And it may be that Canada doesn't look as bad as the United States. Maybe we can borrow at a lower rate than they can. But that's going to be pretty cold comfort if the rate on 30-year bonds goes up, you know, three, four, five, six, seven, eight percent, which can easily happen. It's happened in the past. Yeah, maybe we're borrowing at a lower rate than they are. But all of a sudden, that burden that you mentioned is going to get, you know, one quarter, one third bigger. And at that point, you're talking about serious tax hikes or program cuts just to stop yourself from

44:18getting further into the hole. Yeah, the American overspending is out of control. But unlike them, we're not the reserve currency of the world. We don't have that sort of leverage that they do. How much of the fiscal problems, the economic problems that we're facing are a result of the trade war with the US, the tariffs, etc. And how much of it is just bad policy? Because the government tends to try and say it's due to what's happening in Washington or in, you know, the last little while, they blame both the housing prices being so high and the unemployment rate being so high on the war in Iran, which started after the statistics they were rebutting had been collected. But how much of this is our own fault versus external factors?

45:20Well, I would say that it's mostly our own fault. It's true that Donald Trump's trade war is hurting us. Businesses do not like uncertainty with Canada as exposed to the United States as it is. You can see the impact on confidence. And I'm sure that that has, there are clearly some sectors like steel, for example, where it is doing a lot of damage. But this problem that we have started more than a decade ago. And so Donald Trump was not president during most of that time. And when he was president, he wasn't hitting us with the same kind of tariffs that he has in his second term. So you have to look much more broadly to understand why Canada has been in such a mess for a while. And I think it's a bit of a problem that we've got Donald Trump to blame it on now. If we're spurring us more effectively to action, get another pipeline to the west coast, maybe even some fossil fuels shipable off the east coast. That's harder to do. But we're certainly seeing reasons why you would want to do that now. Maybe it's going to do us a little bit of good.

46:23In the short run, though, what it ought to be making us think about is, what can we control? Well, we can't control Donald Trump. We can certainly control our own corporate tax rate. We can control the speed with which we issue permits for various things. We can control our impulses to slap silly taxes on things. I thought earlier, we might get onto the impulse that causes governments to just do things to hurt rich people because it sort of feels good and it's good populism like slapping taxes on expensive boats and airplanes and ships. And then you pull back on it when you realize how much harm is done. All kinds of things. They brought in the luxury tax on planes and boats and such. There was a boatmaker in the Kelowna area that packed up shop and moved to Texas. Bombarjay didn't sell a single plane in Canada for their, you know, Crimea river, rich people didn't buy jets. They didn't buy a private plane. Well, those private

47:31planes employ an awful lot of people making good money out at plants in Mississauga and Montreal. So we heard ourselves with those bad policies. We did. We backed off or the government backed off when the harm that you talked about became evident and it was predicted ahead of time. Other countries have tried taxes like that. Again, for populist reasons and they pull back on them because they realized the damage that it does and the silliness of it, taxing expensive cars. Well, that looked okay, I suppose, when the price of cars was a lot lower. But now they're still talking about switching us all over to EVs at some point, which are a whole lot more expensive. So they'll back away on that one too. Those are all self-inflicted wounds. None of that stuff needed to happen. So I do think Donald Trump is doing us harm and I do think it would be good for us to respond to the harm that he's doing us with some of the things that we could do to diversify our trade and make ourselves more competitive. Okay,

48:33if we're going to face a 10% tariff on something to the United States that used to be tariffed at zero, well, let's make ourselves 10% more competitive and then we'll just suck it up and we'll you know, we'll still be employed and we'll still be exporting. The Roth started back in 2015. And I think that to say that everything that's gone wrong with the Canadian economy and the stagnation of our living standards since then is all the fault of Donald Trump. That's just getting it all wrong. Yeah, it's frustrating trying to make arguments for how we can improve when that easy argument back is but Trump. And you know, even on something as you know, core is food inflation. Look, the overall inflation rate went down in February because gas prices dropped compared to February of 2025. That has clearly reversed in the past couple of weeks, but food inflation has been persistent and we're persistently higher. And you say, well,

49:34you know, we need to fix this. You know, here's some ideas how to fix it. Don't you know that Donald Trump is hurting us? That cannot be our answer. Well, because you mentioned food inflation, I'll mention supply management. I mean, we have cartels that keep the price of dairy products and poultry and eggs higher than they would be if we had a free market back. This is going back decades now, but Canada used to be a huge dairy exporter. Cheese used to be our second most valuable export after timber. It's hard to believe now. Then supply management came along and we now have this very struggling inefficient industry. Donald Trump and the American dairy farmers would like to see us lower some of the barriers. They should get their wish. They'd suddenly find they got a fierce competitor on their hands, but it's harder to get rid of these things when you got Donald Trump doing what he's doing. So we have to get past that. And I would love to see

50:34the federal government kind of seize the moment and make a few of these changes that are politically difficult on the very straightforward argument that we have to make ourselves more competitive. We have to make ourselves more efficient and more resilient. One of the things David Crane had a piece just recently, David and I argue about many things, but I thought he had a nice suggestion that the Prime Minister ought to be providing us with kind of a state of the nation report card on how we are doing in a whole lot of areas, including the ones that we've just been talking about and to sort of put those markers down to get his government to perform a little better. I'm not sure that's exactly how David would have put it, but I think somebody with Mark Carney's orientation, that kind of business background, I think he could do a lot if he were to say here are the things that are going to be different in a year's time and a couple of years time.

51:37And that would get back to something we were talking about earlier in this conversation, which is the difficulty that he's making. Yeah, he attends meetings on time. He wants accountability. He wants the people around him to be delivering, around him to be delivering what they say they're going to deliver when they're supposed to and to do it right. That's all great, but to make that example sort of propagate through the federal government, all of its agencies, all of the things that it does down to the front line, that's very hard. And I think it would be useful for him to get out there and say, here are some indicators of performance where you're going to see a change for the better in a year's time and a couple of years time. He could do that still. He's got a bit of runway in front of him. And maybe that would make the example he's trying to set at the center propagate a little better. All right. So a C from Bill Robson, let us know what you think. Leave a comment. Great. The prime minister. Thanks for this time, Bill. My pleasure. Thanks for having me. Full comment is a post media podcast. My name is Brian Lilly. Your host, this episode was produced

52:39by Andre Pru, theme music by Bryce Hall. Kevin Lippin is the executive producer. Please make sure that you hit subscribe, leave us a review. Thanks for listening. Until next time, I'm Brian Lilly. There were so many missed opportunities to catch this before the devastating thing happened. A third of them we found literally in the phone book. These people were not afraid. They knew that nobody was effectively hunting them. They knew they had escaped justice that they were going to die in their beds. When I give talks at law schools, is that the charter ultimately is empowering a minority and it's empowering a minority that's a guild across the country. And it's a fairly elite guild and the guild is lawyers. The families who were split by referendum and brothers and sisters who never talked to each other for years after we were formed because they were so angry at each other because of the emotions on both sides. The reason he was assassinated was not because he was trying to put a satellite into space, but because

53:42the gun that he was creating had other applications that made him and the gun very dangerous. It's finally here. A new season of Canada did what? Post media podcast that revisits the big Canadian political events. You might think you remember and tells you the real story you never knew. I'm Tristan Hopper. The voices you just heard are from our brand new season two. We will unpack some of the pivotal moments that helped to find our country. Often without a vote, usually without a plan and sometimes without anyone admitting what they've done. We'll find out how Canada became a welcoming paradise for untold numbers of Nazi war criminals after the Second World War. We let them build monuments to their wartime exploits and even ended up honoring a Nazi fighter in the House of Commons. And I'm sorry to say that none of that happened by accident. We'll bring you the little-known story of a troubled Canadian rocket scientist who turned to a sinister life of selling giant guns to terrible people. And if that sounds like a spy novel,

54:47it ends like one too. You'll hear the behind-the-scenes story of Quebec's attempted secession from Canada and how very close we came to a political crisis that would have made Brexit look like a picnic. You'll hear about how the much celebrated charter of rights and freedoms turned into something its creators never wanted and how many of the most extravagant warnings about the document were all quickly proven true. And you'll even hear about how authorities bungled multiple chances to stop the deadliest terrorist attack in our country's history and then proceeded to pretend it never happened. These aren't dusty history lessons. There are stories about power, ambition, madness, and the things about Canada that a lot of people would rather ignore. But not you, you won't want to miss an episode. Subscribe to make sure you get all of season two starting March 2026. Anywhere you get your podcasts.