Priorities for the next federal government
The good news is life wasn't like this before Justin Trudeau and it won't be like this after he's gone - Pierre Poilievre
Happy New Year! I hope that 2025 is good to you. It is certainly shaping up to be interesting. After four years of ratings-boosting speculation, we will finally have a federal election in 2025. No, I never bought into the idea that the government would fall early. The composition of Parliament made it at extremely unlikely. However recent events have made the eventual dissolution of Parliament more interesting.
Given the subject of this article, a comment on my political affiliation is in order; I don't have one. While I do qualify as conservative in many ways, I have no loyalty to the CPC. Having said that, I do have serious concerns with what the Liberal Party has become under Justin Trudeau and the direction the country has gone in the last decade financially, economically and socially.
I'm not a fan of Pierre Poilievre's "Canada is broken" line. It is too negative for my taste and I don't think it is accurate; dysfunctional and weakened yes, broken no. But given the polls, it seems clear that fixing it will fall to Poilievre and the CPC.
Some time ago I asked myself the question "What should be done to address the problems I see?". It is easy to complain, but how do you fix it? Poilievre hasn't yet shown all his cards. So, what do I want him to do?
The result of this is "Priorities for the next federal government". Enjoy. And feel free to play along.
The Rules
For my little thought experiment I came up with the following rules:
1 - A short list. I aimed for five but had to keep the 6th; just couldn't let it go. These aren't meant to be everything a new government will do during its mandate. But identifying priorities allows for reassigning resources when things don't go well (they won't) and maintaining focus when events derail your plan (they will). If everything is a priority nothing is a priority.
This also aids in messaging. To engage the public you need a clear message so that when someone thinks of your government they have a picture in their mind.
2 - Priorities need to be realistic. For example amending the Constitution is unrealistic (certainly high risk of failure). Also priorities need to be fairly precise/targeted. ‘Fix the economy’ or ‘Pursue a pro-growth agenda’ are overarching aims but priorities need to be limited enough in scope to have a clear purpose, a way forward, and a definition of success.
3 - Priority needs to go to actions that will result in meaningful improvement during the term of government. It takes longer to build something than to break it. So, to really improve conditions the CPC will need at least two terms. This means Poilievre needs something to put in the window in 2030.
Many pundits have spoken of this being a 'change election'. Pollster David Coletto has described a scarcity mindset. Poilievre has never said he'll fix everything in a year; but neither have I heard him acknowledge that meaningful change takes time. Thus he may have set expectations too high. I think he needs to deliver results which 'bend the curve' in his first term. In the first year of government he needs to implement changes rapidly so that they have time to impact the economy and counteract the 'scarcity mindset' before he goes for a second mandate.
4 - The focus is what should be done to course correct the country. However, to be realistic, I allow for politics. If what Poilievre needs to do to keep the base happy isn’t on the table, the list will be disconnected from reality.
The Orange Elephant in the Room
I'm not very focused here on Donald Trump for two reasons.
Trump is like a hurricane. In advance you can't know when or exactly where it will hit, or how bad it will be. There are two things you can do. The first is to keep an eye on the weather and be prepared to respond when something blows up.
The second (sticking with the analogy) is to harden your infrastructure so that when a storm does come in you are able to deal with the consequences. The same things that Canada needs for Canadians’ long-term wellbeing (stable government finances and a strong economy) are what will best prepare for us for the second Trump Presidency.
However, Trump will complicate spending priorities. For example, investing in border security (the Liberals just announced $1.3B in new spending over 6 years) and making meaningful increases in defence spending will put demands on the federal purse. If the next government plans to get control of the deficit this will impact their flexibility significantly.
#1 Right-size the Public Service/Reign in the Deficit
Reduce the size of the federal Public Service with a target of returning to 2016 levels by 2030 (an approx. 30% reduction).
This isn't about the Public Service per se but is rather a necessary action to bring the federal deficit under control.
The federal debt is currently over $1.2T and, as of the Fall Economic Statement, debt service costs were reported to be $53.7B this year (10.8% of federal revenue). Last April these costs were forecast to match total GST revenue in 2024. While decreasing interest rates may provide some relief, Canada is living off its credit cards; the federal debt grew 86% from 2015 to 2023. COVID did have an impact, but the core issue is over spending. While the current government has not been unique in this it has been quantifiably worse than most.
As this government has bashed through fiscal 'guard rails' and cut loose fiscal 'anchors' Trudeau has defended his spending with claims that Canada's debt to GDP ratio is the lowest among G7 countries. However the figure being used (Net Debt) treats government assets as cashable to settle the debt if needed - it is a bankruptcy-style assessment. Specifically these figures treat the CPP/QPP as available to pay off the debt. While this assessment no doubt has value and is often used by organizations like the IMF to compare countries, it hardly presents the debt in a way with which most would be comfortable. As well, the size of these programs and the manner in which they are invested skews the result when comparing country-to-country. A different perspective is provided by Gross Debt which results in Canada ranking 3rd in the G7 and 26th among advanced countries.
I doubt most Canadians would accept the impact to services required to seriously reduce the debt. But the first rule of holes is: "When you are in one stop digging". Reducing, and ultimately eliminating, the deficit is an achievable and necessary aim.
The Public Service accounted for 16% ($69.5B) of annual federal expenditures in fiscal year 23/24. The budget can't be balanced based solely on the Public Service and there are many areas where expenditures will need to be reduced. However the size of the Public Service provides one area which is (relatively) easy to focus on and bend the curve in the short term. The current Liberal government has in fact seemingly come - belatedly - to the same conclusion.
The effort will be significant as all Public Service unions will unite against any such action. And it would garner a lot of media attention which will require a major messaging campaign to maintain support from the public. While balancing the budget hasn't traditionally been a popular topic in Canada, I don’t see the PS getting much sympathy either. Thus, I'd say political risk overall is low. However, given that Poilievre represents an Ottawa riding, this could be rather high risk for him personally.
I would rather this be done based on a functional review (what the government does and what capacity is required) and a process review (red tape reduction). However given the urgency to take action, the complexity of government, and the nature of the bureaucracy the only practical solution will likely be 'hollowing out' in which retiring and short-term employees are not replaced. I've lived through this and it isn't the right way to do a workforce adjustment, but it is probably the only viable short term approach. Such initiatives should be undertaken concurrently with a view to revitalizing the Public Service during a second term in office.
#2 "Repeal" Capital Gains Changes/Encourage Investment
Do not enact the capital gains changes announced in the 2024 Federal Budget. These changes have not been implemented, although the CRA appears ready to enforce them (apparently the CRA typically conforms to the intention of announced changes in advance of legislation).
Capital investment is necessary to grow the economy. Increasing the capital gains inclusion rate to 66% will make Canada less tax-competitive for businesses, as well as encouraging Canadians to invest in safer and higher yield investments outside of Canada. While the government likes to paint a rosy picture of the economy, former Bank of Canada governor Stephen Poloz has concluded that Canada is in a recession which has been masked by our immigration levels. According to December polling by Leger, 57% of Canadians agree with him. If we want to grow the economy we need to encourage, not discourage, investment.
Concerns have also been raised about the impact of the inclusion rate change on doctors who have incorporated their practices. I don't know how serious a concern that is. But, given the state of our health care system, anything that encourages doctors to retire, leave Canada, or not go into family practice should be avoided like the plague (pun intended).
This would be a low effort action. While pundits and economists have been arguing for other investment-friendly changes to taxation I picked this one as it is simple and corrects a recent bad policy decision. It wouldn't be hard to message, and businesses and investors won't need to figure out the 'new' rules. It is just a return to the status quo.
I don’t think that many people were really seized of the issue and applauding this change to capital gains. Thus, repealing it shouldn’t cause much concern. The ‘equity’ crowd will complain and the CPC will be branded ‘pro-big business’. But that is nothing new.
Businesses small and large will be supportive, as will those ideologically in favour of lower taxes. An example which came up frequently when the increase was announced was that individuals (the common example was someone who makes $350K profit when selling their cottage) would be impacted. I'm actually not against that impact of the Liberal's changes to the system. But if a new government repeals the changes to the capital gains level, they will likely need to return all capital gains back to 50% as a matter of messaging/optics.
#3 Replace the Impact Assessment Act/Create Opportunity
Replace the Impact Assessment Act with legislation addressing environmental concerns while respecting provincial jurisdiction and providing a reliable path for development.
Not only is the IAA unconstitutional but it – and the Liberal’s general approach to development – has led to a high-risk environment for investment. Growth and development require a regulatory framework in which potential investors have a clear understanding of the risks and realistic timeframes. Currently in Canada the average time to open a mine is 15.7 years. There are many factors influencing this, but it can't be ignored that Canada consistently appears near the bottom of the OECD in its ability to obtain general construction permits. This isn't a problem specific to the Trudeau Liberals or even the federal government. Depending on the type of project – from building pipelines, to light rail, to housing – different levels of government merit blame. However, the federal government must address their piece. If you aren't part of the solution, you are part of the problem.
I consider this to be a medium risk policy with a significant amount of effort involved. Crafting good legislation which balances concern for the environment with the need to enable the economy, while addressing the multiple interests involved will not be easy. In 2015 Justin Trudeau courted votes by insisting on a need for ‘social licence’ for projects. Putting that genie back in the bottle will be a challenge. Environmental activists will object strongly. Limitations on nuisance objections and the imposition of time limits for consultations and decisions will be challenged in court. The major political risk is that a reliable path to decisions will force the issue on whether the duty to consult awarded to our Indigenous peoples by the Supreme Court of Canada equals a veto. Legally the answer appears to be "no" (although you never know when a court will decide to create a new ‘right’), but politically this still seems to be an open question.
This would eliminate one area of friction with the provinces which can only improve federal/provincial cooperation. It should have appeal in rural communities which would benefit from the jobs associated with projects going forward, although there will always be a NIMBY contingent which will align themselves with activist groups. While not the focus, a full review of legislation and regulations to identify excessive or unnecessary costs to the economy should also be conducted. This could be the shorter term 'first deliverable' from such an initiative.
Regarding energy projects there is also a positive outcome related to concerns over climate change. In short – yes, there is a business case for selling LNG to Europe and elsewhere! China is unlikely to import fuel from the west, but India still produces 75% of its electricity from coal. Developing countries require energy and they will get it from wherever it is available in whatever form is affordable.
#4 Amend the Criminal Code/Addiction Treatment
Amend the criminal code to incorporate addiction treatment as a requirement for conditional sentencing and probation when appropriate.
Policies such as drug decriminalization and so-called safer supply have proven ineffective and have significant externalities for communities. Not only does the overdose crisis need to be addressed on an ethical level, but the CPC needs to demonstrate the effectiveness of a treatment-focused model. Making conditional sentencing and earlier probation for non-violent and (perhaps) some violent crimes contingent on participation in a drug rehabilitation program could provide the incentive for some addicts to commit to therapy. Recently mandatory treatment has been criticized as ineffective. I suspect there is some validity to these criticisms but, as I've previously written, addiction research has become an ideological minefield in recent years, so I don't take any claims at face value. If some who find themselves in treatment via this path are successful I think it would be worthwhile. And, although this would be a forced decision, a person who undergoes treatment to avoid prison has opted for treatment.
This isn't an entirely novel approach as Canada has had Drug Treatment Courts since 1998. However there aren't many of them and they are a treatment program supervised by a judge rather than fully part of the judicial system. I'm recommending incorporating many of the DTC ideas into the criminal justice system to be applied if a person's criminal behaviour is due to or exacerbated by addiction. The primary change I suggest is that, whereas DTCs are an option an accused can choose rather than criminal court, under this approach treatment would be a path offered to a person convicted of an offence.
Prosecutors can be directed to consider this as an option based on the nature of the crime, risk of reoffending, and previous treatment programs attended. Judges then have the option of accepting the proposal if the offender agrees but may choose not to. A conditional sentence would then be awarded contingent on completion of a defined course of treatment. This should also be instituted as an option in prole deliberations.
I see this is a relatively low risk policy. While this doesn’t fit within the popular harm reduction dogma, providing an option other than incarceration should generally be accepted. This emphasizes two neglected pillars of Canada’s drug strategy (Treatment & Enforcement). There is the potential for public outcry when an offender is given conditional sentencing and when (inevitably) someone released under this policy reoffends. But more importantly the success and credibility of this approach hinges on sufficient treatment capacity. Consultation with the provinces and funding would be essential.
Side benefits are that a reduction in the number of addicts who engage in criminal activity would result in a reduction of some crime rates. It should also take some pressure off prisons regarding the number of inmates and dealing with addiction in that population.
#5 Mandate Institutional Neutrality of Federally Funded Academic Institutions/Social Cohesion
Make federal funding of academic institutions contingent on institutional neutrality and merit.
While education is a provincial responsibility, in 2021/2022 universities received $4.6 billion from the federal government. In order to qualify for federal funding post-secondary institutions should be required to adhere to institutional neutrality and the principle of free expression such as in the Chicago Principles. Federal grants and research chair funding must utilize a merit-based selection system, abandoning the current identity-based systems.
Since the turn of the century there has been a shift in our culture as illiberal values have taken hold in Canadian society. This is not all Justin Trudeau's fault, but he and his government have endorsed and funded such views. We need a positive shift in thinking about our country, and I think a clear signal from a new Prime Minister on the value of the individual over the identity group is a good place to start.
Unlike other items on my list this will not fix the country in the short term. Anti-colonialism, anti-racism, etc originated in academia where the ascendant worldview is predicated on postmodernism and Critical Theory. From there it has flowed into elementary education via teacher’s colleges. However political and social division will not be healed while our institutions are teaching that there is only one ‘right’ way to look at issues and to view interactions with others through a narrow lens of self-defined identity.
There would be significant push back from academia, teachers’ unions, and activists. It is safe to say that most Canadian news outlets would present such a policy in the worst possible framing. It is thus critical that this be pursued with caution and avoid infringing on academic freedom or student activism. While tempting, don’t try to forbid DEI statements; rather insist on merit-based systems. The focus must be to encourage an environment where ideas can be shared and debated, and where research is done based on its merits, not its ideological alignment.
This would likely be popular among ‘anti-woke’ social media commentators and (hopefully) the broader population. However, this must not be conceived of as ‘anti-woke’ as that could result in some of the excesses seen in the USA. While support for these ideas may be declining, the 2023 Angus Reid Institute survey "Canada and the Culture Wars" found significant support for, or at least acceptance of, many regressive positions. And the most common words associated with the culture war were found to be "Exhausting", "Divisive" and "Unnecessary". Thus I believe it would be politically risky to challenge progressive cultural beliefs too aggressively.
I also question the value of being 'anti-something'. Defining what you are for is much more useful than stating what you are against. This should be framed as returning to Enlightenment values or the traditions of liberal democracy. Hopefully if the federal government leads the way, this will embolden provinces which are responsible for education to step up.
#6 Promote Interprovincial Trade/Create Economic Opportunity
Actively promote interprovincial commerce via a Ministerial working group or similar mechanism.
I find it incredible that, as free markets have been the focus of our economic policy for the last 40 years, Canada is still replete with internal barriers impeding the flow of people and products. Over that same period the EU has largely eliminated all such barriers and that involved negotiations and compromise between 27 countries. The federal government should publicly champion streamlining the flow of goods, services and the recognition of accreditations across the country.
Interprovincial trade barriers cost the Canadian economy billions of dollars annually. While sectors which benefit from protectionism understandably support the status quo, this harms the economy as a whole and makes no sense to the average consumer (or credentialed worker wishing to change jurisdictions). This was undefendable although generally ignored in the past. But with the rise of trade protectionism in the USA and globally it is a situation we can no longer afford. This also fits well into Poilievre’s “gatekeeper” narrative.
This would require significant effort and be politically risky if mishandled. I don't think the federal government should be involved in areas of provincial jurisdiction as a rule. And, due to their own political interests, many Premiers will not be enthusiastic to participate. However the feds could play a role in highlighting the consequences of the status quo and providing a vision of inter-provincial free trade. It would be important not to over promise (because the federal government can't impose agreements) or be seen as dictating to the provinces. But economic concerns regarding Donald Trump provide an opportunity to identify this as an issue which requires a Team Canada style solution. Handled adroitly the CPC could take a degree of credit for any agreements and economic boost resulting from the initiative.
Beyond the potential economic benefit is the revenue opportunity. An increase of billions of dollars in GDP due to interprovincial trade liberalization would increase tax revenues substantially. Given the state of federal and provincial deficits this would be beneficial. As well there is an argument (however I'm not familiar with this subject) that opening provincial industrial carbon markets would enhance the growth of low-carbon technology.
Conclusion
Stephen Harper was seen by some as too incremental in his time in the office. Partially due to his personality, but also because there wasn't the appetite for big change in Canada at the time and there was still uncertainty about the newly minted CPC. In contrast Poilievre has a more aggressive mindset and there is definitely a desire for change at the moment. I could be accused of thinking too small here. However I wouldn't overestimate the appetite for radical change in the country. Most people are mostly comfortable with the status quo.
The Trudeau government has passed some legislation. But they also have a track record of big announcements of frankly half-baked ideas that don't move ahead (i.e. gun buy back, single use plastics ban, online harms act). In the early days in office Trudeau spoke often of "deliverology" - I haven't heard anyone using that term for years. I think Poilievre would be wise to avoid over promising in that fashion and coming up short.
While not all of these are major items, these are six actions I see as important and which should be a priority to implement. A new government will do many more things during its mandate, but these are all defined items which form part of larger strategic objectives. As well they can be announced and delivered during a first term to demonstrate progress towards stabilizing the country financially and economically. If a new government wants enough time to put Canada back on a stable footing it will need two (or more) terms and thus needs to demonstrate the value of its policies during each mandate.
Thank you for taking the time to consider my thoughts on the subject. I hope you found them useful.