OP-ED: Canada is falling behind – and Carney offers more of the same

Gwyn Morgan writes: "Donald Trump’s continuing rhetoric about making Canada the 51st State is certainly annoying, but one can’t deny that his apparent underlying message."

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Author: Gwyn Morgan

Donald Trump’s continuing rhetoric about making Canada the 51^st State is certainly annoying, but one can’t deny that his apparent underlying message – that Canada is performing far below its potential and needs to get serious or its very existence may be threatened – carries a serious point.

The numbers tell the story. In 2014, the year before the Justin Trudeau government was first elected, America’s GDP per capita was 24 percent higher than Canada’s. Since then, the gap has widened year-by-year, and is projected to hit 40 percent by 2030. Canada’s GDP per capita, a key indicator of a nation’s economic strength, now trails the average among the 38 OECD member nations – a group that includes Greece, Portugal, Colombia and Turkey.

It shouldn’t and didn’t need to be this way. Canada is one of the world’s most naturally well-endowed nations with massive oil and gas reserves, huge mineral wealth, and mighty rivers that produce much of our electricity. Our workforce is as well if not better-educated than America’s. So how did Canada become an economic weakling? The answer lies in nearly a decade of self-inflicted wounds under the Trudeau government – wounds that his successor as Liberal leader, Mark Carney, would only make deeper.

Among the Trudeau government’s biggest mistakes was its green fanaticism. The consumer carbon tax, clean fuel mandates, and electric vehicle subsidies have driven up the costs of transportation, food, heating and small business operations. All this to nudge behaviour toward a “net-zero” ideal that is neither economically feasible nor globally impactful.

Then came the so-called “No More Pipelines” law – officially Bill C-69 – which created an endless regulatory quagmire for new infrastructure projects, all with the aim of getting to net zero by throttling the oil and natural gas sector. Even after the Supreme Court ruled it “largely unconstitutional” in 2023, Ottawa made only cosmetic changes. That left Canada’s oil and gas industry – one of the most productive in the world – in continued limbo.

In this kind of environment, it’s no wonder that business investment is anemic. Capital investment per worker has not only stagnated in Canada, it’s been shrinking in absolute terms – from $18,363 in 2014 to just $14,687 in 2021. In that same period, investment per U.S. worker rose to the Canadian dollar equivalent of $26,751. The result? A gap of more than $12,000 per worker – a key reason for our stagnant wages and declining productivity.

Businesses, both Canadian and foreign, have taken notice. As of 2023, Canadian companies had invested a staggering US$672 billion in the United States, while overall American business investment in Canada had fallen to US$452 billion. That’s a $220 billion vote of non-confidence in the Canadian economy.

The damage doesn’t stop there. The Liberals have doubled the national debt in just nine years – from $612 billion in fiscal 2015 to $1.24 trillion today. That’s 42 percent of GDP and rising. In contrast to a U.S. government now pursuing fiscal restraint, the Liberals continue to borrow and spend, blowing through even their own budget projections. The $62 billion deficit for fiscal 2024 is just the latest example.

Meanwhile, union militancy is on the rise. Person-days-lost to strikes jumped from 1.9 million in 2022 to 6.6 million in 2023. And with legislation now banning replacement workers in federally regulated sectors, companies have few tools to manage disruptive labour actions. Major strikes at the country’s railways and ports cost the economy billions in a matter of weeks. These are the hallmarks of an economy sliding backwards.

And while Canadians may be looking to Mark Carney as a more competent replacement, they should beware: though he’s smooth and superficially sophisticated, he’s cut from the same fanatical net-zero cloth as Trudeau. He founded the Glasgow Financial Alliance for Net Zero (GFANZ), dedicated to withholding equity and bank financing from oil and natural gas companies – in Canada’s case, our most vital industry. In his 2021 book, Carney warned that companies that don’t embrace net-zero “will cease to exist.” That is not a plan for prosperity. It is a warning shot at our economic core.

And what does Carney plan to do about our out-of-control deficit? Use accounting sleight-of-hand, of course. Rather than reduce spending, he would create a fiscal mirage by separating operating from capital expenditures – and then balance only the former category while piling up further debt via the latter. This shell game should not fool Canadians.

There is a better way. Rather than suppressing our natural advantages, Canada must once again unleash them. That means removing investment-killing regulations, restoring fiscal discipline, supporting resource development, and creating an environment where businesses can grow and workers can thrive.

Canadians have a clear choice. Continue with the same destructive policies under a new, more polished figurehead. Or elect a government that is serious about growth, productivity and national renewal. The time for real change has come.

The original, full-length version of this article was recently published in C2C Journal.

Gwyn Morgan is a retired business leader who was a director of five global corporations.