Pulling back the curtain on the Carney government’s first budget

The Carney government will spend more, run larger deficits and accumulate more debt than was previously planned by the Trudeau government.

In the 1939 film the Wizard of Oz, Dorothy and her companions travel to the Emerald City to meet the famous Wizard of Oz who will solve all their problems. When first entering the Wizard’s chambers, the group sees a giant ghostly head that meets their expectations of the “Great and Powerful Oz.” However, later on in the film (much to their disappointment) we learn that the Wizard is nothing more than an ordinary man operating a machine behind a curtain.

Canadians might feel a similar kind of disappointment about the Carney government’s first budget tabled on Tuesday. Prime Minister Carney promised a “very different approach” than that of his predecessor regarding Ottawa’s finances, and at first glance the budget appears to be this new approach. But when you pull back the curtain, it’s simply an escalation of the same failed fiscal policies Canadians have suffered for the last decade.

For context, the Trudeau government’s approach to government finances was record-high levels of spending, persistent deficits and massive debt accumulation. The Trudeau government created a fiscal mess, and as a “responsible fiscal manager” the Carney government has promised to clean it up.

To that end, the Carney government now separates spending into two categories: “operating spending” and “capital investment.” Capital investment includes any spending or tax expenditure (e.g. tax credits and deductions) that contribute to the production of an asset (e.g. infrastructure, machinery or equipment). Operating spending includes everything else, and is supposed to represent “day-to-day” government spending.

The government plans to balance the “operating budget”—meaning it will match operating spending to revenue—by 2028/29, while leaving capital investments to be financed through borrowing. Importantly, when calculating the operating balance, the government counts revenues that are foregone due to tax expenditures that are considered to be capital investments.

To help find the savings needed to balance its operating budget by 2028/29, the government initiated a “Comprehensive Expenditure Review” this past summer—the budget reveals the review’s results. Part of the review included a long overdue reduction in the size of the federal public service, as the government will cut 16,000 positions this year, and reach a total reduction of almost 40,000 by 2028/29 compared to levels seen two years ago. As a result of this spending review, the budget projects spending in 2028/29 will be $12.8 billion lower than it otherwise would have been.

This is the fiscal picture the Carney government is focusing on, and the one it undoubtedly wants Canadians to focus on, too. When taken at face value, balancing the operating budget, initiating a spending review, cutting the federal bureaucracy, and focusing on greater investment would certainly appear to be a different approach than the Trudeau government—which made no meaningful effort to balance the budget or restrain spending during its tenure, grew the bureaucracy, and allowed business investment to collapse under its watch.

But here’s the problem. When you pull back the curtain, all the rhetoric and accounting changes are just a way to obscure the fact the Carney government will spend more, run larger deficits and accumulate more debt than was previously planned by the Trudeau government.

Both operating spending and capital investment (which represents either additional spending or foregone revenue) impact the bottom line, and by separating the two the Carney government is simply obscuring the true state of Ottawa’s finances. If we ignore the government’s sleight of hand and instead compare total government spending against the revenues that are actually collected, the true size of the budget deficit this year is expected to equal $78.3 billion. Not only is that considerably more than the “operating” deficit the government is focusing on, it’s also nearly double the $42.2 billion deficit that was originally planned by the Trudeau government.

The story is similar for years to come. While the Carney government claims it will balance the operating budget by 2028/29, the overall deficit will be $57.9 billion that year. Over the four years from 2025/26 to 2028/29, overall deficits under the Carney government will equal a combined $265.1 billion. In comparison, the Trudeau government had only planned to run deficits equaling a combined $131.4 billion during those same four years—meaning the Carney government plans to borrow more than twice as much as the Trudeau government.

Driving this increase in borrowing is a combination of lower revenues and higher spending. From 2025/26 to 2028/29, the Carney government expects to collect $70.5 billion fewer revenues than the Trudeau government had previously projected. This difference likely comes down to a combination of the economic impact of U.S. tariffs along with various tax measures implemented by the Carney government that lower revenues (including cancelling a proposed increase to capital gains taxes and cutting the bottom federal personal income tax rate).

On the flip side, the Carney government plans to spend $63.4 billion more in total than the Trudeau government due to the introduction of considerable new spending commitments (notably on defence and housing), and the expectation of higher interest payments on its debt. The reality that spending is only set to rise under the Carney government stands in stark contrast to the prime minister’s rhetoric regarding “austerity” and the “ambitious savings” found by the government’s so-called spending review.

Higher spending and larger deficits will help grow the mountain of federal debt. By 2028/29, the Trudeau government had originally projected that total government debt would reach $2.6 trillion—which, based on the budget forecasts, would represent 72.2 per cent of the overall economy. The Carney government’s fiscal plan now puts total federal debt at $2.8 trillion by 2028/29, or 78.6 per cent of the overall economy. For perspective, the last time total federal debt pushed 80 per cent of the economy was during the 1990s when Canada teetered on the brink of a fiscal crisis.

Finally, the government’s approach to spending and the deficit doesn’t seem to be in line with what Canadians wanted to see from this budget. A poll conducted prior to the budget showed that 69 per cent of respondents felt it’s important for the government to balance the budget, compared to just 27 per cent who supported continued deficit spending. In fact, three out of five respondents felt that too much government spending has contributed to the rising cost of living and inflation—the issue they’re most concerned about.

Like a certain Wizard, Prime Minister Carney has made grand promises to fix many of the serious problems facing Canada. At first glance, the Carney government’s first budget may appear to deliver a new plan that will get federal finances back in order. Just pay no attention to the man behind the curtain.

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Grady Munro

Policy Analyst, Fraser Institute

Related Topics:#FederalBudget #FraserInstitute #GradyMunro #JakeFuss CarneyBudget

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Oil tanker traffic surges but spills stay at zero after Trans Mountain Expansion

Published on December 4, 2025

Todayville

From the Canadian Energy Centre

Bigger project maintains decades-long marine safety record

The Trans Mountain system continues its decades-long record of zero marine spills, even as oil tanker traffic has surged more than 800 per cent since the pipeline’s expansion in May 2024.

The number of tankers calling at Trans Mountain’s Westridge Marine Terminal in the Port of Vancouver in one month now rivals the number that used to go through in one year.

A global trend toward safer tanker operations

Trans Mountain’s safe operations are part of a worldwide trend. Global oil tanker traffic is up, yet spills are down, according to the International Tanker Owners Pollution Federation, a London, UK-based nonprofit that provides data and response support.

Graph courtesy International Tanker Owners Pollution Federation

Transport Canada reports a 95 per cent drop in ship-source oil spills and spill volumes since the 1970s, driven by stronger ship design, improved response and better regulations.

“Tankers are now designed much more safely. They are double-hulled and compartmentalized to mitigate spills,” said Mike Lowry, spokesperson for the Western Canada Marine Response Corporation (WCMRC).

WCMRC: Ready to protect the West Coast

One of WCMRC’s new response vessels arrives in Barkley Sound. Photo courtesy Western Canada Marine Response Corporation

From eight marine bases including Vancouver and Prince Rupert, WCMRC stands at the ready to protect all 27,000 kilometres of Canada’s western coastline.

Lowry sees the corporation as similar to firefighters — training to respond to an event they hope they never have to see.

In September, it conducted a large-scale training exercise for a worst-case spill scenario. This included the KJ Gardner — Canada’s largest spill response vessel and a part of WCMRC’s fleet since 2024.

“It’s part of the work we do to make sure everybody is trained and prepared to use our assets just in case,” Lowry said.

Expanding capacity for Trans Mountain

The K.J. Gardner is the largest-ever spill response vessel in Canada. Photo courtesy Western Canada Marine Response Corporation

WCMRC’s fleet and capabilities were doubled with a $170-million expansion to support the Trans Mountain project.

Between 2012 and 2024, the company grew from 13 people and $12 million in assets to more than 200 people and $213 million in assets.

“About 80 per cent of our employees are mariners who work as deckhands, captains and marine engineers on our vessels,” Lowry said.

“Most of the incidents we respond to are small marine diesel spills — the last one was a fuel leak from a forest logging vessel near Nanaimo — so we have deployed our fleet in other ways.”

Tanker safety starts with strong rules and local expertise

Tanker loading at the Westridge Marine Terminal in the Port of Vancouver. Photo courtesy Trans Mountain Corporation

Speaking on the ARC Energy Ideas podcast, Trans Mountain CEO Mark Maki said tanker safety starts with strong regulations, including the use of local pilots to guide vessels into the harbour.

“On the Mississippi River, you have Mississippi River pilots because they know how the river behaves. Same thing would apply here in Vancouver Harbour. Tides are strong, so people who are familiar with the harbor and have years and decades of experience are making sure the ships go in and out safely,” Maki said.

“A high standard is applied to any ship that calls, and our facility has to meet very strict requirements. And we have rejected ships, just said, ‘Nope, that one doesn’t fit the bill.’ A ship calling on our facilities is very, very carefully looked at.”

Working with communities to protect sensitive areas

Beyond escorting ships and preparing for spills, WCMRC partners with coastal communities to map sensitive areas that need rapid protection including salmon streams, clam beds and culturally important sites like burial grounds.

“We want to empower communities and nations to be more prepared and involved,” Lowry said.

“They can help us identify and protect the areas that they value or view as sensitive by working with our mapping people to identify those areas in advance. If we know where those are ahead of time, we can develop a protection strategy for them.”

Bruce Dowbiggin

Integration Or Indignation: Whose Strategy Worked Best Against Trump?

Published on December 4, 2025

Bruce Dowbiggin

““He knows nothing; and he thinks he knows everything. That points clearly to a political career.” George Bernard Shaw

In the days immediately following Donald Trump’s rude intervention into the 2025 Canadian federal election— suggesting Canada might best choose American statehood— two schools of thought emerged.

The first and most impactful school in the short term was the fainting-goat response of Canadian’s elites. Sensing an opening in which to erode Pierre Poilievre’s massive lead in the 2024 polls over Justin Trudeau, the Laurentian elite concocted Elbows Up, a self-pity response long on hurt feelings and short on addressing the issues Trump had cited in his trashing of the Canadian nation state.

In short order they fired Trudeau into oblivion, imported career banker Mark Carney as their new leader in a sham convention and convinced Canada’s Boomers that Trump had the tanks ready to go into Saskatchewan at a moment’s notice. The Elbows Up meme— citing Gordie Howe— clinched the group pout.

(In fact, Trump has said that America is the world’s greatest market, and if those who’ve used it for free in the past [Canada] want to keep special access they need to pay tariffs to the U.S. or drop protectionist charges on dairy and more against the U.S.)

The ruse worked out better than they could have ever imagined with Trump even saying he preferred to negotiate with Carney over Poilievre. In short order the Tories were shoved aside, the NDP kneecapped and the pet media anointed Carney the genius skewing Canada away from its largest trade partner to the Eurosphere. We remain in that bubble, although the fulsome promises of Carney’s first days are now coming due.

Which brings us to the second reaction. That was Alberta premier Danielle Smith bolting to Mar A Lago in the days following Trump’s comments. Her goal was to put pride aside and accept that a new world order was in play for Canada. She met with U.S. officials and, briefly, with Trump to remind them that Canada’s energy industry was integral to American prosperity and Canadian stability.

Needless to say, the fainting goats pitched a fit that not everyone was clutching pearls and rending garments in the wake of Trump’s dismissive assessment of his northern neighbours. Their solution to Trump was to join China in retaliatory tariffs— the only two nations to do so— and to boycott American products and travel. Like the ascetic monks they cut themselves off from real life. Trump has yet to get back to Carney the Magnificent

And Smith? She was a “traitor” or a “subversive” who should be keel hauled in the North Saskatchewan. For much of the intervening months she has been attacked at home in Alberta by the N-Deeps and in Ottawa by just about everyone on CBC, CTV, Global and the Globe & Mail. “How could she meet with the Cheeto?”

Nonetheless conservatives in the province moved toward a more independence within Canada. Smith articulated her demands for Alberta to prevent a referendum on whether to remain within Confederation. At the top of her list were pipelines and access to tidewater. Ergo, a no-go for BC’s squish premier David Eby who is the process of handing over his province to First Nations.

It became obvious that for all of Carney’s alleged diplomacy in Europe and Asia (is the man ever home?) he had a brewing disaster in the West with Alberta and Saskatchewan growing restless. In a striking move against the status quo, Nutrien announced it would ship its potash to tidewater via the U.S., thereby bypassing Vancouver’s strike-prone, outdated port and denying them billions.

Suddenly, Smith’s business approach began making eminent good sense if the goal is to keep Canada as one. So we saw last week’s “memorandum of understanding” between Alberta and Ottawa trading off carbon capture and carbon taxes for potential pipelines to tidewater on the B.C. coast. A little bit of something for everyone and a surrender on other things.

The most amazing feature of the Mark Carney/Danielle Smith MOU is that both politicians probably need the deal to fail. Carney can tell fossil-fuel enemy Quebec that he tried to reason with Smith, and Smith can say she tried to meet the federalists halfway. Failure suits their larger purposes. Which is for Carney to fold Canada into Euro climate insanity and Smith into a strong leverage against the pro-Canada petitioners in her province.

Soon enough, at the AFN Special Chiefs Assembly, FN Chief Cindy Woodhouse Nepinak told Carney that “Turtle Island” (the FN term for North America popularized by white hippy poet Gary Snyder) belongs to the FN people “from coast to coast to coast.” The pusillanimous Eby quickly piped up about tanker bans and the sanctity of B.C. waters etc.

Others pointed out the massive flaw in a plan to attract private interests to build a vital bitumen pipeline if the tankers it fills are not allowed to sail through the Dixon Entrance to get to Asia.

But then Eby got Nutrien’s message that his power-sharing with the indigenous might cause other provinces to bypass B.C. (imagine California telling Texas it can’t ship through its ports over moral objections to a product). He’s now saying he’s open to pipelines but not to lift the tanker ban along the coast. Whatever.

Meanwhile the kookaburras of isolation back east continue with virtue signalling on American booze— N.S. to sell off its remains stocks — while dreaming that Trump’s departure will lead to the good-old days of reliance on America’s generosity.

But Smith looks to be wining the race. B.C.’s population shrank 0.04 percent in the second quarter of 2025, the only jurisdiction in Canada to do so. Meanwhile, Alberta is heading toward five million people, with interprovincial migrants making up 21 percent of its growth.

But what did you expect from the Carney/ Eby Tantrum Tandem? They keep selling fear in place of GDP. As GBS observed, “You have learnt something. That always feels at first as if you have lost something.”

Bruce Dowbiggin @dowbboy is the editor of Not The Public Broadcaster A two-time winner of the Gemini Award as Canada’s top television sports broadcaster, his new book Deal With It: The Trades That Stunned The NHL And Changed hockey is now available on Amazon. Inexact Science: The Six Most Compelling Draft Years In NHL History, his previous book with his son Evan, was voted the seventh-best professional hockey book of all time by bookauthority.org . His 2004 book Money Players was voted sixth best on the same list, and is available via brucedowbigginbooks.ca.