From the Fraser Institute

By Jake Fuss and Grady Munro

The Carney government is not making deep cuts but rather simply slowing the pace of spending increases. In fact, Prime Minister Carney is on track to be a much bigger spender than Justin Trudeau (the highest-spending prime minister in Canadian history)

Earlier this month, federal Finance Minister François-Philippe Champagne told his fellow cabinet members to present “ambitious savings proposals” to help constrain federal spending. In response, public-sector unions cried foul while some pundits inexplicably compared Champagne’s request to the Chrétien government’s substantial spending cuts in the 1990s.

Time for a reality check. Champagne told cabinet ministers to find operational savings in their respective departments of 7.5 per cent in 2026/27, 10 per cent in 2027/28 and 15 per cent in 2028/29. But the government will exclude more than half of all federal spending from this so-called “comprehensive expenditure review” on things such as individual benefits (e.g. Old Age Security) and transfers to the provinces (health care, etc.).

According to the Canadian Union of Public Employees (CUPE), these “draconian rollbacks” will produce massive “cuts to direct program spending” over the next three years. But that almost certainly will not be the case. While we won’t know for sure until the federal budget finally arrives in the fall, the “cuts” proposed by the Carney government won’t actually reduce overall spending. In fact, federal spending will likely increase.

Here’s why. In December, The Trudeau government planned to increase program spending from $504.1 billion in 2025/26 to $547.8 billion by 2028/29. According to rough calculations based on the Liberal Party election platform, the Carney government plans to further increase spending to a projected $533.3 billion in 2025/26 and $566.4 billion in 2028/29. The government also plans to substantially increase military spending on top of these increases. So, any “ambitious savings proposals” over the next three years may help cover some, but almost certainly not all, of these planned spending increases.

To put this in context, consider a household that spent $500 on entertainment in 2025 and plans to double that amount to $1,000 by 2028. Then some unforeseen circumstance makes that family scale back its plans. They decide to trim the $1,000 by 15 per cent and now only plan to spend $850 by 2028. This is not a cut or reduction in year-over-year spending—they still plan to spend 70 per cent more on entertainment three years from now than they do today. The family simply slowed the growth rate of planned spending. However, if the family reduced entertainment spending by 15 per cent from current levels ($500 in 2025), they would spend $425 in 2028.

Likewise, the Carney government is not making deep cuts but rather simply slowing the pace of spending increases. In fact, Prime Minister Carney is on track to be a much bigger spender than Justin Trudeau (the highest-spending prime minister in Canadian history) and plans to borrow a projected $224.8 billion over the next four years to pay for this profligate spending—$93.4 billion more than Trudeau planned to borrow. Again, this is not austerity.

And what about those allusions to the Chrétien spending reductions of the ’90s? Back then, the federal government did not merely slow the growth in spending, but instead reduced spending year-over-year by $11.9 billion (or 9.7 per cent) over a two-year period. Chrétien made difficult decisions and left nothing off the table in his spending review (except what was then called the Department of Indian and Northern Affairs). He reduced transfers to the provinces, reduced department expenses, and shrunk the size of bureaucracy by nearly 15 per cent.

Ignore the voices who call the Carney government’s “ambitious savings” plan the “worst spending cuts in modern history.” It’s wildly inaccurate and represents a fundamental misunderstanding of fiscal policy. Carney is actually poised to become an even bigger spender than Justin Trudeau.

From the Fraser Institute

By Ben Eisen

According to new data from Statistics Canada, young Canadians are facing a historically challenging job market. In June, the unemployment rate for young people (aged 15-24) was 14.2 per cent, up from 13.5 per cent in June 2024, which was already a bad year in historical terms. By comparison, in the pre-pandemic years from 2017 to 2019, the average youth unemployment rate in June averaged 10.9 per cent.

If you’re a young Canadian, or are related to one, this likely comes as no surprise. Summer jobs are getting harder to find. When we zero in specifically on students returning to school in the fall, we see similarly bleak numbers and a worrying multi-year trend. In 2022, the June unemployment rate for returning students age 15-24 was 10.2 per cent—that number climbed to 15.8 per cent last June and 17.4 per cent this June (outside of the pandemic years, this is the highest June unemployment rate for this group since 2009).

Moreover, while the unemployment rate shows the share of people in the workforce (that is, people working or looking for work) who are not employed, in recent years there has also been a significant drop in the employment rate (the share of people who have paid employment). In June, the youth employment rate was 54.3 per cent, down from an average level of 58.4 per cent from 2017 to 2019.

Of course, all of this is bad news in the short term for young people who are missing out on employment income. However, for young Canadians who can’t find summer jobs, there could also be negative lifelong effects. According to several decades of research, early connection to the workforce can increase employment prospects and wages in adulthood. Young Canadians missing out on work can experience “prolonged scarring effects” that can hurt their “human capital and future development.” In other words, the less work experience you have in your younger working years, the less prepared you may be for a career and future job opportunities.

So, how can policymakers help increase employment opportunities for young Canadians?

Some experts have pointed to the large influx of temporary foreign workers who compete with young Canadians for entry-level jobs. It’s also noteworthy that many provinces have increased their minimum wages substantially over the past decade. Because evidence suggests that higher minimum wages can reduce youth employment, these increases may have made it more difficult for young Canadians to find work this summer. Policymakers should review any policy that may limit employment opportunities for young Canadians.

Summer jobs aren’t just an important source of income; they are also an opportunity to gain experience, knowledge and connections, which can provide benefits for a lifetime. Canada’s multi-year summer job slump isn’t just a seasonal problem; it’s a serious long-term challenge that may cause lasting harm to a generation’s economic future. Policymakers should treat it as such.

Ben Eisen

Senior Fellow, Fraser Institute