Canada stands at a crossroads today, as emerging crises compound long-standing problems, all adding up to one of the most daunting moments in the history of this country.
Productivity has been lagging for years, recently sliding into a decline in living standards. The military has been left to stagnate for most of this millennium, a dereliction of duty whose danger is only now becoming clear.
Trade wars are brewing with China and the United States. Hostile powers are eyeing Canada’s North. The housing shortage has left a generation of young Canadians wondering if they will be able to afford a home of their own.
Any one of those problems would be enough to dominate the agenda of the next government. Together, they add up to a turning point in Canada’s history.
For that compounded crisis, the Liberals and Conservatives propose fundamentally different economic visions – and offer two different paths from the crossroads.
Pierre Poilievre and the Conservatives offer a break with the recent fiscal and economic trajectory of Canada, aiming for a leaner government that would aim to clear away obstacles for the private sector.
The party’s embrace of cutting capital-gains taxes is a welcome move, but the policy needs fine-tuning to avoid further inflating the housing market. Still, the Tories have correctly recognized that more dollars in the hands of private investors is a necessary first step to an economic reinvigoration.
But the Conservatives have declined to go further and faster in a way that would fully reverse Canada’s economic decline. Mr. Poilievre says he would appoint a task force to examine wide-ranging tax reform. That would represent an opportunity for a more aggressive revamping of investment taxation, should the Conservative Leader win government.
The Conservatives are also headed in the right direction on deregulation, reducing the size of the federal government and accelerating the pace of megaproject construction, including pipelines. That push, however, must be balanced against the realities of the need for buy-in from Indigenous communities and a realistic climate plan that will avoid trade friction with the European Union.
On the whole, the Tory plan can be summed up as a good first step toward unleashing the energy of the free market.
Canada's national interest needs new energy
Mark Carney and the Liberals propose, not a break with the past nine years of interventionist high-spending policy, but a doubling-down – the bet being that Mr. Carney can succeed where Justin Trudeau failed, repeatedly.
Rising government spending and debt levels, new government agencies and an evident distrust of the free market: those were Mr. Trudeau’s hallmarks, and so far they appear to be that of his successor, too.
Mr. Carney has reduced the federal carbon fuel charge to zero and has said he will cancel an increase in the capital-gains tax. But those moves look to be made in a concession to political reality rather than born of conviction. (Indeed, the Liberals are proposing two new types of carbon levies.)
Despite Mr. Carney’s professed break with the Trudeau government, the rhetoric and approach are remarkably similar.
The Liberals have vowed to “catalyze private sector dynamism” in order to pursue “ambitious initiatives that bring a critical mass of stakeholders together and connect their ideas to the marketplace.” They have also promised to “ensure the federal government’s capital investment dollars catalyze multiple times their value in private investment.” One promise was made in 2016; the other was last Saturday.
The Liberal Leader contends that private-sector investment retreats in a crisis and that the federal government must fill that void. He does not seem to spare a thought for the notion that Liberal intervention, and growing federal debt, helps to crowd out private investment.
That said, there are Liberal proposals that do hold promise of reinvigorating Canada’s economy: creating energy corridors, reducing approval times for big projects, slashing interprovincial trade barriers and driving down development fees for housing, to name the most obvious. (The Conservatives have similar plans.)
The country is at a crossroads, and voters must pick a path: the Liberals, with a promise that, this time, high spending and an interventionist Ottawa will steady the economy. Or the Conservatives, with a vision for a federal government that looks to clear the way for the private sector.