Ken Coates is a Professor Emeritus at the Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan, and the President of Coates Holroyd Consulting Inc.We live in economically perilous times, produced by a decade of financial mismanagement by the Justin Trudeau government, the global pandemic, the long-term limitations of Canadian industry and business, and the turmoil caused by US President Donald Trump’s quixotic and disruptive tariffs. These successive crises compelled Canadians to make significant financial sacrifices in the collective national interest. To date, despite considerable personal hardships, the Government of Canada has gone out of its way to shield citizens from fiscal realities.Starting in the first months of the COVID-19 outbreak, the Government of Canada made billions of dollars in commitments without expanding government revenues, creating the conditions for private-sector growth or reducing core expenditures. With an experienced financial manager at the helm after Mark Carney’s ascension to the prime ministership, Canadians expected a more rational and effective approach to the management of the country’s finances. They are still waiting.Instead, Prime Minister Carney speaks grandiloquently about his government’s plans. Depressing accounts of Canada’s productivity shortcomings, declining competitiveness, and sustained failures in the housing market do little to convince the Liberal Government to change its rosy outlook. Their primary weapons — MOUs with international trading partners, well-publicized lists of potential major projects, and Prime Minister Carney’s mantra that Canada will have the “strongest economy in the G7” — have not produced a promised economic rebound.The Prime Minister says, repeatedly, that the country is not in financial difficulty and that Canada can carry even more debt. His banker’s demeanour appears to have mollified many Canadians. To be fair, Carney accepted a bum hand when he became leader, but the Prime Minister has followed the Trudeau playbook much more than he has laid out a new fiscal plan for Canada..With few exceptions — the collaboration of former prime minister Jean Chrétien and former finance minister Paul Martin in the late 1990s being the best example — Liberal governments have followed a similar fiscal approach, spending aggressively during prosperity and doubling down on government expenditures during economic hard times. Canada has routinely reversed the formula popularized by the economist John Maynard Keynes, which called on governments to save during good years and spend the accumulated wealth during hard times. Liberal governments and, to be fair, some Conservative administrations dropped the savings and wealth-building part of the equation.Trudeau missed an excellent opportunity in 2020 to get it right during COVID. Canadians knew that the pandemic required extraordinary measures. The public may well have been supportive of emergency increases in taxes and other fees to cover the costs of the steps needed to deal with the epidemic. We will never know. Trudeau did not trust Canadians enough to call on the citizenry to understand the fiscal burden of national distress.In earlier crises, particularly during World War I and World War II, major financial sacrifices were expected. Rationing of key supplies addressed widespread shortages of food, gasoline, and other goods. Citizens contributed billions of dollars to War Bonds during both World War I and World War II. Recycling efforts ramped up across the country, providing critical supplies for the Canadian industry and maximizing public participation in the war effort.Not now. In recent times, the federal government has abandoned all pretense of direct citizen engagement, financing the pandemic response through massive spending..The financial uncertainty unleashed in January 2025 by US President Donald Trump produced Canadian war-style rhetoric that suggested change was imminent. “Elbows Up” sloganeering made for effective electoral posturing, but the policy response has been shallow. Canadians responded to this faux appeal for national unity by cancelling holidays to the United States (opting for Mexico more than Thunder Bay!) and taking American beer and spirits off our liquor store shelves. We showed them! But to little real effect on either side of the Canada-USA border.Prime Minister Carney urged Canada to get on a “wartime footing,” but has subsequently proceeded as though there was no crisis. The January 2026 announcement of the Canada Groceries and Essentials Benefit — a repackaged and enhanced Goods and Services Tax Credit — put a small bandage over the hemorrhaging finances of low-income Canadians while costing the cash-strapped federal coffers more than $12 billion. At the same time, massive expenditures on national defence, infrastructure, social programs, emergency relief for Canada Post, and an overly large civil service undercut any federal claims for frugality.Many Canadians were hurt by the economic fallout from the pandemic, and the Trump-caused economic disruptions are cutting deeply. Add in the structural weaknesses and lack of competitiveness in significant sectors of the Canadian economy, and one sees a country in economic peril. Spending vast sums during comparatively good times, as the Trudeau government did, did not create sustainable prosperity; over-regulation and a swollen public sector sucked much of the vitality from the Canadian economy. The open-pocketbook approach by the Carney administration adds to the deficit and debt without providing significant evidence of a sustainable economic renewal.Truth be told, Canada is in significant economic difficulty. Each new social program or benefit is now a financial charge on our grandchildren and great-grandchildren. Canada needs frankness and truth-telling rather than platitudes, slogans, and fancy speeches. The economy will not be strengthened by the current approach of the Liberal government, which is based on protecting Canadians from fiscal realities, refusing to require real sacrifices, and pretending that all will be fine with a few more government agencies, programs, and subsidies. Canada is capable of much more, but the Government of Canada currently shows neither the courage nor the vision to forge a new economic future.Ken Coates is a Professor Emeritus at the Johnson Shoyama Graduate School of Public Policy, University of Saskatchewan, and the President of Coates Holroyd Consulting Inc.
