The fix Canada's economy needs...

It's not a grand solution, it's really quite simple.

This newsletter is brought you by Beer Canada and their Here for Beer campaign.

There’s some action on the cross border front at both the national and sub-national level taking place, and for those of us who want tariffs removed and a smoothing of relations, that’s a good thing.

Mark Carney is greeted by Donald Trump at the White House, May 6, 2025.

Ahead of Prime Minister Mark Carney heading to Washington on Monday night ahead of meetings on Tuesday, premiers and governors will be meeting in Quebec City. The Conference of Great Lakes St. Lawrence Governors & Premiers is taking place from Saturday to Monday at the Chateau Frontenac, a glorious hotel overlooking the St. Lawrence River.

There are only two Canadians in the group, Quebec’s Francois Legault and Ontario’s Doug Ford. The rest of the conference is filled with American governors.

The leaders meet every few years to discuss trade and issues along the waterways, you can be sure that this year they are talking about issues surrounding tariffs. The Great Lakes Basin has long been the manufacturing heartland of North America and a highly integrated economy.

Sadly, their discussions will have little impact on the later discussion in Washington.

The PMO is leaking out that they are hopeful of getting some movement on steel and aluminum tariffs. For a while now it has felt like the Carney government has been playing political games on this file, they know fighting Trump is popular but keeping the tariffs in place is hurting our economy.

Let’s hope both sides act like adults.

A word from our sponsor…

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Contact your MP now at this link to say no to the beer tax hike.

Fixing Canada’s finances…

Global News had an interesting story the other day asking if we should raise the GST to pay down debt or to pay for spending. The supposed news hook for this was a report from the Business Council of Canada, the country’s largest business network.

From the Global story.

Should the federal government raise the goods and services tax (GST) as a means of paying down the deficit and funding more spending in the upcoming budget?

A group of Canadian financial and business leaders is urging Ottawa to consider it in the event officials need to find a way to offset expected increases in spending.

This comes ahead of the anticipated federal budget, which Prime Minister Carney’s Liberal government says will be tabled on Nov. 4, and which is expected to include multiple spending commitments amid the trade war aimed at bolstering the Canadian economy — while also increasing the deficit.

The problem with this story is that the GST has been mentioned exactly once in the entire report.

The report spent more time talking about other issues such as the state of federal finances, Canada’s investment environment, fiscal anchors and guardrails, revenue vs spending, the size of government, tax reform and more. The GST mention was one brief line in the section on revenue vs spending and how to bring about balance.

One group of experts argued forcefully that Canada does not have a revenue shortfall. As one stated, “The U.S. has a revenue shortfall…Canada does not. Our current revenue take is in the middle of the pack.” Another concurred, noting that when looked at over the long term, revenues are “close to long-run norms” and that “one simply cannot make the case that revenues are extraordinarily low.”

The opposing camp believes new spending pressures, particularly on defence, make new revenue unavoidable. One expert was categorical: “I cannot see how the increase in defence spending to five per cent of GDP can occur without a rise in revenue”. Another argued that if society wants to maintain the current level of program spending, then “new sources of revenue are essential.”

While divided on the if, the experts were remarkably aligned on the how. If the government must raise revenue, there is an overwhelming consensus that it should use the Goods and Services Tax (GST), because it is the least distortionary option.

This isn’t exactly a call to raise the GST, it is simply a statement that if the government needs new revenue that this the easiest way to raise it.

Canada’s finances are a mess…

Last week we heard that the Parliamentary Budget Officer was projecting a deficit for the current fiscal year of $68.5 billion. That’s a massive increase from the projected $42.2 billion deficit from last December’s Fall Economic Statement.

To deal with this increase and this massive deficit, which is mostly driven by overspending and not Donald Trump and his tariffs, Global wants taxes to go up. The problem with most in the media is that they can only think of two options, cut spending or hike taxes.

As I wrote in my Sun column last week, there are three options and the third option is the best.

To deal with this massive deficit increase, the one the PBO said it not sustainable, the government has just a few options, such as cutting spending (they probably should) and increasing taxes (they probably shouldn’t).

The third option is to grow the economy, live up to Carney’s words and promises and not move forward in baby steps like he is doing now. We are in a moment where the public is giving him permission to act boldly on the economy.

He should seize that moment because the current path we are on is not sustainable.

Danielle Smith has a plan we should follow…

Which brings us to the current plan from Alberta Premier Danielle Smith to begin the planning and development process for a pipeline to Canada’s northwest coast. It’s a bold plan worthy of consideration and exactly the kind of thinking we need to unshackle Canada’s economy.

Too bad some members of the mud hut brigade don’t think so and want to block it.

I used the term Canada’s northwest coast on purpose because British Columbia Premier David Eby seems to think that he can just block a pipeline even though he doesn’t have the constitutional authority to do so.

Perhaps he thinks that since the Liberals allowed Quebec to block Energy East they will let him block a pipeline through BC. He might be right, it’s not like Prime Minister Mark Carney has rushed to Smith’s defence, or to defend the constitution for that matter.

“It’s all about B.C.,” said one plugged in politico this past week noting that Carney is trying to woo and keep B.C. voters.

Let’s hope not because as Jason Kenney, the former Premier of Alberta and former Harper era cabinet minister put it, Smith’s plan is the best for boosting Canada’s economy, for generating wealth, for diversifying away from the American economy. In a lengthy post on X, Kenney detailed all the ways that Eby’s opposition to a pipeline across provincial borders was unconstitutional and how as a lawyer he should know better.

We have a solution…

The answer to the questions the Business Council of Canada was asking, the answer to the massive deficit the PBO is projecting is not raising taxes, it is not cutting spending, it is economic growth. In Canada, that begins and ends with natural resource development.

Greg Ebel, the CEO of Enbridge, who is advising Premier Smith on her pipeline project, was pretty blunt this week when he said Canada is standing in it’s own way when it comes to resource development and growing our economy. I’ve been saying that for some time, I know that business leaders have said it quietly before, so it was good to hear Ebel being blunt.

Listen to Ebel, listen to Smith, get back to doing what we do best. Diversifying our economy is a good thing, but that doesn’t mean we should wind down or stymie the industries that drive our economy - natural resources.

Let’s get moving on that and get back to being a serious country.

Contact your MP now at this link to say no to the beer tax hike.