Prime Minister Mark Carney jokes with Minister of Finance and National Revenue Francois-Philippe Champagne at a community centre in Ottawa on Oct. 10.Justin Tang/The Canadian Press
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
If anyone doubted that their financial prospects hang in the balance with Tuesday’s federal budget, Bank of Canada Governor Tiff Macklem put such doubts to rest on Thursday.
Mr. Macklem cut the bank’s policy rate from 2.50 to 2.25 per cent last week. He also signalled that more cuts are unlikely.
He doesn’t believe they will solve our low productivity problem, which lags most other advanced economies and, if boosted, could help mitigate the effect of President Donald Trump’s tariffs on our economy. Should governments and businesses fail to boost productivity, suggests Mr. Macklem, “our standard of living as a country … is going to be lower than it otherwise would be.”
In plain terms, Canada’s economy is enduring “structural changes” that are already turning Canada into America’s poor cousin.
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Stomping our skates on the ice, flapping our elbows up then down while appealing for tariff justice from the U.S. has become a distraction. The federal budget is an opportunity to focus on transforming the economy by incentivizing productivity – something Canadians control.
We know what failure to do this looks like. Ryan Williams, an entrepreneur, former member of Parliament and Fellow of the Balsillie School of International Affairs in Waterloo, recently appeared before the House of Commons standing committee on science and research. His testimony was startling.
Canada’s digital economy “is booming,” he said, generating more than $100-billion in revenue a year. We own little of it. Mr. Williams points out that “87 per cent of our innovation is foreign owned” and that Canadian-controlled venture funding for research and development is a relative pittance.
“In 2025, U.S. startups raised US$91.5-billion in venture funding” while Canada has generated $920-million, yet, as Mr. Williams highlights, “80 per cent of that was U.S.-controlled.”
We nurture talent that generates productivity-enhancing intellectual property and largely ignore it, leaving U.S. entrepreneurs and others to profit from our indifference while our wages and living standards whither.
Canadians should know how this plays out in practice. Consider the example of Ucore Rare Metals Inc., reported on last week in The Wall Street Journal. The Canadian company based in Bedford, N.S., received US$18-million from the Pentagon to “build its first commercial plant in Louisiana, which will turn raw rare earths into oxides used by many industries.”
Ucore’s CEO, Pat Ryan, was quoted saying, “We’re looking at this as a Manhattan Project. You have got to move quickly to get this job done.” The Louisiana plant is expected to be operational next year. Ucore’s shares are up 700 per cent.
Such efforts by the U.S. government involve partnerships with private enterprise such as America’s largest bank, JPMorgan, which launched a US$1.5-trillion strategic-industries investment fund. It will “make direct equity and venture-capital investments of up to $US10-billion to help select companies primarily in the United States enhance their growth, spur innovation and accelerate strategic manufacturing.”
The fund may play a role in another much larger U.S. government effort that leverages Canadian expertise and critical minerals – the US$80-billion deal penned last week with Canadian companies Brookfield Asset Management Ltd. and Cameco Corp to build eight large nuclear reactors through Westinghouse Electric Co.
This is what Canada is competing against.
While Canadian companies are securing tangible commitments from the U.S. government and investors, Ottawa is signing international agreements to open new markets for Canadian critical minerals that will materialize in some distant future. This is laudable, yet overdue.
Natural Resources Minister Tim Hodgson said last week that Canada would lead a new G7 critical-minerals pact that would guarantee markets and deliver stable returns using price floors as well as stockpiling to combat China weaponizing its dominance in such minerals.
In Ontario, Premier Doug Ford just signed an important partnership deal with the Webequie First Nation. The Webequie are completing the environmental assessment for the supply road to the province’s critical-mineral-rich Ring of Fire. The assessment is due this January. Mr. Ford wants the road construction to begin in the coming spring.
That is unlikely. Regardless of the environmental assessment by the Webequie, Ottawa will conduct its own review using Canada’s Impact Assessment Act, delaying road construction, critical-mineral mining, and the 70,000 jobs that Mr. Ford says the project will generate atop the $22-billion it would add to the country’s economy. It’s time for Mr. Carney to give his “build, baby, build” election slogan meaning.
Today, Canada is too much like The Bay in a Costco world. Tomorrow’s budget should change that for everyone’s sake.