Carney admits Liberal government’s spending is unsustainable at cabinet forum

Prime Minister Mark Carney and Finance Minister Philipe-Francois Champagne spoke ahead of a cabinet meeting, admitting that the Liberals have to find ways to rein in unsustainable spending.

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Prime Minister Mark Carney and Finance Minister Philipe-Francois Champagne spoke ahead of a cabinet meeting, admitting that the Liberals have to find ways to rein in unsustainable federal government spending.

Liberal cabinet ministers are convening for the second day for a “cabinet planning forum,” which Carney promised would be focused on finding ways to spend less while also boosting investments. Carney did not specify whether any significant cuts to specific departments were forthcoming.

The meeting comes as U.S. tariffs remain on select items such as Canadian steel and aluminum.

Carney said Wednesday in Toronto that the cabinet meeting comes during “challenging economic times,” due to the U.S.’ shifting global trade policy.

“We have a riskier global environment. We have changes in technology that bring both promise but also dislocation, and so the focus of the government from the start has been on what we can control,” he said.

He said priorities during the meetings will include his “build Canada homes” plan to double the pace of home building over the next decade, infrastructure projects, and increase defence spending to meet NATO goals, all while making cuts to the federal budget.

“The federal government has been growing spending as a whole at over 7% a year on average for over a decade. That’s twice the rate of growth of the economy on average. It’s not a sustainable situation,” Carney said. “So we need to rein in spending. We need to find efficiencies. We’re in the process of finding efficiencies.”

Champagne also called the growth in Liberal government spending “unsustainable” on Thursday, before cabinet met for its second and last day.

“The Prime Minister was right when he said, over the last years, you’ve seen an increase in spending of about 7% – that’s not sustainable. Folks at home understand that,” he said. “Folks have been tightening their belt for quite some time, so if I do it, the government has to do it as well. So having a leaner and more efficient government to provide services to Canadians that is needed as you’re looking to rebuild this nation.”

Last year, former Liberal finance minister Chrystia Freeland resigned before she was set to unveil the government’s fall economic statement. The statement unveiled a $61.9 billion deficit despite Freeland setting a “guardrail” against running more than $40 billion in deficit spending.

Carney also released a $486 billion dollar spending plan for this fiscal year in May. The plan is on track to surpass the Trudeau government’s final-year projection of $449 billion.

Champagne noted that some of the priorities of the cabinet meeting will be focused on affordability and building housing as well.

“We’re going to be ambitious in our investment and rigorous in how we manage our expenses,” Champagne pledged. “How do you balance all of that while addressing affordability concerns? Well, I think families do that all the time.”

Champagne added that the Liberals have asked their colleagues to come up with savings proposals, which are to be reviewed as a cabinet.

“There’s things that we can do more efficiently, there’s things that we need to review how they’ve been done in the past, and at the same time, you need to make the investment. Because what we need to do as a nation now is to seize the moment,” Champagne said. “Canadian, understand that we’ll have to find these savings, be very rigorous in how we spend the money. That’s the short term. But at the same time, build this nation for the long term.”

He said the exact measures the cabinet decides on will be included in this year’s budget, which has yet to materialize in the first four months of the Carney Liberal government.

Champagne also said that it’s time for the Liberal government to be honest with Canadians.

“It’s about time that we are straight with Canadians. Canadians understand that I want to be straight with Canadians. The Prime Minister was straight yesterday. Tough choices ahead,” he said. “But ambition when it comes to investment, rigour, when it comes to spending, and, yeah, there’ll be adjustments in different places, but at the same time, we’re going to be emphatic to make sure that we are always there for Canadians.”

Later in the day, Foreign Affairs Minister Melanie Joly said the government is focused on the economy, protecting jobs and creating them through its defence spending.

“We’re increasing our investments in defense, and while we’re doing that for our strong, bravemen and women serving our armed forces at the same time, we’re doing it to create jobs, and that’s why we’re working on a defense and missile strategy,” she told reporters Thursday.

“The other thing that we’re working on is obviously, to be closer to Europe and to closer to certain countries in Asia, because we know we’re too dependent on the US when it comes to trade, and that is clearly a focus of what we’re doing as a government. “

Dominic LeBlanc, the minister responsible for U.S.-Canada trade, said the PM is hoping to reach a freer trade deal with the U.S. and try to lift the U.S. tariffs against Canadian exports.