Pierre Poilievre says Canada is broken. Polls say 70 per cent of Canadians agree. But what does that claim really mean?

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Jack Mintz: Canada isn’t broken but it is badly mismanaged Back to video

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Canada is one of the wealthiest countries in the world — with the ninth largest GDP and over 40 million people. Despite regional tensions, we have maintained our unity with a decentralized federation. We have welcomed and integrated millions of immigrants and helped win two world wars. We are a successful resource-based economy that has given the world energy, minerals food and wood products without suffering the “resource curse.” We have 14 corporations in Forbes’ global 500. We boast 28 Nobel Laureates, eighth best among countries, just behind Russia, just ahead of Switzerland. We have the 20th lowest level of income and wealth inequality among 196 countries in a recent report.

That doesn’t sound like a broken country to me. In the past decade, however, we have slipped badly. Our real per capita GDP, now 27th in the world, is only 73 per cent of the American level, the biggest gap since 1950.  The IMF says we have the eighth least affordable housing market among 58 countries. Our health system, a key part of Canadian identity, is one of the most expensive in the world and ranks poorly in terms of quality, with burned-out staff, long wait times and poorly integrated services. With a stagnant standard of living and moribund investment climate in the past six years, rising unemployment since July 2022 and a half million unemployed young Canadians today, we have clearly lost our mojo.

None of this makes sense. How can a country that has been a great success for 150 years find itself stuck in quicksand? Canadians haven’t changed but their governments have. In the past decade, they have focused on dividing the economic pie rather than enlarging it. Industrial policy is in vogue, with grants and preferences thrown at politically favoured industries. Taxes on personal and corporate incomes and all capital gains have been raised while regulations have slowed energy exports, mining, and infrastructure and housing development.

Canada isn’t broken. It is mismanaged — our immigration, fiscal and climate policies most seriously.

Even the prime minister admits to mismanagement of immigration when he says the government “did not get the balance right after COVID-19.” Based on advice from the Advisory Council on Economic Growth, the federal government steamed ahead, doubling permanent migration limits to 500,000 from their level 10 years ago. The number of non-permanent migrants in the country rose from 1.3 million in 2021:Q1 to three million in 2024:Q2. Immigration may have helped with post-pandemic worker shortages but it severely stressed housing, medical services, schools and infrastructure. Nor did federal planners take into account that immigrants competing for jobs would push down wages if businesses failed to expand investment commensurately — which, of course, is what happened.

On fiscal policy, governments put themselves in a bind with lavish spending and big deficits that stoked inflation. As the IMF recently reported, consolidated government spending grew 50 per cent between 2014 and 2022, from $766 billion (38.4 per cent of GDP) to $1.155 trillion (41.5 per cent of GDP). Over the same period, taxes rose from $770 billion (38.6 per cent of GDP) to $1.114 trillion in 2022 (40.9 per cent of GDP). Having run balanced budgets in 2014, Canadian governments have since been running chronic deficits. Interest expense now consumes nine per cent of all-government revenues, more than defence spending. Public debt is less onerous than in many other countries, but households are stretched servicing their mortgages at higher interest rates. Private and public debt owed to the rest of world is now over $100,000 per Canadian, almost the same as in the United States.

Climate policy has become socialist sustainability, with market prices subordinate to an interpretation of “Canadian values” (as if we all have the same values). In a recent interview, prospective Liberal politician Mark Carney proposes heavy interventionism based on the principle that what’s priced “be consistent with what people care about, what people value, the values in this case of Canadians around sustainability and the transition.” The result of such thinking is the current flood of taxes, regulations, emissions caps and tax-funded slush funds rather than the uniform price on emissions that would allow the market to determine the best course of action.

We have a completely arbitrary 2035 deadline for EV cars and clean electricity without any idea of how to reach such wildly unrealistic targets. And we want companies to report in detail about the financial effects of climate-related risks — as if such information (1) exists and (2) is readily available — and not just about their own emissions but also about those of companies upstream and downstream in their supply chains. Despite the impossibility of all this, we are adopting disclosure rules on climate risk that could lead to financial institutions withholding financing based on policies and targets chosen by ill-informed Canadian governments.

Immigration, fiscal policy and the energy transition are just the three worst examples of gross policy mismanagement. Canada isn’t broken but its political leadership clearly is. And Canadians are fed up to the gills with it, which is why governments are having a hard time getting re-elected and only squeak through if they make it at all.

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