Robert Lyman is a retired energy economist who served for 25 years as a policy advisor and manager on energy, environment and transportation policy in the Government of Canada.George Koch is the Editor-in-Chief of C2C Journal.Prime Minister Mark Carney promised a swift, businesslike reboot of a Canadian economy battered by a decade of overspending and regulatory overreach. Yet just over two months into his term, his public statements are often hedged or shrouded in ambiguity and his policy direction remains unclear.Carney has promised to make Canada an energy superpower and launch large industrial and infrastructure projects from coast to coast. His mandate letter to his new cabinet stressed the need to act quickly. But after the One Canadian Economy bill was tabled last month, Carney said he would only support a new export energy pipeline if absolutely everyone else agreed first. “We must have a consensus of all the provinces and the Indigenous people,” he told reporters, speaking in French. “If a province doesn’t want it, it’s impossible.”He’s said to be under pressure from Trudeau-era ideologues in his new cabinet hostile to the oil and natural gas industry — the nation’s number-one source of export earnings. His government was notably absent from Calgary’s recent Global Energy Show, a vast event that attracted leaders and officials from around the world.With Canada’s competitiveness slipping further behind the United States, Carney faces stark choices on key economic and fiscal policies: stay the Liberal course or make the hard, pragmatic decisions that will determine Canada’s future prosperity — and his legacy. Decision time is coming up in multiple areas. Canada’s accumulated federal debt now approaches $1.3 trillion, with interest charges costing taxpayers more than $1 billion per week. In March, the Parliamentary Budget Officer projected a $42 billion deficit for fiscal 2026 — the largest in Canadian history. Yet the Liberals’ “Canada Strong” 2025 election platform promised to increase spending by $130 billion more than Trudeau-era commitments. And that was before Carney bowed to U.S. pressure and said he would hike defence spending to 5% of GDP, an utterly irresponsible vow.All of this puts Canada on a path to fiscal disaster. A much more prudent alternative is available: mirror former Liberal Prime Minister Jean Chrétien’s 1995 spending review, asking each federal government department to identify 10, 20 and 30% cuts, then implementing targeted reductions that preserve core services while restoring fiscal balance.Canada’s industrial carbon tax — currently $95 per tonne of CO2-equivalent emissions, rising to $170 by 2030 — is dragging down whole sectors of the economy. Companies largely pass the costs onto customers; exporters unable to do so will lose sales, lay off workers and stop investing. Here, Carney could shift to a cap-and-trade system — similar to Quebec’s arrangement with California — that sets a realistic market price on emissions and encourages innovation. Alternatively, freezing or reducing the rate would reduce political friction with Alberta and Saskatchewan without Carney entirely sacrificing his coveted climate credentials.Critical infrastructure projects also hang in the balance. The previous Liberal government enshrined the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) into legislation. Some interpret UNDRIP as granting an effective veto to First Nations over any resource project affecting Indigenous lands or treaty rights. Carney must clarify that while good-faith consultation is essential, UNDRIP does not confer absolute veto power. That reassurance would give investors certainty, honour reconciliation principles and keep vital projects — and the jobs they create — on track.Ottawa’s Clean Electricity Standard aims to eliminate hydrocarbon-fired power generation by 2035 at a net cost of $58 billion, according to Environment Canada. Provinces warn that forced phase-outs will raise electricity pricing and trigger blackouts. A pragmatic extension of the deadline to 2060 — or permanently allowing a share of thermal generation — would lower costs and ensure stability of electricity grids.Regulations capping oil and natural gas sector emissions in order to force a 42% reduction by 2030 amount to a de facto cap on production, making it possibly the Liberal government’s single-most objectionable policy. Carney could instead lower the target to 30% with an extended timeline, paired with tax incentives for carbon capture and storage. Such measures would signal willingness to compromise and sustain dialogue with energy-producing provinces, avoiding outright confrontation and, hopefully, easing Western separatist sentiments.Beyond energy and finance, record-high immigration has intensified Canada’s housing crisis. The Canada Mortgage and Housing Corporation estimates that 3.5 million additional units are needed by 2030 to restore affordability. Scaling back permanent admissions toward pre-Justin Trudeau-era levels of roughly 200,000 admissions per year, alongside tighter controls on temporary workers and international students, would better align Canada’s population growth with housing and infrastructure capacity, and probably help improve integration of newcomers.The pressure is growing on Carney to makes some tough decisions. The average American now earns roughly 50% more than their Canadian counterpart, and despite heated predictions of a “Trump Depression” the U.S. economy is actually buoyant, posting first quarter annualized GDP growth of 4.5% and adding 150,000 net new jobs monthly. Canada is locked in a downward spiral of falling productivity and economic decline that must be reversed.Carney’s background as an international central banker and global investor should equip him to assess these complex trade-offs and deliver sensible reforms. But the gravest risk is perpetuating ambiguity and defaulting to familiar Liberal orthodoxy. Canada needs decisive fiscal restraint, a market-oriented energy policy, clarified project approvals and immigration levels matched to capacity. Carney’s choices will determine whether he’s remembered as a doer acting in his ailing nation’s interests — or as just another Liberal ideologue.The original, full-length version of this article was recently published in C2C Journal.Robert Lyman is a retired energy economist who served for 25 years as a policy advisor and manager on energy, environment and transportation policy in the Government of Canada.George Koch is the Editor-in-Chief of C2C Journal.
