It will take 'sacrifices' and 'some time' to transform economy, Mark Carney says in pre-budget address to country

The operating budget will be balanced within three years “by reducing wasteful government spending and doing more with less,” Carney said. However the government will continue to borrow over the midterm in order to make major increases to capital spending on defence, ports and railways, and housing — spending Carney has long portrayed as necessary to generate economic growth and key to his broader trade strategy.

“To be clear, we won’t transform our economy easily or in a few months — it will take some sacrifices and some time. 

“Our government will work relentlessly to cut waste and drive efficiencies, and when we have to make difficult choices, we will be thoughtful, transparent, and fair.”

The prime minister promised to work “collaboratively” with political parties across the aisle and not to “play games” or “waste time” as his minority government tries to advance the Liberal agenda.

But Carney, who met earlier Wednesday with two major Opposition party leaders — Conservative Leader Pierre Poilievre and Bloc Québécois Leader Yves-François Blanchet — did not reveal which, if any, of their demands he is prepared to accept to ensure the budget’s passage.

Instead, Carney underscored that he intends to chart the same economic course that he campaigned on. 

Canada benefited from decades of free trade however given the dramatic changes in the U.S., this country’s “former strengths” which were based on close ties with America “have become vulnerabilities,” he said. The budget plan is to make Canada less reliant on the U.S. purchases of exported products, a major promise that brought Carney to office.

Yet, as talks intensify over U.S.-imposed tariffs on Canadian steel, aluminum, autos, lumber and more, Carney revealed nothing about where negotiations to lift those punishing tariffs now stand. 

Instead, Carney predicted that his goal of diversifying away from American markets will generate $300 billion more in trade over the next decade through new orders for Canadian resources, technology and expertise. He highlighted agreements with Indonesia, the United Arab Emirates, and the European Union, and said his government is “re-engaging with the global giants India and China while we deepen our partnerships with traditional allies.”

“We have to take care of ourselves because we can’t rely on one foreign partner,” said Carney. 

“Our government has the fiscal capacity to act decisively,” Carney said. “And we must draw on these strengths now.”

Canada is forecast to be the second-fastest growing economy in the G7 over the next two years “even though some critical sectors, including autos, steel, lumber, forest products, and some regions are facing big pressures,” he said. “The fact is at present, despite everything, our economy is holding up.  But if we don’t act now, the pressures will only grow.”

Reducing wasteful spending while turning trade away from the U.S. are both echoes of the Liberal campaign platform which Carney largely rewrote after taking over the leadership from Justin Trudeau.

Carney has already ordered a major change in how the country’s books are organized — split into operating funds and capital investment funds. 

With Carney in Asia to attend two international summits for about nine days ahead of the Nov. 4 budget, the prime minister used the speech to preview the budget’s broad brush strokes.

The prime minister chose an audience of young people deliberately because it is the generation soon to enter the workforce amid the fallout of global trade uncertainty and economic challenges, an official said.

The budget, Carney said, will “unlock new apprenticeships, skills training programs and a talent strategy “for the next generation of scientists and innovators.”

Carney added Canada’s “values” are an “economic asset” giving investors and innovators confidence in a stable society.

Hours before the speech, Carney met in private with Poilievre after the two sparred in question period in the House of Commons, following an earlier meeting with the Bloc Québécois leader.

Carney is three seats shy of the number of votes he needs to win a majority in the House of Commons, but he can still pass the budget if enough Opposition members either vote with the Liberals, or abstain, which could allow the Liberals’ 169 votes to carry the day.

Before and after they met, Poilievre warned that Carney’s budget plans will leave Canadians with massive deficits to pay off, as he listed off his own long-standing demands for the government, adding he told Carney his view that the government must “bring down its inflationary deficits and taxes” to make life more affordable for Canadians.

“If he takes my suggestions, bringing down the deficit to the level … the Liberal government promised, of getting rid of the hidden taxes on food, well, then, let’s have a look at it” — a sentiment he repeated after their 30-minute meeting.

Carney’s office said the two leaders had a “productive meeting,” saying the prime minister “gave Mr. Poilievre the opportunity to share his priorities. No assurances were made regarding the budget.”

The prime minister, who met NDP interim leader Don Davies earlier in the month, also met Wednesday with Blanchet, who later sounded skeptical the Liberals could win his party’s support for the budget.

Blanchet said he reiterated to Carney the Bloc’s six “non-negotiable” demands, among them increasing health transfers to provinces by six per cent over five years, an expansion of Old Age Security benefits to include those aged 65-74, money for Quebec to compensate for the end of the federal carbon levy in light of Quebec’s retaining its own carbon pricing program, and more help for homebuyers and support for social housing and infrastructure.

Blanchet suggested the Liberals might find support among the “seven independent” MPs who call themselves NDP despite it not having official party status, and the eighth, Green Party MP Elizabeth May.

And he shrugged off any concerns about thrusting Parliament into another election if the budget fails to pass.

Liberal House leader Steve MacKinnon told reporters that Opposition parties are being “very cavalier” in their budget demands, and said, “If there has to be an election, we will confidently take our plan to the people, but we don’t think an election is necessary.”