Ottawa continues to infringe in areas of provincial jurisdiction

The Alberta Next panel—tasked with assessing how Alberta can protect its economy, assert its sovereignty within Canada, and defend its provincial rights after years of federal government intervention—has concluded its townhall sessions. The Smith government has repeatedly called for the federal government to stay in its lane, and according to a recent study, governments work better when they do.

The Canadian federation was intended to be decentralized. The powers and responsibilities of the federal and provincial governments are defined in the constitution. The federal government was given power over the regulation of trade and commerce, the postal service, national defence, navigation and shipping, and criminal justice. It also has the power to raise money by any form of taxation. The provincial governments were given power over natural resources, health care, welfare, education and overseeing municipal governments. Some areas, including certain aspects of the environment, entail joint or shared responsibility.

There are self-evident reasons for clearly dividing powers between national and provincial governments. There are some policies, such as national defence, where it makes obvious sense to have one national policy covering the entire country.

At the same time, there are numerous areas of responsibility where it makes an equal amount of sense to have the provinces exclusively responsible so they’re empowered to address areas and issues with more localized policies. Such a decentralized approach also allows for more experimentation and innovation, so provinces can learn from one another.

This is certainly the case with respect to welfare reform in the 1990s after Ottawa stopped interfering with the provinces’ delivery and regulation of welfare. This led to innovations by some provinces, and many of the successful reforms were copied by other provinces.

Yet more recently, the federal government has interfered in areas of provincial jurisdiction, which not only impedes the effective delivery of provincial services but also fuels regional tensions.

For instance, the Trudeau government increased federal involvement in areas of provincial jurisdiction via new dental, pharmacare and daycare plans. The federal government’s $10-a-day daycare, for example, has been disastrous, fuelling massive shortages across Canada. Some daycare centres have even exited the federal plan because government interference has threatened their ability to provide quality care.

Federal energy policies, such as the cap imposed exclusively on oil and gas emissions and new electricity regulations (which mandate all provincial electricity grids are decarbonized by 2035), have fuelled regional frustrations.

Consider that Quebec separatism essentially died during the Harper years, when the federal government left the provinces alone in their areas of jurisdiction. The provincial political party the Parti Quebecois (PQ) was reduced to 10 seats with just 17 per cent of the vote in 2018, for instance, but is now poised to form a majority government in the next Quebec election with the PQ committed to another sovereignty referendum vote. And there’s now a real sovereignty movement in both Alberta and Saskatchewan, with approximately three-in-10 Albertans (30 per cent) and one-third of Saskatchewians (33 per cent) indicating they would vote to leave the federation.

Provincial governments are fed up with Ottawa’s involvement in areas of provincial jurisdiction at the same time that federal policymakers have neglected areas of exclusive federal jurisdiction such as defence and criminal justice. History shows that Canada works best when governments stay in their lane. It’s time for the Carney government to change course and get out of provincial matters and focus on federal priorities.

Tegan Hill

Director, Alberta Policy, Fraser Institute

Jason Clemens

Executive Vice President, Fraser Institute

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Ottawa continues to infringe in areas of provincial jurisdiction

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Canada’s economic performance cratered after Ottawa pivoted to the ‘green’ economy

Published on October 31, 2025

Todayville

From the Fraser Institute

By Jason Clemens and Jake Fuss

There are ostensibly two approaches to economic growth from a government policy perspective. The first is to create the best environment possible for entrepreneurs, business owners and investors by ensuring effective government that only does what’s needed, maintains competitive taxes and reasonable regulations. It doesn’t try to pick winners and losers but rather introduces policies to create a positive environment for all businesses to succeed.

The alternative is for the government to take an active role in picking winners and losers through taxes, spending and regulations. The idea here is that a government can promote certain companies and industries (as part of a larger “industrial policy”) better than allowing the market—that is, individual entrepreneurs, businesses and investors—to make those decisions.

It’s never purely one or the other but governments tend to generally favour one approach. The Trudeau era represented a marked break from the consensus that existed for more than two decades prior. Trudeau’s Ottawa introduced a series of tax measures, spending initiatives and regulations to actively constrain the traditional energy sector while promoting what the government termed the “green” economy.

The scope and cost of the policies introduced to actively pick winners and losers is hard to imagine given its breadth. Direct spending on the “green” economy by the federal government increased from $600 million the year before Trudeau took office (2014/15) to $23.0 billion last year (2024/25).

Ottawa introduced regulations to make it harder to build traditional energy projects (Bill C-69), banned tankers carrying Canadian oil from the northwest coast of British Columbia (Bill C-48), proposed an emissions cap on the oil and gas sector, cancelled pipeline developments, mandated almost all new vehicles sold in Canada to be zero-emission by 2035, imposed new homebuilding regulations for energy efficiency, changed fuel standards, and the list goes on and on.

Despite the mountain of federal spending and regulations, which were augmented by additional spending and regulations by various provincial governments, the Canadian economy has not been transformed over the last decade, but we have suffered marked economic costs.

Consider the share of the total economy in 2014 linked with the “green” sector, a term used by Statistics Canada in its measurement of economic output, was 3.1 per cent. In 2023, the green economy represented 3.6 per cent of the Canadian economy, not even a full one-percentage point increase despite the spending and regulating.

And Ottawa’s initiatives did not deliver the green jobs promised. From 2014 to 2023, only 68,000 jobs were created in the entire green sector, and the sector now represents less than 2 per cent of total employment.

Canada’s economic performance cratered in line with this new approach to economic growth. Simply put, rather than delivering the promised prosperity, it delivered economic stagnation. Consider that Canadian living standards, as measured by per-person GDP, were lower as of the second quarter of 2025 compared to six years ago. In other words, we’re poorer today than we were six years ago. In contrast, U.S. per-person GDP grew by 11.0 per cent during the same period.

Median wages (midpoint where half of individuals earn more, and half earn less) in every Canadian province are now lower than comparable median wages in every U.S. state. Read that again—our richest provinces now have lower median wages than the poorest U.S. states.

A significant part of the explanation for Canada’s poor performance is the collapse of private business investment. Simply put, businesses didn’t invest much in Canada, particularly when compared to the United States, and this was all pre-Trump tariffs. Canada’s fundamentals and the general business environment were simply not conducive to private-sector investment.

These results stand in stark contrast to the prosperity enjoyed by Canadians during the Chrétien to Harper years when the focus wasn’t on Ottawa picking winners and losers but rather trying to establish the most competitive environment possible to attract and retain entrepreneurs, businesses, investors and high-skilled professionals. The policies that dominated this period are the antithesis of those in place now: balanced budgets, smaller but more effective government spending, lower and competitive taxes, and smart regulations.

As the Carney government prepares to present its first budget to the Canadian people, many questions remain about whether there will be a genuine break from the policies of the Trudeau government or whether it will simply be the same old same old but dressed up in new language and fancy terms. History clearly tells us that when governments try to pick winners and losers, the strategy doesn’t lead to prosperity but rather stagnation. Let’s all hope our new prime minister knows his history and has learned its lessons.

Jason Clemens

Executive Vice President, Fraser Institute

Jake Fuss

Director, Fiscal Studies, Fraser Institute

Business

Canadians paid $90 billion in government debt interest in 2024/25

Published on October 31, 2025

Todayville

From the Fraser Institute

By Jake Fuss, Tegan Hill and William Dunstan

Next week, the Carney government will table its long-awaited first budget. Earlier this year, Prime Minister Mark Carney launched a federal spending review to find $25 billion in savings by 2028. Even if the government meets this goal, it won’t be enough to eliminate the federal deficit—projected to reach as high as $92.2 billion in 2025/26—and start paying down debt. That means a substantial amount of taxpayer dollars will continue to flow towards federal debt interest payments, rather than programs and services or tax relief for Canadians.

When a government spends more than it raises in revenue and runs a budget deficit, it accumulates debt. As of 2024/25, the federal and provincial governments will have accumulated a total projected $2.3 trillion in combined net debt (total debt minus financial assets).

Of course, like households, governments must pay interest on their debt. According to our recent study, the provinces and federal government expect to spend a combined $92.5 billion on debt interest payments in 2024/25.

And like any government spending, taxpayers fund these debt interest payments. The difference is that instead of funding important programs, such as health care, these taxpayer dollars will finance government debt. This is the cost of deficit spending.

How much do Canadians pay each year in government debt interest costs? On a per-person basis, combined provincial and federal debt interest costs in 2024/25 are expected to range from $1,937 in Alberta to $3,432 in Newfoundland and Labrador. These figures represent provincial debt interest costs, plus the federal portion allocated to each province based on a five-year average (2020-2024) of their share of Canada’s population.

For perspective, it’s helpful to compare debt interest payments to other budget items. For instance, the federal government estimates that in 2024/25 it will spend more on debt interest costs ($53.8 billion) than on child-care benefits ($35.1 billion) or the Canada Health Transfer ($52.1 billion), which supports provincial health-care systems.

Provincial governments too spend more money on interest payments than on large programs. For example, in 2024/25, Ontario expects to spend more on debt interest payments ($15.2 billion) than on post-secondary education ($14.2 billion). That same year, British Columbia expects to spend more on debt interest payments ($4.4 billion) than on child welfare ($4.3 billion).

Unlike other forms of spending, governments cannot simply decide to spend less on debt interest payments in a given year. To lower their debt interest payments, governments must rein in spending and eliminate deficits so they can start to pay down debt.

Unfortunately, most governments in Canada are doing the opposite. All but one province (Saskatchewan) plans to run a deficit in 2025/26 while the federal deficit could exceed $90 billion.

To stop racking up debt, governments must balance their budgets. By spending less today, governments can ensure that a larger share of tax dollars go towards programs or tax relief to benefit Canadians rather than simply financing government debt.