The Lost Liberal Decade: Carney's Mini-Budget Has No Plan for Canada's Productivity Crisis
Canada's productivity has flatlined for a decade under Liberal rule. Every economist in the country agrees it's the defining economic crisis of our era. Carney's spring economic update — despite a $66.9 billion deficit — contains no serious plan to fix it. What it contains instead: new government agencies that duplicate existing departments, misleading international comparisons, $37.5 billion in new spending, and a "wealth fund" built on borrowed money. Ten years. $554 billion in new debt. No results.
On Tuesday, Finance Minister François-Philippe Champagne stood in the House of Commons and declared: "Today, we're restoring fiscal discipline." He then tabled a spring economic update that adds $37.5 billion in new spending — bringing Canada's deficit for 2025-26 to $66.9 billion.
For context: the deficit Carney promised to reduce was $78.3 billion. A revenue windfall — Canadians paying more taxes as the economy performed better than expected — brought it down to $60.6 billion. Then the government spent $6.3 billion more than the windfall, pushing it back up to $66.9 billion. Poilievre's summary was blunt: "He doubled the deficit."
But the bigger story isn't the number. It's what's missing.
The Productivity Crisis They Won't Name
Canada's GDP per capita growth has been among the weakest in the developed world for over a decade. Business investment per worker is declining. Our technology adoption rate lags behind peers. Young Canadians are less productive than their parents' generation was at the same age — not because they work less hard, but because the policy environment has discouraged the capital investment and competition that drives real productivity gains.
Every serious economist, including Carney himself, has acknowledged the crisis. And yet this economic update — like the fall budget before it — contains no big policy swing to address it. No meaningful tax reform. No serious deregulation. No plan to reduce the structural friction that makes Canada one of the hardest places in the G7 to build anything.
What it does contain: a "whole-of-government competition plan," a new $103.8 million Defence Investment Agency (doing work that is already the mandate of the Department of National Defence), a new "Canada Strong Fund Transition Office," and "comprehensive mandate reviews" of existing federal financing bodies. More agencies. More offices. More reviews. The thing that Canada's private sector has been screaming it doesn't need.
The Misleading Comparison
The Carney government's spring update trumpets Canada's relatively low net debt compared to other G7 nations. But this comparison is deliberately misleading. Canada's net debt figure looks rosy because the Canada Pension Plan — unlike pension systems in most other countries — is fully funded. CPP assets offset government liabilities in the calculation. Other G7 countries operate pay-as-you-go pension systems, which makes their gross debt figures look worse by comparison.
Strip out that structural advantage and Canada's fiscal position is considerably less flattering. The government knows this. It buried the methodology in the fine print.
The $56 Billion Deficit — By 2031
The spring update contains projections stretching over three decades. What those projections show, buried past the headline-friendly near-term numbers: Canada will still be running a $56 billion annual deficit by the end of this decade — up from the $20 billion projected in budget 2024. Two years and $36 billion worse than the plan from just two years ago.
And those projections, like every Liberal projection before them, assume no new spending shocks, no recession, no pandemic, no unforeseen crises. Past Liberal budgets projected balance. They never arrived. There is no reason to believe these projections will be different.
What Accountability Looks Like
Conservative Leader Pierre Poilievre offered the simplest summary of what the update missed: Canadians are paying more for everything — groceries, rent, gas, mortgages — while the government adds more bureaucracy, more debt, and more agencies that duplicate existing functions. "This prime minister has been wrong about everything," Poilievre said during the budget debate. "And now he's asking Canadians to trust his 30-year projections."
A government serious about the productivity crisis would cut the consumption taxes that punish spending, reduce the payroll and corporate taxes that discourage investment, and eliminate the regulatory layers that stop projects from getting built. Instead, Carney launched a Major Projects Office to work around the broken system — without fixing the system. Then he announced a Defence Investment Agency to duplicate DND. Then a new fund office. Then a competition plan with no concrete targets.
The lost Liberal decade isn't just a slogan. National Post published 13 charts this week documenting the economic decline in precise terms. The spring economic update is the Liberals' answer to that record. It amounts to more of the same — dressed up in different branding, funded by your grandchildren's taxes.