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).

From the Frontier Centre for Public Policy

By Jay Goldberg

Rosy projections, chronic deficits, and opaque budgeting. If nothing changes, Carney’s credibility could collapse under the same weight.

Carney promised a fresh start. His budget makes it look like we’re still stuck with the same old Trudeau playbook

It turns out the Trudeau government really did look at Canada’s economy through rose-coloured glasses. Is the Carney government falling into the same pattern?

New research from the Frontier Centre for Public Policy shows that federal budgets during the Trudeau years “consistently overestimated [Canada’s] fiscal health” when it came to forecasting the state of the nation’s economy and finances over the long term.

In his research, policy analyst Conrad Eder finds that, when looking specifically at projections of where the economy would be four years out, Trudeau-era budgets tended to have forecast errors of four per cent of nominal GDP, or an average of $94.4 billion.

Because budgets were so much more optimistic about long-term growth, they consistently projected that government revenue would grow at a much faster pace. The Trudeau government then made spending commitments, assuming the money would be there. And when the forecasts did not keep up, deficits simply grew.

As Eder writes, “these dramatic discrepancies illustrate how the Trudeau government’s longer-term projections consistently underestimated the persistence of fiscal challenges and overestimated its ability to improve the budgetary balance.”

Eder concludes that politics came into play and influenced how the Trudeau government framed its forecasts. Rather than focusing on the long-term health of Canada’s finances, the Trudeau government was focused on politics. But presenting overly optimistic forecasts has long-term consequences.

“When official projections consistently deviate from actual outcomes, they obscure the scope of deficits, inhibit effective fiscal planning, and mislead policymakers and the public,” Eder writes.

“This disconnect between projected and actual fiscal outcomes undermines the reliability of long-term planning tools and erodes public confidence in the government’s fiscal management.”

The public’s confidence in the Trudeau government’s fiscal management was so low, in fact, that by the end of 2024 the Liberals were polling in the high teens, behind the NDP.

The key to the Liberal Party’s electoral survival became twofold: the “elbows up” rhetoric in response to the Trump administration’s tariffs, and the choice of a new leader who seemed to have significant credibility and was disconnected from the fiscal blunders of the Trudeau years.

Mark Carney was recruited to run for the Liberal leadership as the antidote to Trudeau. His résumé as governor of the Bank of Canada during the Great Recession and his subsequent years leading the Bank of England seemed to offer Canadians the opposite of the fiscal inexperience of the Trudeau years.

These two factors together helped turn around the Liberals’ fortunes and secured the party a fourth straight mandate in April’s elections.

But now Carney has presented a budget of his own, and it too spills a lot of red ink.

This year’s deficit is projected to be a stunning $78.3 billion, and the federal deficit is expected to stay over $50 billion for at least the next four years.

The fiscal picture presented by Finance Minister François-Philippe Champagne was a bleak one.

What remains to be seen is whether the chronic politicking over long-term forecasts that plagued the Trudeau government will continue to be a feature of the Carney regime.

As bad as the deficit figures look now, one has to wonder, given Eder’s research, whether the state of Canada’s finances is even worse than Champagne’s budget lets on.

As Eder says, years of rose-coloured budgeting undermined public trust and misled both policymakers and voters. The question now is whether this approach to the federal budget continues under Carney at the helm.

Budget 2025 significantly revises the economic growth projections found in the 2024 fall economic statement for both 2025 and 2026. However, the forecasts for 2027, 2028 and 2029 were left largely unchanged.

If Eder is right, and the Liberals are overly optimistic when it comes to four-year forecasts, then the 2025 budget should worry Canadians. Why? Because the Carney government did not change the Trudeau government’s 2029 economic projections by even a fraction of a per cent.

In other words, despite the gloomy fiscal numbers found in Budget 2025, the Carney government may still be wearing the same rose-coloured budgeting glasses as the Trudeau government did, at least when it comes to long-range fiscal planning.

If the Carney government wants to have more credibility than the Trudeau government over the long term, it needs to be more transparent about how long-term economic projections are made and be clear about whether the Finance Department’s approach to forecasting has changed with the government. Otherwise, Carney’s fiscal credibility, despite his résumé, may meet the same fate as Trudeau’s.

Jay Goldberg is a fellow with the Frontier Centre for Public Policy.