Here’s what pundits and analysts get wrong about the Carney government’s first budget

Under the new budget plan, this wedge between what the government collects in revenues versus what is actually spent on programs will rise to 13.0 per cent by 2029/30. Put differently, slightly more than one in every eight dollars sent to Ottawa will be used to pay interest on debt for past spending.

The Carney government’s much-anticipated first budget landed on Nov. 4. There’s been much discussion by pundits and analysts on the increase in the deficit and borrowing, the emphasis on infrastructure spending (broadly defined), and the continued activist approach of Ottawa. There are, however, several critically important aspects of the budget that are consistently being misstated or misinterpreted, which makes it harder for average Canadians to fully appreciate the consequences and costs of the budget.

One issue in need of greater clarity is the cost of Canada’s indebtedness. Like regular Canadians and businesses, the government must pay interest on federal debt. According to the budget plan, total federal debt will reach an expected $2.9 trillion in 2029/30. For reference, total federal debt stood at $1.0 trillion when the Trudeau government took office in 2015. The interest costs on that debt will rise from $53.4 billion last year to an expected $76.1 billion by 2029/30. Several analyses have noted this means federal interest costs will rise from 1.7 per cent of GDP to 2.1 per cent.

These are all worrying statistics about the indebtedness of the federal government. However, they ignore a key statistic—interest costs as a share of revenues. When the Trudeau government took office, interest costs consumed 7.5 per cent of revenues. This means taxpayers were foregoing 7.5 per cent of the resources they sent to Ottawa (in terms of spending on actual programs) because these monies were used to pay interest on debt accumulated from previous spending.

Under the new budget plan, this wedge between what the government collects in revenues versus what is actually spent on programs will rise to 13.0 per cent by 2029/30. Put differently, slightly more than one in every eight dollars sent to Ottawa will be used to pay interest on debt for past spending. This is one way governments get into financial problems, even crises, by continually increasing the share of revenues consumed by interest payments.

A second and fairly consistently misrepresented aspect of the budget pertains to large spending initiatives such as Build Canada Homes and Build Communities Strong Fund. The former is meant to increase the number of new homes, particularly affordable homes, being built annually and the latter is intended to provide funding to provincial governments (and through them, municipalities) for infrastructure spending. But few analysts question whether or not these programs will produce actual new spending for homebuilding or simply replace or “crowd-out” existing spending by the private sector.

Let’s first explore the homebuilding initiative. At any point in time, there are a limited number of skilled workers, raw materials, land, etc. available for homebuilding. When the federal government, or any government, initiates its own homebuilding program, it directly competes with private companies for that skilled labour (carpenters, electricians, etc.), raw materials (timber, concrete, etc.) and the land needed for development. Put simply, government homebuilding crowds out private-sector activity.

Moreover, there’s a strong argument that the crowding out by government results in less homebuilding than would otherwise be the case, because the incentives for private-sector homebuilding are dramatically different than government incentives. For example, private firms risk their own wealth and wellbeing (and the wellbeing of their employees) so they have very strong incentives to deliver homes demanded by people on time and at a reasonable price. Government bureaucrats and politicians, on the other hand, face no such incentives. They pay no price, in terms of personal wealth or wellbeing if homes, are late, not what consumers demand, or even produce less than expected. Put simply, homebuilding by Ottawa could easily result in less homes being built than if government had stayed out of the way of entrepreneurs, businessowners and developers.

Similarly, it’s debatable that infrastructure spending by Ottawa—specifically, providing funds to the provinces and municipalities—results in an actual increase in total infrastructure spending. There are numerous historical examples, including reports by the auditor general, detailing how similar infrastructure spending initiatives by the federal government were plagued by mismanagement. And in many circumstances, the provinces simply reduced their own infrastructure spending to save money, such that the actual incremental increase in overall infrastructure spending was negligible.

In reality, some of the major and large spending initiatives announced or expanded in the Carney government’s first budget, which will accelerate the deterioration of federal finances, may not deliver anything close to what the government suggests. Canadians should understand the real risks and challenges in these federal spending initiatives, along with the debt being accumulated, and the limited potential benefits.

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Related Topics:#FederalDebt #FraserInstitute #JakeFuss 2025FederalBudget CarneyBudget feature FederalInterestPayments JasonClemons

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Canada’s EV Mandate Is Running On Empty

Automotive / 6 hours ago

Trump Deals Biden’s EV Dreams A Death Blow

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Automotive

Canada’s EV Mandate Is Running On Empty

Published on December 6, 2025

Todayville

From the Frontier Centre for Public Policy

By Marco Navarro-Genie

At what point does Ottawa admit its EV plan isn’t working?

Electric vehicles produce more pollution than the gas-powered cars they’re replacing.

This revelation, emerging from life-cycle and supply chain audits, exposes the false claim behind Ottawa’s more than $50 billion experiment. A Volvo study found that manufacturing an EV generates 70 per cent more emissions than building a comparable conventional vehicle because battery production is energy-intensive and often powered by coal in countries such as China. Depending on the electricity grid, it can take years or never for an EV to offset that initial carbon debt.

Prime Minister Mark Carney paused the federal electric vehicle (EV) mandate for 2026 due to public pressure and corporate failures while keeping the 2030 and 2035 targets. The mandate requires 20 per cent of new vehicles sold in 2026 to be zero-emission, rising to 60 per cent in 2030 and 100 per cent in 2035. Carney inherited this policy crisis but is reluctant to abandon it.

Industry failures and Trump tariffs forced Ottawa’s hand. Northvolt received $240 million in federal subsidies for a Quebec battery plant before filing for bankruptcy. Lion Electric burned through $100 million before announcing layoffs. Arrival, a U.K.-based electric van and bus manufacturer, collapsed entirely. Stellantis and LG Energy Solution extracted $15 billion for Windsor. Volkswagen secured $13 billion for St. Thomas.

The federal government committed more than $50 billion in subsidies and tax credits to prop up Canada’s EV industry. Ottawa defended these payouts as necessary to match the U.S. Inflation Reduction Act, which offers major incentives for EV and battery manufacturing. That is twice Manitoba’s annual operating budget. Every Manitoban could have had a two-year tax holiday with the public money Ottawa wasted on EVs.

Even with incentives, EVs reached only 15 per cent of new vehicle sales in 2024, far short of the mandated levels for 2026 and 2030. When federal subsidies ended in January 2025, sales collapsed to nine per cent, revealing the true level of consumer demand. Dealer lots overflowed with unsold inventory. EV sales also slowed in the U.S. and Europe in 2024, showing that cooling demand is a broader trend.

As economist Friedrich Hayek observed, “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.” Politicians and bureaucrats cannot know what millions of Canadians know about their own needs. When federal ministers mandate which vehicles Canadians must buy and which companies deserve billions, they substitute the judgment of a few hundred officials for the collective wisdom of an entire market.

Bureaucrats draft regulations that determine the vehicles Canadians must purchase years from now, as if they can predict technology and consumer preferences better than markets.

Green ideology provided perfect cover. Invoke a climate emergency and fiscal responsibility vanishes. Question more than $50 billion in subsidies and you are labelled a climate denier. Point out the environmental costs of battery production, and you are accused of spreading misinformation.

History repeatedly teaches that central planning always fails. Soviet five-year plans, Venezuela’s resource nationalization and Britain’s industrial policy failures all show the same pattern. Every attempt to run economies from political offices ends in misallocation, waste and outcomes opposite to those promised. Concentrated political power cannot ever match the intelligence of free markets responding to real prices and constraints.

Markets collect information that no central planner can access. Prices signal scarcity and value. Profits and losses reward accuracy and punish error. When governments override these mechanisms with mandates and subsidies, they impair the information system that enables rational economic decisions.

The EV mandate forced a technological shift and failed. Billions in subsidies went to failing companies. Taxpayers absorbed losses while corporations walked away. Workers lost their jobs.

Canada needs a full repeal of the EV mandate and a retreat from PMO planners directing market decisions. The law must be struck, not paused. The contrived 2030 and 2035 targets must be abandoned.

Markets, not cabinet ministers, must determine what technologies Canadians choose.

Marco Navarro-Genie is vice-president of research at the Frontier Centre for Public Policy and co-author, with Barry Cooper, of Canada’s COVID: The Story of a Pandemic Moral Panic (2023).

Automotive

Trump Deals Biden’s EV Dreams A Death Blow

Published on December 6, 2025

Todayville

From the Daily Caller News Foundation

By David Blackmon

President Donald Trump dealt the dreams of former President Joe Biden for an all-electric fleet of American cars a fatal blow on Thursday by terminating the onerous Corporate Average Fuel Economy (CAFE) standards Biden invoked in 2022 and further tightened in 2024.

“We’re officially terminating Joe Biden’s ridiculously burdensome, horrible actually, CAFE standards, that imposed expensive restrictions… It puts tremendous pressure on upward car prices,” Trump said during a press conference held in the Oval Office Thursday afternoon.

The Biden standards, which cranked down on allowable tailpipe emissions and raised industry-wide average car mileage to a stratospheric 50.4 miles per gallon requirement by 2030, were the centerpiece of his strategy to force American consumers to buy electric vehicles by intentionally forcing up prices for traditional internal combustion models.

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That’s right, America: Your government, led by Joe Biden’s autopen and the woke staffers who wielded it, intentionally and with malice aforethought drove up the prices of the gas powered cars you actually want to buy to try to force you to purchase electric models that poll after poll proves most of you don’t want. They did this all in the name of the global climate alarm religion, which far too many U.S. politicians use to justify a vast array of authoritarian actions.

The unbridled hubris involved in even entertaining this concept would have in the past been considered scandalous. Yet, today, it is completely in keeping with one of the central goals of the energy transition movement to drive up the costs of all traditional forms of energy to try to make the subsidized alternatives favored by the Democratic Party – wind, solar, and electric vehicles – competitive in the market. Activists in the climate alarm movement no longer even try to deny this goal – they proudly boast about it.

This was the real enterprise behind Biden’s ridiculous CAFE standards, and it is what President Trump interrupted on Thursday. It was just the latest in a series of body blows Trump and his officials have dealt the U.S. EV industry, one that could well prove fatal to many pure-play electric car companies and force major reallocations of capital budgets inside integrated automakers like Ford, GM, and Stellantis.

Naturally, the climate alarm activist community was outraged. “Trump’s action will feed America’s destructive use of oil, while hamstringing us in the green tech race against … foreign carmakers,” said Dan Becker, Director of the notorious far-left conflict group, the Center for Biological Diversity, according to the Guardian.

But here’s the thing: U.S. consumers don’t want to buy the alternative the climate alarm community and Biden administration were trying to force. Even with the attraction of Biden’s economically ruinous $7,500 per unit IRA subsidies, U.S. car buyers made clear their strong preference for big, full-size, gas-or-diesel-powered pickups and SUVs.

This reality is why Stellantis announced in September it was abandoning plans to introduce a full-size electric pickup to compete with Ford’s F-150 Lightning. Even worse for EV boosters, Ford has already cut back on production of the Lightning model, and is planning to eliminate it entirely soon, according to the Wall Street Journal. These decisions and plans were already underway long before Trump’s decision to rescind the CAFE standards, based on simple consumer demand.

Interestingly, many consumers believe Trump didn’t go far enough on Thursday, and that he should simply eliminate mileage requirements altogether. One commenter to my Substack newsletter writes, “why didn’t they just kill CAFE standards once and for all? From what clause in the Constitution does the federal government have the right to limit what type of car I can buy?…They should have just killed it outright.”

It’s a legitimate question: Why do federal regulators believe they have the right to control consumer behavior in the name of climate alarmism? In light of last year’s decision by the Supreme Court to rescind the Chevron deference – which helped facilitate the massive expansion of the federal bureaucracy for 40 long years – it’s a question that could be litigated in the months and years to come.

Joe Biden’s EV dreams are dead now, but that doesn’t mean the situation can’t possibly get even worse for the EV industry in America. Stay tuned.

David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.