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Canada’s Financial Freefall: When Rosy Rhetoric Meets Hard Reality

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This article is from The Opposition With Dan Knight substack.  

The Trudeau Government’s Economic Alchemy: Turning Gold Hopes Into Lead Numbers

Good morning, my fellow Canadians. It’s September 3, 2023, and if you’re expecting to wake up to a bright, financially secure Canada, well, I have some sobering news for you. The latest figures from Statistics Canada are in, and they confirm what many of us have suspected: the Canadian economy is not on the up-and-up. Despite the rosy pictures painted by Prime Minister Justin Trudeau and Finance Minster Chrystia Freeland, the real numbers don’t lie, and they point to an economic landscape in turmoil. Allow me to break it down for you.

The new Statistics Canada data is in, and it paints a rather bleak picture of the Canadian economy under the watchful eyes of the federal government and Justin Trudeau. Let’s delve into some numbers, shall we? A staggering $16.5 billion in debt was added by Canadian households in the first quarter of this year alone, with $11.2 billion being in mortgage debt. In an environment of 5% interest rates, a rate we haven’t seen for over a decade, this is a financial bomb waiting to explode.

And let’s not forget inflation. Since 2021, we’ve seen a cumulative inflation rate of around 16.5%. Now, remember, these aren’t just abstract numbers on a ledger somewhere; these are realities hitting your grocery bills, your gas prices, your rents, and slowly emptying your wallets. But it’s not just households feeling the pinch. The economy as a whole is stalling, with real GDP nearly unchanged in the second quarter of 2023, following a measly 0.6% rise in the first quarter.

Amidst all this, Justin Trudeau and the federal government seem content piling on debt like there’s no tomorrow. The Parliamentary Budget Officer’s March 2023 report shows Canada’s deficit is expected to rise to $43.1 billion in 2023-24, up from $36.5 billion in 2022-23. And let’s not forget that 1 out of every 5 dollars in this debt spree didn’t even exist pre-pandemic. Essentially, we’re spending money we don’t have, to solve problems we’re not solving, all while making new ones.

So, where has all this spending gone? Not into securing a robust future for Canadians, I can tell you that. Despite the monumental deficits and the reckless spending, housing investment fell 2.1% in the second quarter,marking its fifth consecutive quarterly decrease. Canadians are struggling to make ends meet, and the government’s financial imprudence is exacerbating, not alleviating, the situation.

But here’s a twist to the story: while investments in housing decline, Justin Trudeau decided it was prime time to open the floodgates of immigration. There’s an aspect of governance called planning, something that seems foreign to this administration. How does one justify allowing over a million immigrants into Canada without even hinting at a solution for housing them? The result is basic economics – demand outstrips supply, and prices soar.

Remember the days before Trudeau’s reign, when the average home in Canada cost around $400,000? Eight years under his watch and that figure has doubled. Trudeau’s policies seem like a cruel jest to young families, professionals, and, frankly, anyone aspiring to own a piece of the Canadian dream. It’s almost as if he expected the housing market to “balance itself”.

And before you think this is just a ‘rough patch,’ let me remind you that household spending is also slowing. So not only are Canadians going into debt, but they’re also cutting back on spending. They’re being hit from both sides, and there’s no end in sight. The government’s promises of prosperity seem increasingly hollow when we see that per capita household spending has declined in three of the last four quarters.

The Trudeau administration’s approach to governing appears to be in a parallel universe, one where debt is limitless, and financial responsibilities are for the next government or even the next generation to sort out. And don’t even get me started on the higher taxes lurking around the corner to pay off this bonanza of spending. This isn’t governance; it’s financial negligence.

When Canadians were told that this level of inflationary spending could turn our country into something akin to Venezuela, many scoffed at the idea. But let’s face it: the signs are becoming hard to ignore. The truth is, many Canadians have been led to believe they can have gold-plated social services without paying an ounce of gold in taxes. Prime Minister Justin Trudeau seemed more than happy to sell that narrative. He promised a utopia, a social safety net woven from dreams and aspirations. But what has that net caught? Rising costs, crippling debt, and a harder life for everyday Canadians.

Trudeau has turned out to be less a responsible steward of the economy and more of a Pied Piper, leading us all off a fiscal cliff while playing a cheerful tune. Or perhaps he’s more like the Cheshire Cat from “Alice in Wonderland,” grinning broadly as he disappears, leaving behind only his grin and a trail of false promises.

As we approach the pivotal year of 2025, don’t forget who sold you this bill of goods. Remember the skyrocketing costs of living, the unmanageable debt, and the empty words that were supposed to make everything better. I, for one, certainly won’t forget. And I suspect, come election time, neither will you.

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International

Canada’s lost decade in foreign policy

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Macdonald-Laurier Institute

By Joe Varner for Inside Policy

Our allies no longer doubt our values – they doubt our value.

Ten years after promising a return to global relevance, Canada’s foreign policy is defined not by what we do – but by what we fail to do – or fail to show up for.

When Prime Minister Justin Trudeau declared in 2015 that “Canada is back,” he promised to restore the country’s global voice and moral leadership. Ten years later, Canada is indeed back – but not in the way he intended. We are back to irrelevance, back to strategic incoherence, and back to being ignored by allies and adversaries alike. Across a decade of shifting crises, Canadian foreign policy under Prime Ministers Trudeau and Carney have become a case study in good intentions, miserable excuses, poor execution, and chronic unseriousness.

Nowhere was this clearer than in the fight against the Islamic State (ISIS). In October 2014, Stephen Harper’s government committed six CF-18 Hornets, two CP-140 Auroras, and a CC-150 Polaris refueller to the US-led coalition against ISIS, forming the backbone of Canada’s Operation Impact. Canadian aircraft conducted 251 airstrikes in the first six months, striking ISIS positions in Iraq and later Syria. When Trudeau took office in November 2015, his first major foreign-policy act was to withdraw the CF-18s, formally announced on February 8, 2016. The air campaign ended within weeks, replaced by a “train-advise-assist” mission that expanded our trainers in northern Iraq but sharply reduced our combat capability and influence. The decision was framed as moral sophistication but in practice it was viewed as a marked retreat.

The Syrian refugee crisis that erupted in 2015 became the emotional centrepiece of the Trudeau Liberals’ election campaign and his government’s first term – a symbolic gesture of compassion that ignored operational realities. Within weeks of taking office, Ottawa pledged to bring 25,000 Syrian refugees by February 2016, compressing a process that normally took a year into just 100 days. The first flights landed in Toronto and Montreal on December 10, 2015, to global and domestic applause. Behind the scenes, the RCMP and CSIS officials warned that the accelerated timeline left gaps in security screening, and the provinces struggled to provide housing and integration services. It was in the end humanitarian theatre – an election promise kept at the expense of process, capacity, and Canadian national security.

The Syrian refugee crisis saw the Trudeau government jettison Canada’s immigration policy for domestic political purposes. A few years later, when Canadians who had joined ISIS – so-called “foreign fighters” – began to return home between 2017 and 2023, the same government that had championed compassion responded with confusion. Roughly 60 foreign fighters returned to Canada, yet very few were successfully prosecuted under federal anti-terrorism laws. Instead, Ottawa relied on peace bonds, deradicalization programs, and surveillance costing millions of dollars per case. The spectacle intensified in 2022 and 2023 with the repatriation, under court order, of dozens of ISIS brides and their children from Kurdish detention camps. Many arrivals required extensive monitoring and support while families of ISIS victims  protested that justice had been denied. The government’s oft-repeated line that “a Canadian is a Canadian” sounded inclusive; it came to symbolize moral inconsistency and policy drift. Critics viewed the hospitality bill reported in the popular press for ISIS Brides and children as an irresponsible fiscal and moral outrage.

Afghanistan was the ultimate test of Canada’s so-called “feminist foreign policy,” and it failed dramatically. When Kabul fell on August 15, 2021, Ottawa was unprepared despite months of intelligence warnings about the Taliban’s advance, and a knowledge of the Biden administration’s draw down and withdrawal. Operation Aegis, Canada’s evacuation effort, began late and ended early. Between August 4 and 26, the Canadian Armed Forces managed three evacuation flights, moving about 3,700 people while allies such as the US and the UK moved tens of thousands. The final RCAF flight departed before the US withdrawal on August 30, leaving hundreds of locally employed interpreters, contractors, and NGO partners stranded. Subsequent reports confirmed that internal direction from the defence minister led officials to prioritize select religious minorities like Sikhs with political connections over interpreters and Afghan women who had worked with Canadian agencies. Veterans and civil-society groups accused Ottawa of politicizing rescue lists while publicly boasting of compassion. For all the talk of empowering women and girls, the people most at risk were left behind in favour of Canadian domestic political interests in the Liberals’ Sikh support base.

In the Middle East, the 2018 rupture with Saudi Arabia remains one of the costliest self-inflicted diplomatic crises in recent memory. A tweet from the Foreign Minister calling for the release of a dissident sparked sweeping retaliation from Riyadh: the expulsion of Canada’s ambassador, suspension of trade and investment, cancellation of flights, and the withdrawal of thousands of Saudi students from Canadian universities. The Gulf Cooperation Council sided with Riyadh, leaving Canada isolated. It took more than four years to rebuild relations, and during that period Ottawa was excluded from key regional energy and security discussions. The episode became a cautionary tale of social-media diplomacy without strategy.

Canada’s approach to Israel and Palestine mirrored the pattern of ambiguity that has defined our broader foreign policy under the Trudeau and Carney liberals. Beginning in 2019, Ottawa reversed a long-standing position by supporting a UN resolution condemning Israeli settlements and endorsing Palestinian statehood – Canada’s first such vote in 14 years. When Hamas launched its October 7, 2023, terrorist attacks against Israel that killed more than 1,200 people, Canada’s initial response was cautious and slow. Statements emphasized proportionality and restraint rather than moral clarity. Two years later, in April 2025, Ottawa recognized a Palestinian state while hostilities with Hamas and other Iranian-backed groups were ongoing. The move alienated allies in Washington and Jerusalem, who warned that premature recognition risked legitimizing a territory still controlled by organizations committed to Israel’s destruction. President Trump went as far as to suggest that Canada had rewarded Hamas for the October 7 terror attack on Israel.

On Iran, engagement drifted into accommodation. After years of delay, Ottawa finally listed Iran’s Islamic Revolutionary Guard Corps (IRGC) as a terrorist entity in 2025 – long after allies such as the United States had done so and only following sustained pressure from Parliament and the families of victims of Flight PS752, which the Iranian Islamic Revolutionary Guard Corps (IRGC) shot down in January 2020, killing 55 Canadian citizens and 30 Canadian permanent residents. The long-overdue designation was more symbolic than strategic. Canada has become, by default, a refuge for individuals linked to the Iranian regime, including relatives of senior officials who live and invest here with impunity. Members of the Iranian diaspora report regular intimidation, surveillance, and threats from Tehran’s proxies operating on Canadian soil – activities that persist despite repeated calls for stronger counterintelligence and enforcement. For all its rhetorical commitment to human rights, Ottawa has failed to translate outrage into action. What passes for engagement with Iran today is less diplomacy than moral fatigue disguised as principle.

Relations with the US fared little better. The renegotiation of NAFTA in 2017–18 produced the United States-Mexico-Canada Agreement (USMCA) – a deal that preserved supply management but conceded ground on automotive exports and dispute-resolution mechanisms. Tariffs on steel and aluminum followed in 2025, and Canada’s retaliatory levies could not hide the reality of diminished leverage. Chronic underinvestment in defence and intelligence further eroded trust. When the United States, the United Kingdom, and Australia formed the AUKUS pact in 2021 to share advanced defence technology, Canada was not consulted. In 2022, after years of frustrating delays, NORAD modernization hedged forward but by 2025 Canada had yet committed the full $38 billion required to upgrade continental defences. Years of delay in replacing the CF-18 fighter fleet key to NORAD – starting during the 2015 election campaign by the Trudeau Liberals – only resolved when Ottawa reversed course and ordered the same F-35s in 2023, the same planes that Trudeau once derided. In 2025, Prime Minister Carney placed the F-35 purchase under an election campaign review – reinforcing the impression of drift. To allies, Canada increasingly appeared as a moral commentator rather than a security contributor.

The federal government’s misreading of China compounded the damage. While allies recalibrated against Beijing’s coercion, Ottawa continued to chase trade and investment under the illusion that China could be both partner and rival to play off against the US. That fiction collapsed in December 2018 when Beijing detained Canadians Michael Kovrig and Michael Spavor in retaliation for Canada’s arrest of Huawei executive Meng Wanzhou. The two men spent 1,020 days in secret detention under harsh conditions before their release in September 2021 – the same day Meng returned to China. Ottawa’s response throughout was hesitant, relying on “quiet diplomacy.” Even as other democracies expelled Chinese diplomats and banned Huawei, Canada delayed until 2022, becoming the last member of the “Five Eyes” intelligence alliance to act. Beijing’s execution and death sentences for Canadian citizens in 2019 elicited only muted protest by the Trudeau government. Despite fresh warnings of political interference in domestic affairs and elections campaigns, progress toward a foreign-influence registry remains halting. The cumulative impression is of a government reluctant to confront reality even as its allies in North America, Europe, and Asia are hardening their stance against Beijing.

Europe tells a similar story. The war in Ukraine has exposed the gulf between Canada’s rhetoric and its resources. Although NATO adopted its two-per cent-of-GDP defence-spending target in 2014, successive Canadian governments have treated it more as aspiration than obligation. Publicly, the Trudeau government endorsed the goal; privately, Trudeau told NATO leaders in 2017 that Canada would “never” reach it, a remark later reported in the Washington Post and confirmed by alliance officials. Eight years on, the numbers bear him out. Canada’s defence spending has hovered near 1.4 per cent of GDP, third from the bottom in NATO, even as Poland and the Baltic states have surged past four per cent and re-armed against Russia.

Under Prime Minister Carney, Ottawa now insists that the target will finally be met – on paper at least. In June 2025, the Carney government pledged to reach the spending benchmark by March 31, 2026, under what officials describe as a “re-baselined” accounting framework. In practice, much of the projected increase relies on broad definitions of “defence-related” spending – everything from veterans’ benefits and pensions to Arctic infrastructure and cybersecurity initiatives – that many allies may not accept as true military expenditure. To use a polite phrase, there is considerable voodoo math involved.

Equally puzzling is Ottawa’s rhetorical commitment to a new NATO 5-per cent-of-GDP goal without any credible path or plan to achieve it. Since Russia’s full-scale invasion in February 2022, Canada’s military aid to Ukraine has remained constant but promised weapons shipments have been delayed or cancelled and participation in major NATO exercises curtailed by personnel and equipment shortages. At home, procurement paralysis has left the Canadian Army, Royal Canadian Navy and Royal Canadian Air Force under-equipped and increasingly unready for its primary role of defending Canada. Meanwhile, Ottawa refused for years to leverage Canada’s vast natural-gas reserves to help Europe reduce dependence on Russian energy, insisting there was “no business case” for Atlantic Liquified Natural Gas (LNG) exports. Only after 2025, under Carney, did talk of trade and energy re-engagement resume – too late to shape outcomes. In Brussels, Canada is now viewed less as a dependable ally than as a rhetorical one: a country that still talks like a middle power but spends like a minor one.

The sum of these choices is a Canada that no longer matters as it once did. We are too hesitant to deter, too divided to lead, and too sanctimonious to partner effectively. The language of virtue has replaced the practice of real strategy. Foreign policy is not theatre; it is the disciplined pursuit of national interest, backed by capability and clarity. For ten years we have confused applause at home and sometimes abroad with achievement and hashtags with hard power. The result is a diminished country adrift in an age of international danger – irrelevant in Washington, distrusted in Jerusalem, ignored in Riyadh, dismissed in Beijing, and barely tolerated in Brussels. Our allies no longer doubt our values – they doubt our value.

So, how do we not lose the next decade too? If Canada is to regain its standing, it must first rediscover seriousness. That means returning to the fundamentals of statecraft: credible defence spending, strong military power, clear strategic priorities, and the courage to act rather than advertise. Meeting NATO’s two-per cent commitment must be a floor, not a mirage built on creative accounting. Canada must modernize its armed forces, rebuild its defence industrial base, and restore operational readiness in the Arctic and abroad.

Diplomatically, Ottawa must re-anchor itself within the democratic alliance system – treating Washington, London, and Brussels as indispensable partners rather than convenient props. Engagement with China should be rooted in deterrence and human-rights enforcement, not wishful economics. Canada needs to field a well-equipped brigade in Latvia and lead by example to deter Russia. In the Middle East, Canada must again stand firmly with Israel’s right to exist while pushing back on Iran and its regional proxies.

Canada must once again take a principled stance on human rights and targeted economic development compatible with our national interests and the strategic realities on the ground in regions like Africa.

At home, foreign policy should once again serve national interest rather than transactional domestic political theatre. Canada’s influence was never built on slogans but on capability, credibility, and sacrifice – from Vimy Ridge to Juno Beach and from Kapyong to Kandahar. Those qualities are not lost; they are merely dormant. The path back is not through hashtags or press conferences, but through purpose, power, and principle. Only when Canada stops pretending to lead and starts preparing to lead will the world take us seriously again. If “Canada is back” is ever to mean something again, it must be said not from a podium, but from a position of strength. Power respects power – and until Canada remembers that – no one will remember us.


Joe Varner is a senior fellow at the Macdonald-Laurier Institute and the Center for North American Prosperity and Security, and deputy director of the Conference of Defence Associations.

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Canada At Risk Of Losing Control Of Its Northern Territories

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From the Frontier Centre for Public Policy

By Gerry Bowler

Canada has left the North wide open to foreign powers eager to grow their Arctic foothold

Canada is in danger of losing the Arctic because Ottawa has ignored the North for far too long.

The Canadian North makes up 40 per cent of our land mass and includes more than 19,000 islands in the Arctic Archipelago. Yet only about 120,000 people live across this enormous stretch of wilderness. Canada took control of the region in the late 19th century through territorial transfers from the Hudson’s Bay Company and the British Crown, one of the largest land transfers in history.

For decades afterward, the North received little federal attention. The Second World War briefly changed that, prompting construction of the Alcan Highway to Alaska and bringing new airfields and telephone lines.

The Cold War, along with the threat of Soviet bombers crossing the Pole, led to multiple radar lines. Still, Prime Minister St-Laurent admitted in the 1950s that Canadian governments had treated the North “in an almost continuing state of absence of mind.”

John Diefenbaker’s Progressive Conservative administration tried to reverse that neglect. In 1958, he told a Winnipeg audience: “I see a new Canada—a Canada of the North! … We intend to carry out the legislative program of Arctic research, to develop Arctic routes, to develop those vast hidden resources the last few years have revealed.”

Plans for a research and industrial city in Frobisher Bay, new roads and railway lines and wide-ranging surveys were ambitious but ultimately unaffordable. In the years that followed, both Liberal and Conservative governments again set northern development aside.

Foreign interest, however, continued to grow. The Canadian Security Intelligence Service recently reported Russian and Chinese attempts at influence and subversion in our northern territories.

American governments over the past 20 years have shown serious interest in the region’s resources, which include significant oil, gas and mineral deposits, along with control of the Northwest Passage, a shipping route becoming increasingly accessible as Arctic sea ice recedes.

Canada considers those waters national; the United States, the European Union and at times China argue it is an international strait.

For all practical purposes, Canada has what amounts to no meaningful presence north of the tree line, leaving the field open to countries with far more ambition and far better-equipped forces.

Canada is in no position to defend its claims. We have no icebreakers capable of operating through the Arctic winter. We have no submarines that can work under the ice cap. We have no permanent air base for fighter jets.

And to cover two million square kilometres of Arctic territory, we have only 300 troops stationed there. The chance they could detect, let alone repel, a serious intruder is essentially zero. Without these capabilities, Canada cannot properly monitor activity in the region or enforce its sovereignty claims.

In the last federal budget, Ottawa announced a $1-billion Arctic infrastructure fund for new airports, seaports and all-season roads. Our foreign affairs minister has urged NATO to pay more attention to the Arctic, saying it “must be an organization not only that focuses on the eastern flank, but also that looks north.”

These steps are gestures, not strategy. Canadian governments excel at promises but struggle with procurement, and the idea that European allies might fill the gap, considering their weak response to Russia’s assault on Ukraine, is unlikely.

Our northern territory is under threat. We must use it or lose it.

Gerry Bowler is a Canadian historian and a senior fellow of the Frontier Centre for Public Policy.

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