National
The elements of Marc Garneau – A special report from Paul Wells
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He was trained to admit every error. Then he went into politics. A feature interview with the retiring MP for Notre-Dame-de-Grâce—Westmount
Introduction
When you resign your seat in the House of Commons, you get to keep your phone for 90 days. The deadlines for cleaning out your offices on Parliament Hill and in your riding are tighter but still civilized. Soon Marc Garneau will leave his constituency office on the third floor of a nondescript office building in Westmount, the affluent anglophone enclave west of downtown Montreal, for the last time. But there’s no rush, so he met me there on Monday.
Trying to get politicians to speak frankly while they’re still in office is not always rewarding, It gets easier quickly once they leave. So I thought a visit with Garneau was worth the drive to Montreal, even though he’s been cagey in his remarks to journalists since he announced his retirement on March 8. I’ll cut to the chase: His interview with me wasn’t the work of a rebel either. Garneau remains a gentleman and a Liberal. He offered only praise for Justin Trudeau. But on several issues — communications philosophy; the handling of the Freedom Convoy occupation of Ottawa; and the proper attitude toward one’s own fallibility — he drew occasional sharp distinctions between his attitude and the Trudeau government’s.
I took the scenic route to get to that stuff. Garneau was the first Canadian to fly in space. He was a national celebrity before Trudeau finished high school. And while that’s a historic distinction, Garneau shares with many more parliamentarians a long career outside politics that preceded, and informed, his career in elected office. Not all of that is the stuff of every conversation, but this one was valedictory in tone. I thought it best to start at the beginning.
This is an unusually long post on the Paul Wells newsletter. I figured I owed everyone a good feature read. I’m leaving the paywall off. You can help spread word about the writing I do by sharing this with a friend or with your networks.
I also want to remind readers that writing this newsletter is what I do for a living. When you decide to become a paid subscriber, you help support this work. You also make it possible for me to do things too few of my colleagues elsewhere are able to do — things like travelling, or paying a professional photographer properly to illustrate my work.
1. Water
I began by asking him about the year and a half he spent as a combat systems engineer on the HMCS Algonquin. When he arrived on board, it was the newest destroyer in the Canadian Navy.
“It was what I had dreamt of from the beginning of my life,” he said. “My first love was the Navy.” His father’s family was francophone Quebecers, soldiers from way back. His father fought in the infantry in WWII and was posted in Germany for two years as the Cold War settled in. “I crossed the ocean with my parents in 1956 coming back from Germany,” he said. “We came back on a ship that was on its last voyage, the Samaria, and I just fell in love with the ocean. A few years later, we went back to England on the Empress of Britain. Those confirmed for me that I wanted to be in the Navy.”
The Algonquin, a big boat with 280 crew, spent three months doing exercises as part of STANAVFORLANT, NATO’s multinational Standing Naval Force Atlantic, which would pretend the Soviet Union was up to various kinds of risky business and figure out ways to respond. Off Puerto Rico he led tests of the new Sea Sparrow missile system. Around Newfoundland’s outports, the Algonquin took the province’s lieutenant governor on an annual tour.
Young Garneau wasn’t particularly interested in moving up the ranks. “I’m an engineer. I didn’t want to be the ship captain. I wanted to be the engineer that kept the equipment going. That may not sound very exciting. But for me that was exciting, because it’s quite a job to keep all that equipment operational in case you had to go into conflict.”
2. Air
Advancement for its own sake held no appeal. But when he saw a nondescript ad from the National Research Council calling for applicants for Canada’s first astronaut corps, that sounded better than a promotion. “Wow. The idea of possibly going into space just blew me away. At the same time, I thought my chances [of being chosen] were pretty close to zero.”
In May of 1983 there were 4,200 applicants. Six months later, six remained. It became clear pretty soon the program wasn’t just looking for technical expertise but for — well, for heroes. Or at least for people who wouldn’t screw up the illusion.
“They wanted us to write essays about why we thought that we were particularly well suited. Did we realize that we would become public figures? And were we ready for that? And did we think it was important for Canada? Medical [exams] like you’d never had before. Every single thing checked, because you had to be 100% fit. Then they brought us in for the last week and and they subjected us to a whole bunch of things.
“We had to give presentations in front of the selection board. Any attempted humour was met with a stone-cold face. I remember coming out of it thinking, ‘I’ve totally bombed this.’ But they’d all been trained not to react to anything.
“Do you remember somebody called Keith Morrison?” I sure do. TV reporter and anchor, CTV to the CBC to NBC. He actually interviewed me once, when that was an odd thing to do, and I remember he was good at it. “Well, Keith was hired for the week. And he put us through our paces, sort of doing the interview thing. So that was another thing they wanted to know, if you’d be able to do that. They had us in social settings, like a cocktail kind of thing. [They wanted to see] whether you were relatively comfortable in the company of total strangers, that kind of thing. So it’s a pretty thorough week. And by the end of that, they said, ‘Look, stand by your telephone between five and seven on the third of December and you’ll get a call.’ We’re 20 at that point. ‘It’ll either be to say, sorry you didn’t make it, or, you made it.’ And I was fortunate to be one of the six chosen. They called about six o’clock. They didn’t beat around the bush. ‘Look, you made it. Congratulations. Keep it private and we’ll trot you out on the following Monday.’ Which they did.”
When you know what happened next in Garneau’s career, all this prodding and profiling and media scrutiny takes on a different meaning. He started to meet prime ministers.
Pierre Trudeau: “Man of powerful intellect. Everyone knows that. There are warmer people than Pierre Trudeau. But very cordial.”
Brian Mulroney: “Mulroney had just been elected. He wanted to meet Ronald Reagan right away… I was summoned, along with two of my crew members, Bob Crippen and Kathryn Sullivan. Which, by the way, is a total no-no. You do not take the next crew that’s going to fly in three weeks out of their bubble of training and getting ready. Except if it’s POTUS. Reagan thought it was good idea, so we were summoned. I spent time in the Oval Office with with Reagan, whom I liked right away, and Mulroney, whom I also liked right away…. I was even at the Shamrock Summit a couple of months later in Quebec City. I wasn’t quite so happy with what PMO told me to do, which is to come up through the floor on a thing that was raising me up with smoke and lighting on me, dressed in my flight suit, and having to say, ‘Take me to your leader,’ which the crowd liked. And I thought, ‘I’m making a fool of myself here.’”
On the first trip, Garneau was a payload specialist, which meant he had responsibility for a suite of Canadian scientific experiments and little else. But he had two audiences he wanted to please. NASA was the first. “I had to make a good impression so that, based on a sample of one, they’d say, ‘Okay, he did pretty well. Let’s keep inviting Canadians to fly.’ And quite a few Canadians have flown.”
Canadians were the second audience. “I wanted Canadians to be proud of me.”
Both audiences gave him the thumbs up. Today there’s a high school in Toronto named after him. In 1992 Garneau and Chris Hadfield reported for training to become mission specialists, with much broader responsibility for mission success. It took another year of training before Garneau was eligible for his second flight, in 1996. His third and final mission was at the end of 2000. There were Russians waiting at the International Space Station when the shuttle Endeavour delivered Garneau and the others. Relations with Russia were as warm as they’ve ever been. “It was more than cordial. Frankly our lives depended on one another.”
It was a longer acquaintance with higher stakes than most of us ever experience. “One of the things I loved the most about NASA was that if you fuck up” — he paused before using the salty word — “you confess. That is the culture there.”
Probably this does not need to be spelled out, but here goes anyway. This culture of honesty was not a simple preference. Shuttle crews rode a lake of liquid fuel and twin towers of solid fuel at speeds their own ancestors could not have imagined. If a bug slipped into the system it could kill them and set spaceflight back decades, as indeed it did, twice. Owning up to error was the primary method of keeping colleagues, and the dream of spaceflight, alive.
“I did hundreds of simulations. I was the first non-American CAPCOM ever. CAPCOM’s the guy who talks to the crew in orbit for Mission Control. And we did hundreds of simulations. I covered 17 missions, just as CAPCOM. And after every simulation, where the crew, perhaps, had not picked up the problem and had not reacted properly to it, we’d do a post mortem.
“And that culture of honesty and openness, which you absolutely need in the space business — you can’t have people making excuses or trying to hide things — that’s what I love the most. And I wish it existed in all facets of life, including the one I ended up in.”
3. Earth
Garneau first ran for Parliament in 2006, just west of Montreal Island, and lost, in the first of three elections when losing was most of what Liberals did. He was interested in Outremont in a 2007 by-election. So was Justin Trudeau. Stéphane Dion was the leader, though, and he thought a political scientist was just the ticket. Dion’s designated nominee, Jocelyn Coulon, did not fare well.
In 2008 Garneau inherited the Liberal nomination, essentially a Wonka golden ticket, in Westmount, as solid a Liberal fortress as any in Canada. Only a catastrophe could lose Westmount for the Liberal. In 2011 it almost happened — Garneau beat the New Democrat by only 642 votes in the party’s worst national defeat in since Confederation. Soon Peter C. Newman had a book out proclaiming the Liberals were history.
“There’s something intimate about being only 33 [MPs in the Liberal caucus], Garneau recalled. “We got to know each other in a kind of a relationship that you don’t get when you’re 150 or 160. So I really enjoyed the collegiality of having that small, small group. Although of course I was hoping it wouldn’t last too long.”
In 2013, Garneau, who hadn’t been interested in commanding a ship, decided to try his chances with a political party. He ran for the Liberal leadership. He had competition.
“I personally believe that I had good policy that I put in the shop window. What I didn’t have — what I still don’t have — is charisma. I’m not interested in charisma, by the way. I’ve lived my life very well without charisma. And I’m not saying the electorate chooses on a superficial basis. But there was something about Justin Trudeau that was incredibly appealing to people.”
Garneau bowed to the inevitable and dropped out of the race. Eighteen months later he was co-chair of the Liberal Party’s “International Affairs Council of Advisors,” with a threefold mission: Figure out the party’s foreign policy; teach foreign policy to a leader with extremely limited experience in the field; and be seen showing interest in foreign policy. The group met regularly. “Trudeau only came occasionally to meet everybody and to sort of stir stir things up and have a really good discussion,” Garneau said.
4. Fire
As co-chair (with Andrew Leslie) of Trudeau’s Council of Advisors, Garneau figured he had a good chance to become foreign minister. He got Transport.
“You know, I’ve lived 17 years of my life abroad. And I love foreign policy. I wasn’t expecting Transport. And it turned out to be a job I loved. Although at first I thought, ‘Why’d he put me in transport?’
“When I got the call that, you know, ‘The Prime Minister wants to meet you,’ I thought — This is after the vetting process, ‘Are there any skeletons in your closet?’ — I thought, ‘What’s he going to put me in?’ I thought, Defence because of my background. I was in the regular forces. Or I thought, then, maybe Industry, because I was the president of the Canadian Space Agency and I worked for the Minister of Industry, Science and Technology at the time. And maybe even Foreign Affairs, because he’d had me in this job for the past two years. I wasn’t expecting Transport.” Garneau chuckled at the incongruity of it. “But now, after a little while, I saw the logic of it. I was in the Navy, ships, so I know the marine environment. I know the air environment. And so there is a certain logic to it. And it’s a job that I came to love.” He held the post for five and a half years. Only David Collenette and Lionel Chevrier lasted longer.
The new governing caucus had five times as many MPs as the Liberal caucus it replaced. “It was a heady experience,” Garneau said. “And there was a certain amount of chaos, which is understandable because it takes a couple of years to learn the basics of your job.”
It must have been a management challenge for the Prime Minister’s Office, I ventured. To have a finance minister, health minister, justice minister, defence minister who’d never been Members of Parliament before, let alone cabinet ministers. How did the PMO handle that? “It was a little bit like when you see kindergarten children all tied up with ropes, going down the street.”
Did the control ever chafe? “I had some times where I felt one way and and I felt that the centre did not necessarily agree with it. Yeah. That comes from the dynamic. If you’ve got your mandate letter, and you interpret that mandate letter the way you feel it must be implemented — you know, the vast majority of the time, no problem. But there was the odd occasion. You’ll forgive me if I don’t go into details on it. But I was very conscious of the fact [that] you have a chief of staff, your chief of staff is a key person for you. But that chief of staff reports to you, but also must report to the chief of staff of the Prime Minister. I made an indirect reference to it in my parting speech, that I sometimes made their life difficult because I might have wanted to go one way whilst the center didn’t necessarily want to go that way.”
We had been talking for more than an hour. I asked Garneau about the Freedom Convoy of January and February 2022, which has been on my mind. Specifically, I asked Garneau about his Liberal caucus colleague Joël Lightbound, who held an astonishing news conference in the second week of the Ottawa siege to say the Liberals’ COVID policy “stigmatizes and divides people.”
“I definitely took very much note of it,” he said of Lightbound’s surgical sortie. “Some of what he said is true. There were people on the Hill that were not extremists. They were just there because they felt that their rights were being not respected.” He faced his share of verbal abuse as he made his way to and from the Hill, but even still —
He paused. “I’ll be very candid. I don’t think we handled it as well as we could have.”
In what sense? “I think there was a sense that, ‘We’re not going to talk to you people. You’re just a bunch of troublemakers.’ I had always been brought up to not avoid dealing with difficult issues. This was an incredibly difficult issue.” Another pause. “So that’s just my personal comment.”
The other thing I wanted to ask him about was the tremendous controversy he and two other back-bench Liberals have stirred up over the interaction between Quebec’s newly beefed-up language law and Bill C-13, which proposes amendments to the federal Official Languages Act. This has put Garneau and his colleagues squarely on the side of Montreal’s anglophone population against a majority of Quebec’s elected politicians. And it’s brought Garneau in for some unaccustomed criticism. Barely two weeks before he resigned, he was complaining about the rough ride from Quebec commentators on Twitter.
12:40 PM ∙ Feb 18, 2023
Garneau’s comments on this were long, and would constitute inside baseball for most readers outside Quebec, but he didn’t like seeing Quebec’s language laws incorporated by reference into a federal bill. “I have very rarely disagreed with my party, but I disagreed with them on that.” It got worse for Garneau when he read 88 amendments introduced by the Bloc Québécois, five of which said that in case of a conflict between federal and provincial legislation, Quebec’s should predominate. Those amendments were eventually rejected, but by then Garneau was already on the record with his concerns. “I’m always ready to face criticism, but it got personal. And I think that’s sad.”
The controversy has been a much bigger deal inside Quebec than outside, but Garneau insisted it’s not why he’s leaving politics.
The reason I’m leaving is because I made that promise to my wife, and to my family. I actually told him after the 2019 election that that was my last election. I had been reappointed to Transport. And I thought, ‘Okay, this is a lovely way to finish.’
“Then in January of 2021, to my great surprise, the Prime Minister [shuffled Garneau.] I think it was motivated by the fact that Navdeep Bains pulled out. The Prime Minister, I personally think that he said, ‘Okay, I want François-Philippe to take over from that. And there’s a bit of musical chairs and I ended up in foreign affairs.
“But seven months later, an election was announced. And I felt, in all good conscience, that after seven months in that portfolio — to now say, ‘Sorry, I’m leaving,’ when I had been the fourth appointed in under six years, it just wouldn’t have been right.
“Now, if the prime minister had told me, ‘Mark, after this election, you won’t be in the cabinet,’ I wouldn’t have run. But he didn’t tell me that.
“I ran hoping to go back into that job. Because Lord knows there were things that I wanted to do. With respect to Afghanistan, China, the Indo-Pacific strategy, I’d been working all that stuff. But the bottom line was that he said, ‘You’re not in cabinet anymore.’
“And so, at this point, I felt it would be really not acceptable for me to say, ‘Okay, thank you for electing me three weeks ago, I’m leaving.’ So I felt I needed to put in some time. To my great personal satisfaction, I was given two things that I really enjoyed. One was to be chair of the Indigenous and Northern Affairs Committee, which I think has an important role with respect to reconciliation. And the other one was kind of unexpected… medical assistance in dying, where I was co-chair with a senator on this special mixed committee.”
That committee presented its final report in February. Garneau resigned three weeks later. He was already in the history books before he ever ran for office. Would he run now, in the atmosphere of today’s politics, if he were just starting out? Is there still room in politics for an engineer who just wants to make things work better? These are eternal questions, and I had already asked Garneau enough questions for one day.
National
Did the Liberals Backdoor Ruby Dhalla to Hand Mark Carney the Crown?
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She was surging in the polls—so why was she secretly disqualified? Was this a race or a coronation?
She Wasn’t Supposed to Win
Ruby Dhalla wasn’t supposed to be a problem. When she entered the Liberal leadership race, she was treated as an afterthought, an outsider with no chance of breaking through. Mark Carney was the clear favorite—not because he had some overwhelming grassroots movement behind him, but because the Liberal swamp had already crowned him as Trudeau’s successor. The decision had been made long before the race even began. But then, something happened that the elites didn’t see coming: Dhalla started gaining traction. She started signing up thousands of new members. She started climbing in the polls. And that’s when the Liberal machine kicked into overdrive to shut her down.
If you’ve been paying attention to Canadian politics, none of this should be surprising. This is how the Liberal Party operates. The leadership race was never about choosing the best candidate; it was about making sure their pre-selected golden boy, Mark Carney, strolled into power without opposition. Dhalla’s rise threatened that plan, and as we’ve seen time and time again, the Liberal establishment has no patience for democracy when it gets in the way of their backroom deals.
Who Is Ruby Dhalla?
Unlike Carney, who spent his career bouncing between bureaucratic positions and the boardrooms of global financial institutions, Ruby Dhalla actually had experience winning elections. She wasn’t a puppet installed by the elites—she had built her own career in politics. Born in Winnipeg to Punjabi immigrant parents, Dhalla had been politically active from a young age. At just 14, she made international headlines for standing up to India’s Prime Minister over Sikh violence, proving early on that she wasn’t afraid to challenge powerful figures.
In 2004, she was elected as Member of Parliament for Brampton—Springdale, becoming one of the first Sikh women in Canada’s Parliament. For seven years, she fought for causes that mattered to working-class Canadians—pushing for foreign credential recognition, better healthcare access, and policies that helped immigrants integrate and succeed instead of being stuck in low-wage jobs.
But the Liberal Party, especially under Trudeau, doesn’t like independent thinkers. Dhalla lost her seat in 2011, took a step back from politics, and then, in 2025, decided to make a comeback. This time, she wasn’t just running on her record—she was running to take back the Liberal Party from the corporate elites, career bureaucrats, and political insiders who had hijacked it. And for a brief moment, it looked like she might actually succeed.
Dhalla’s Platform Was A Direct Threat to the Liberal Swamp
Let’s get one thing straight: Dhalla wasn’t just another Liberal politician running on empty platitudes. She was actually taking on the biggest failures of the Trudeau era—the very policies that have driven the country into the ground.
She was the only candidate willing to take a hard stance on illegal immigration, promising to deport those who entered Canada illegally and crack down on human trafficking networks that had turned Canadian cities into a magnet for asylum scams. This was a direct rebuke of Trudeau’s open-border policies, which flooded major urban centers with asylum seekers while leaving legal immigrants—the ones who actually followed the rules—waiting years in bureaucratic limbo.
She also had the guts to address Canada’s crime wave—something the Liberal establishment refuses to even acknowledge. Under Trudeau, violent crime, carjackings, and organized theft rings have exploded across the country, while the justice system has been hijacked by radical left-wing activists who care more about “rehabilitating” criminals than protecting innocent people. Dhalla called for stronger sentencing laws, increased funding for law enforcement, and an end to the revolving-door justice system that lets repeat offenders walk free. This was a direct challenge to the Liberal Party’s activist wing, which has spent years prioritizing criminals over victims.
Economically, she focused on the cost-of-living crisis that Trudeau’s reckless spending had fueled. While Mark Carney was busy rubbing elbows with globalist elites, Dhalla was actually talking to working-class Canadians who were struggling to afford basic necessities, being crushed by inflation, and priced out of homeownership. She proposed tax relief for small businesses, homeownership incentives, and policies to lower the cost of essential goods. Most importantly, she vowed to end corporate influence over government policy—something that would have put her in direct conflict with the very donors bankrolling Carney’s campaign.
The Fix Was In—And the Liberal Establishment Didn’t Even Try to Hide It
While Dhalla was out winning over actual voters, Carney didn’t have to lift a finger—at least, that’s how she sees it. According to Dhalla, the Bay Street donors, the Liberal bureaucrats, and Trudeau’s inner circle had already decided he would be their next puppet. But her unexpected momentum was throwing a wrench into their plans.
She claims her campaign signed up over 100,000 new members—a surge that, in her view, proved just how many Canadians wanted an alternative to the establishment. Internal polling allegedly showed that she was running neck and neck with Carney, challenging the idea that he was the inevitable frontrunner. Most importantly, she says she was calling out corruption within the party—something the Liberal insiders simply couldn’t tolerate.
That, she argues, is when the knives came out.
According to Dhalla, her campaign faced deliberate obstruction at every turn. She says she was denied access to crucial party membership lists, while Carney’s team faced no such restrictions. She also claims the party handed exclusive control of voter data to Data Sciences, a company with deep ties to both Trudeau and Carney—giving the establishment free rein over the internal mechanics of the race.
Then came what Dhalla describes as a financial ambush. Leadership candidates were required to submit a $350,000 deposit to stay in the race. Her campaign, backed by thousands of small-dollar donors, met that requirement in full. But just days later, she says, the party suddenly hit her with a six-page letter listing 27 allegations—none of which had been raised before she made her final payment. Despite fully cooperating, answering every question, and providing every requested document, Dhalla was disqualified behind closed doors.
But were these serious concerns about party rules and ethics? Or were they just serious concerns for Mark Carney’s leadership bid?
They didn’t even bother waiting for a debate. They removed her just before the first leadership debate in Montreal, ensuring that Carney wouldn’t have to answer a single tough question. The only real challenger was gone. And just like that, the “race” was over.
A Staged Leadership Race
With Dhalla and Chandra Arya—the only two South Asian candidates—mysteriously vanished from the race, the Liberal Party has officially dropped the mask. This is not a party of “inclusion” or “diversity” or whatever meaningless buzzword they trot out when the cameras are rolling. This is a party of insiders, where Trudeau’s handpicked elites play musical chairs with Canada’s future while pretending to hold a fair contest. And now, with the competition conveniently wiped off the board, Mark Carney—the globalist banker with a resume straight out of the Davos job fair—is all but guaranteed his coronation.
And let’s take a moment to acknowledge who’s left. Chrystia Freeland—who doesn’t even bother hiding her ties to Carney (he’s literally her children’s godfather)—isn’t running against him, she’s running as his insurance policy. If, for some reason, Carney stumbles, Freeland will be right there to catch the baton and carry on the exact same elite-driven, Canada-last agenda. And then there’s Karina Gould, a candidate so irrelevant to this race that her sole purpose seems to be testing the waters for the Liberals’ shiny new Marxist project: Universal Basic Income. Because if there’s one thing Trudeau’s Liberals love more than taxing Canadians into the ground, it’s making them dependent on government handouts.
This was never a leadership race. It was a staged coronation, a laughable farce cooked up by the same Liberal swamp who have spent the last decade running Canada into the ground. If this had happened in another country, Canadian politicians would be tripping over themselves to condemn it, talking about how democracy is under attack. But because it happened inside the Liberal Party, the media just shrugs and moves on, pretending this is all perfectly normal. Because, in their world, it is.
And that’s the real story here. If this is how the Liberals run their own leadership race, what do you think they’ll do in the next federal election? If they’re willing to purge their own candidates, rig their own nomination process, and outright silence anyone who dares to challenge their elite-controlled puppet show, then what chance does the average Canadian voter have?
This isn’t just corrupt. It’s disgusting. It’s a slap in the face to every Canadian who still believes in fair elections, free debate, and the basic idea that leaders should be chosen by the people—not installed behind closed doors by Trudeau’s golfing buddies and Bay Street billionaires.
The Liberal Party isn’t a political party anymore. It’s a gated country club for the ruling class, where power is passed around like a family heirloom. And if no one stands up to stop it, they’ll keep getting away with it. The fix is in, the swamp is deeper than ever, and the only question left is: Are Canadians going to do anything about it?
Economy
Meeting Ottawa’s new housing target will require more than $300 billion in additional financing every year until 2030
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From the Fraser Institute
Canada Needs to Save Much More to Finance an Ambitious Investment Agenda
To meet Ottawa’s ambitious new housing construction targets in order to restore affordability, the country needs more than $300 billion in additional financing every year from 2025 to 2030, finds a new report published today by the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.
“To increase home building and restore business investment in key areas like technology to previous levels, Canada needs to become much more attractive to investors, both from within Canada and around the world,” said Steven Globerman, Fraser Institute senior fellow and author of Canada Needs to Save Much More to Finance an Ambitious Investment Agenda.
To restore housing affordability, the Canadian Mortgage and Housing Corporation (CMHC), a Crown Corporation of the federal government, has estimated that about 3.5 million additional housing units need to be built by 2030 given expected construction rates.
The study finds that for the federal government to meet this housing construction goal, an estimated $331 to $364 billion in additional financing is needed annually from 2025-2030.
If business investment in key areas such as communications and IT are to return to previous levels, another roughly $13 billion is needed annually.
In total, this means Canada needs an additional $343 to $377 billion in financing annually over the next five years. To put this into perspective, this is equivalent to increasing the current Canadian savings rate by 50 per cent.
One option to mitigate the need for a drastic increase in the domestic savings rate is to attract more foreign investment, but that will require substantial policy reforms to make Canada a more attractive environment for foreign investors.
“It is very likely that the ambitious targets that have been set for homebuilding and business investment won’t be met, but even so, encouraging increased investment and higher domestic savings is a worthy policy pursuit,” Globerman said.
- Both the Canadian government and policymakers from various organizations including the Bank of Canada have called for ambitious programs to increase capital investment in Canada, particularly investment focused on residential housing and productivity-enhancing business assets.
- The ambitious domestic investment agenda will require a substantial increase in domestic savings in order to finance the necessary increased capital expenditure. The requisite increase has been largely ignored, to date, in policy proposals and surrounding discussion of those proposals.
- The financial capital required to fund major investments in residential housing and even modest increases in business investment will require an increase in the domestic savings rate of as much as 50 percent. Alternatively, much larger inflows of long-term foreign capital investments into Canada beyond what has been realized over the past few decades will be required.
- Such large increases in the domestic savings rate and in foreign capital inflows would require unrealistic and unsustainably high real interest rates. The implication is that the federal government’s investment goals, especially with regard to increasing the supply of residential housing, are unrealizable over the foreseeable future. Nevertheless, implementing policies to encourage increased domestic savings and channeling those savings into high priority investment activities should be a public policy imperative.
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