“Look at 1945,” Finance Minister François-Philippe Champagne told reporters outside the federal cabinet’s two-day meeting in Toronto, when asked repeatedly about the budget he is expected to deliver next month.
It’s pretty unusual for a finance minister to compare his coming budget to the end of the Second World War, so one might have guessed it would provide some revealing clue about the first fiscal blueprint of the Carney government. But it didn’t reveal much.
Mr. Champagne seemed quite taken with the analogy, which in his telling was about a moment in history when it was time to rebuild Canada. He mentioned it four times and referenced the legendary role of then-reconstruction minister C.D. Howe, who is credited with engineering Canada’s industrial economy. Mr. Champagne talked about the need for economic ambition. Nine times. It’s like 1945. Got it?
But there will also tough choices, we were told. Prime Minister Mark Carney said on Wednesday that the budget will focus on both austerity and investment; his fiscal mantra has been “spend less, invest more.”
Mr. Champagne also wanted to tell Canadians – repeatedly – there will be spending cuts. In a folksy way.
“Canadians have been tightening their belts for quite some time. Times have been challenging for many families across the nation,“ he said. ”It’s only normal that, from a government perspective, we do the same."
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That was a favourite analogy, too: belt-tightening. When asked how he will cope with the loss of revenues from retaliatory tariffs – which the Liberal election platform had projected at $20-billion – Mr. Champagne said families understand belt-tightening. He said his mother gets it, too.
Those cuts are one clue we’ve had for a while. Mr. Champagne wrote to his fellow ministers in July asking them to find savings of 7.5 per cent of operational spending next year, which would rise to 15 per cent in 2028-29.
But that’s perhaps $10-billion of belt-tightening next year. And Mr. Champagne sure sounded like he’s got a lot of things to pay more for at some unspecified cost, without a clear line between spend and invest.
He talked about infrastructure, trade corridors, defence, industrial supports “to help certain sectors to pivot,” building affordable homes, and being there for Canadians in tough economic times – it all started to sound less like belt-tightening.
There was no answer on the size of the deficit and no mention of the national debt, or the Liberals’ vague election promise to ensure the debt-to-GDP ratio “declines over the budget horizon.”
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So what is this government’s fiscal policy anyway? Don’t expect to follow Mr. Champagne’s clues to unlock the mystery of the budget surprise. They were vague mantras and ill-fitting analogies. Something about 1945; nothing about deficits and debt and constraints. It is not just details that are being kept under wraps.
“We don’t know what the government is thinking,” said economist and C.D. Howe Institute fellow-in-residence Don Drummond, later that day.
If the government is really planning major changes to the country’s economic structure – which Mr. Drummond thinks it should – it can’t expect the public to buy-in if it delivers a big, sudden surprise.
The Liberal election platform forecast a $62-billion deficit this year and a $60-billion deficit next year. However, Mr. Drummond and the institute’s Alexandre Laurin published a paper in July that estimated economic and policy changes would already increase those projections to $92-billion and $75-billion, respectively.
Who knows? There are now a lot of plans in the air that don’t appear to be in the projections. The Liberal platform had a list of spending promises that could be cancelled now.
Mr. Drummond fears Mr. Champagne is going to deliver change that Canadians aren’t prepared for, or worse: a budget that doesn’t launch the big structural changes needed to address pressing economic challenges such as low productivity. And that it might pile on a lot of debt.
Mr. Champagne’s analogy to 1945 certainly seems to have a big hole in it. That was when the federal government pivoted to an effort that spanned several years to whittle down the massive debt built up in the Second World War, running budget surpluses to return the public finances to health. In 2025, the clues don’t suggest there’s a lot of concern about debt.