Front Burner - Mark Carney’s economic update

Episode Date: April 29, 2026

Prime Minister Mark Carney’s government has delivered its spring economic update amidst an unpredictable global backdrop. It included a better-than-expected deficit figure and billions of dollars for skilled trades workers, as well as a sovereign wealth fund. Senior business correspondent Peter Armstrong breaks down what the document tells us about Canada’s finances and the Liberal government’s priorities.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

I'm Lisa Yuso, a digital producer at Ideas, the podcast that likes to feed your curiosity. I ask my colleagues why they think you should listen. Ideas can make you the smartest, most interesting guest at your next dinner party in less than 60 minutes. It's got the best of a storytelling podcast with the best of a great lecture. You can pretty much never predict where an episode will take you, but you can count on every episode to shift your perspective. even just a little. Find and follow ideas wherever you get your podcasts. This is a CBC podcast. We are building Canadian. We're a building sustainably.

Hey everybody. I'm Jamie Poisson. With an extremely unpredictable economic backdrop, Prime Minister Mark Carney's government gave an update yesterday on what's going on with our country's finances, what they want to spend on, and how they think Canada can weather the turbulence. Here to break it all down for us is Peter Armstrong. He's the CBC Senior Business Correspondent. Peter, great to have you. Oh, Jamie. Is it ever nice to be back on your show? Always a pleasure. So I know you like to flip to the back of a budget document when you get one. Yes, I do. I know this about you. To the appendix, I guess, right, to see what economic assumptions the document is built on. And when you did that today, I'm assuming that you did do that today. What did you see? I did. And the reason

I do it, Jamie, is because like all of the words in the front try to tell a story. And I think it's an important story that like my colleagues here in the Ottawa Bureau do such an amazing job of deciphering the politics of it. What I try to do just to differentiate myself, if nothing else, is I go to the back and I dig through the annexes because there's a different story being told in all the economic charts and tables. And one of the most important ones starts with the economic assumptions that this budget is built on, that any budget, a spring update or a full budget, whatever.

it is they solicit from the private sector a series of forecast. What are the things going to happen with GDP over the budget horizon? What are things going to happen with inflation or unemployment? And in this case, what are things going to happen with the price of oil? So the first number I looked at was, well, what do they think is going to happen with the price of oil? And in the forecast, it says it expects, and this is the entire budget is built on this, that they expect that the price of oil in 2026 will be $73 a barrel. Now, anybody who's been following anything about what's going on in the world knows that it's way higher than that now.

And the expectation is that it will come down. It's about $99 a barrel right now. And that means that what they've done is they've allowed this budget to be built and say, well, you know, everything's going to chug along and growth is going to be pretty tepid. It's not going to slip into recession. And it's going to be a little bit better than expected. And they said 5,000 times that Canada has the second best growth in the G7.

But what it does is it underestimates the amount of rate. revenue the government's going to get from all that oil, right? When the oil producers sell oil at $99 a barrel instead of $73, that gap is considerable. And for every day that that happens, for every million barrels of oil that's sold, that gap grows. And so what it means is they have this kind of cushion, a windfall, if you will, of money that they'll be allowed to play around with when they sit down to table the next budget. They'll have this sort of windfall where they can say, oh, look, we did better than expected. We can bring down the deficit or we can spend on something else. But it really reminded me, Jamie, of the budgets I used to cover when Paul Martin

was finance minister and Jean-Cretcheno's prime minister and when Paul Martin was prime minister as well, where they'd underestimate growth and then they'd be surprised by how well growth came in. And that would give them a little cushion that they could play around with. And they used that as a real kind of political tool. I mean, right. But I guess also other unpredictable things could happen here because when they wrote their first budget back in the fall, I'm not sure anybody anticipated that the U.S. and Israel were going to war with Iran, and that, I think, importantly, Iran would be able to effectively close the Strait of Hormuz and choke global trade. So, like, how can one even begin in this moment to predict

where the economy is going, let alone kind of trust those predictions? I think that's not just a fair point. I think it's a really important point. And it's a important to remind people, it's not like the government cooked up these numbers and said, well, we're going to think the price of oil is going to be $73 a barrel. They use the private sector forecast. So they have, you know, they have good reason to have used that. And of course, you would way rather underestimate revenue than overestimate it and come in wrong and end up on the wrong side of that balance. Governments have all landed in that predicament. And it's a pretty lousy one. And the theme of uncertainty has been embedded in budgeting and in budget forecasting.

for man, what, like six years now, right? Like it is the predominant feature on the economic landscape of uncertainty, whether it was just tariffs or now it's tariffs and an unpredictable war in Iran without a clear path out of it. And what does that mean for global oil prices? Even if the war ended today,

we'd be months before we get back to anything even approximating normal. You know, I wrote in my newsletter this week that, you know, they don't write a lot of folk songs about the bureaucrats in the finance department that have to try to forecast their way through this. And probably rightly so. I don't think it would exactly be a hit.

But it does speak to they've got a really tough job. It's an incredibly difficult task to try to think, okay, what is this snapshot today? What does that tell us? What story does that tell us about the economy? And how do we sort of use that overlay it over what we think is going to happen in the future to try to come up with a plan for what we can do in this country to make the economy stronger, to protect households through a really difficult time, to grow the economy in ways that we haven't tried for many, many years

in terms of diversifying and doing new things. It's an unenviable task. And I'm much happier that I'm sitting here talking to you rather than up on a podium trying to explain this to Canadians. Let's talk about that plan a little bit more. Talk about what actually was in the update today. Carney's team had hinted before this budget that there would be, new measures aimed at helping out with affordability issues, which is obviously front and center

for Canadians right now. And did we see anything new in that department or was it all just things that we already knew about? We saw some things, but we didn't see a lot. And that was kind of expected in that, you know, whenever I come to Ottawa to cover these budgets and then these, you know, they do these fall economic updates and now it's a spring economic update because we switch that around. There's always a question in my mind about how much of this is a mini budget and how much of it is just an update. And different prime ministers at different times, they've used these in different ways. This was so clearly an update. Like, there is new spending in it, to be sure, quite a bit of new spending, in fact. But it isn't a budget. It isn't where

they're like, okay, here's the plan. Here's how we're going to do it going forward. I spoke off the record with some government officials leading up to this who tried to to frame it as like a bridge between where we are now and where the things the government is trying to do will actually work, right? And if you think about what the government's been trying to do writ large, not just in this document, though it's here too, they've got these big plans to diversify the Canadian economy and change how steel is sold in Canada and, you know, these really big, you know, working on the port of Montreal, these massive changes. But those are going to take years to actually show up in the data and actually impact your life and my life.

life and the people that will work there. And so what the messaging was heading into this is they're going to use this economic update to try to bridge that gap and try to do things around training workforce. And we saw a lot of that. We saw efforts to try to get young people, but anybody really into the trades because, man, we're going to need skilled trades. We're going to need, you know, trades workers throughout the country to execute so much of this. We've got to do that work. And that's in here. But it's not like a budget where there's like sweep measures to try to bring down costs for Canadian households. There are these little measures that they can point out and say, well, we did that,

we did that. They brought down the cost you pay to cover your CPP pension payments. But there just wasn't that sense that you get out of a budget where they're like, here's what we're going to try to do to affect your life. They really tried to frame on that side of it. Hey, this is just an update. We're just trying to give you a sense of where we're at and sort of move the ball further down the field a little bit towards that place where the economy is stronger, things are

working better, and that benefit is going to accrue and grow for every Canadian household and every Canadian worker. I'll leave it to my political colleagues to decipher whether they accomplished that or not. But some think you did and some think they didn't. Yeah. I mean, I heard of you Lewis on power of politics saying that, you know, Canadians are hardly feeling the benefits of the gas tax suspension, for example. these measures that the Carney government has made to try and ease the financial pain that regular people are feeling. You know, we've seen a tax cut for gas, right, which we said at the moment would be absorbed by price gouching corporations instantly. It's now a buck 80 today average gas price per leader in Toronto.

Where is this big tax cut? And he suggested that the government should like tax corporations profiting from skyrocketing prices of oil and then reinvest that in. for Canadians. I think he mentioned specifically his pitch for our publicly funded grocery stores. And was there anything about, you know, excess profits in this update, anything like that? No. And in fact, you know, with the talk of the sovereign wealth fund leading into this, there's a lot of question where are they going to draw that money from? And one of the concerns among industry was, well, is the government going to introduce some kind of a windfall tax that will draw profit out of those industries and use that fund, the sovereign wealth fund? We didn't get very

many answers on how the wealth fund is going to be funded. But none of that showed up. But on the flip side, to Javi Lewis's point, you know, the pain out there is very real. You hear people talking about it every single day. You hear your friends and neighbors and family members. And it's not just, you know, I think we're first drawn to the price of oil and what it means for gasoline at the pump for me and my car to drive my kids to art class or whatever. And that matters. That is enormously important, and it's a huge political calculation. But economically, I think you have to think about how that's actually playing out for businesses that need diesel fuel to power their fleet to deliver their products, and they need

heating fuel to power their factory or their warehouse. There's a weird needle that needs to be thread. You know, I talk about higher oil prices mean oil producers in Canada, specifically in Newfoundland, Labrador, Saskatchewan and Alberta, they'll do better. They'll see higher profits. Yeah. And that's good for the Canadian economy, right? That will see GDP growth rise. Okay, full stop. On the flip side of that, even drivers in Alberta and Saskatchewan, Newfoundland, Labrador are fueling the pain of this. And as that pain drags on, that balance starts to shift and the accrued benefit of the higher oil prices for the Canadian economy get outweighed by the demand destruction that happens because people can't afford to drive their cars and businesses can't afford to ship their goods.

and you know, you start to see that impact. And so if you get past 18 months of this, that benefit to the economy gets outweighed by the demand destruction that's happening that will eventually drag down the economy. And so there's all these different sort of countervailing forces at play and trying to figure those out, as I say, that's why I'm sure glad I'm not in politics and I just get to sit here and tear it all apart. Do you get the sense, though, that this government is live to that, that they're really thinking about it?

I do. And I think, you know, that's why we heard things like Canada is the second fastest growing economy in the G7. We're going almost twice as much as Germany. Wow. Because what they want to say is, look, they can cut the excise tax on gasoline. It's a gesture. It doesn't cover the increased cost at all. So they're aware of it. But I think they don't want to take too much action. Now, because the action they're trying to take is to sort of turn the economy to deal it with the first crisis, which was the tariffs and the uncertainty and the business investment

that was being sucked out of this country because of what's happening with the United States. Now you've got to add in this whole new layer of, well, how does an energy, a global energy crisis, unlike anything we've ever seen before, literally anything we've ever seen before, how does that layer on top of all that uncertainty? And we don't know. The only thing we can say for certain is that we do know it'll be bad. And so, So what measures can they take today to offset that? I mean, there's really not a ton that this incarnation of a liberal government is willing to do right now.

But as I say, that's why it gets really interesting that they'll have this little windfall as a result of the underestimating of oil prices that they'll be able to do something with in the fall. Will that be more targeted approach to households and businesses? Will that be new programs? Or will that be, will the moment to, you? of the, you know, the feeling of the moment shift to, well, you've got to start dragging that deficit down, right? Like the public debt charges, Jamie, are, the numbers are bananas. By 2030,

number three, right, line item, the third most spending on that. It becomes the second biggest spending. It's enormous. 80.9 billion dollars by 2030. And so like this year, it's either second or third. And it holds in second place. It's like transfer to the elderly, which is always been the biggest expenditure in any Canadian budget is number one. And then public debt charges is very quickly number two. And it is an enormous sum of money, $80.9 billion by 2030. Right. And this government's going to have to make choices with this windfall. What are they going to do? What are they going to do? What are they going to do with it in the moment? Yeah. use so, a digital producer at Ideas, the podcast that likes to feed your curiosity. I ask my colleagues

why they think you should listen. Ideas can make you the smartest, most interesting guest at your next dinner party in less than 60 minutes. It's got the best of a storytelling podcast with the best of a great lecture. You can pretty much never predict where an episode will take you, but you can count on every episode to shift your perspective even just a little. Find and follow ideas wherever you get your podcasts. You mentioned the sovereign wealth

fund and just maybe for people listening, if you could just explain what this is in kind of layman's terms, Carney announced it in the lead-up to this update earlier this week. The Canada's Strong Fund will invest alongside the private

sector and nation-building projects to create wealth for Canadians today, and our kids tomorrow. And if you have a bit of extra money, we'll make it easy for you to invest in the fund to help build Canada strong for all. The sovereign wealth fund is a couple of things, traditionally. Traditionally, it's a fund made up of excess profits

of surplus revenue. Many countries that are blessed with natural resources like Norway have sovereign wealth funds. Canada hasn't had one until now. So the Norwegians used it. They took the massive profits they had in the 80s, and they used it to diversify away from oil, but they invest exclusively abroad. They invests none of that money in Norway. And the idea is to try to use that money to expand the way that country is drawing power and money and investment from and to the world.

This fund is far more focused on Canada, on domestic investments. We don't know to what extent. I mean, the amount of times I'm about to say I don't know, maybe put me on a clock because I think there's going to be a bunch of them. We don't know how they're going to raise the money because we certainly don't have a surplus to draw from them. We don't know where they're going to spend that money and how they say they want to spend some or a lot of it in Canada, but we don't know what percentage.

We don't know how it's going to be run. Usually these are like an arm's length organization that oversees these. How's that going to work? They say they're going to have this, this like, transition. an organization that's going to explore all that. But the amount of things we don't know vastly outnumbered, the amount of things we do know about this. And the biggest question that economists keep asking about this, and I think it's the question I was told to ask about basically everything. What problem is it trying to solve for? And within that, you have to think, well, you've got the

business development bank and you've got the Maple 8, the big pension funds in Canada with the CPP being the main one, you've got the infrastructure bank. What is what is this thing going to do that's different from that? And what problem are they all struggling to solve? I don't think at its core the problem Canada has in terms of building big things is access to capital. It's that the capital that it has access to is wary, that there's too much regulatory burden, that it's too tricky and risky and that you can go spend hundreds of millions of dollars and the government might cancel it in the end and say

you can't go ahead. That's the problem that needs to be solved for and I don't see how any of these solved for that. To that point I was listening to labor economist Jim Stanford expressed concern that in the worst case scenario that this could be used to subsidize private projects

that I guess can't stand on their own two feet. But I think yeah, importantly don't want to take their risk, right? And just, I guess that's the point that you're trying to make here. It's exactly the point I'm trying to make. And Jim has always makes it better than me. You know, I wanted to ask you another piece of news that came out in the kind of lead up to this update. And that was Carney seeking out foreign investment. He wants to get one trillion in total investment in Canada over the next five

years. As part of that, he's invited, I think, like a hundred of the world's biggest investors to a summit in Toronto this September, including other countries sovereign wealth funds like Singapore's, and also private investment firms like BlackRock. And just what's the pitch here and how does it fit into this larger context that you and I have been discussing today? So the whole idea of both the sovereign wealth fund and this idea to invest capital, right? So they invited a hundred of the biggest investment bodies, some of them sovereign wealth funds,

some of them just investment firms like BlackRock, for example. the hundred of the biggest top investors around the world to come to Toronto in September for a sort of like a pitch session. Somebody described it to me as like an investor day presentation where it's like Canada, Inc. and they can say, here's how we can, you should be investing in Canada. And there's been as many questions about how that's going to work as there are around this sovereign wealth fund about like, what are you asking them to invest in?

What specific projects? And when I was doing some reporting around that summit that's going to take place, in September. One of the questions I kept getting asked by people abroad was whether Canada's airports were going to be something that was going to be on the table in terms of something they could invest in. And so I was interested to see on page 57 of the budget for those following at home that it has this line about airports. And it says the government is also assessing opportunities to unlock the full value of airports in support of investments in Canada's long-term growth, including through alternative models of ownership.

This work will be advanced with the input of the airport authorities and other stakeholders, including airlines and local governments. Now, James, you will point out the word privatization isn't used once in that sentence. Nobody's saying... Although alternative models of ownership does sound like a euphemism for privatization. It sure does. And so I think one of the really interesting things when this investment summit happens and as we get more information of the sovereign wealth fund,

And as we look ahead to the next federal budget, it'll probably come out in November, I think those kinds of questions about what's on the table? What are we actually looking at? Are Canadians okay with that? How do we feel about that? What kind of money would we get? Is there, you know, somebody in the lockup today was musing that maybe you sell an airport and you use that money to cede the sovereign wealth fund. Maybe that's how they're coming about it. You don't have people speculating like that when you actually provide the answers. I don't know if that's true or not. But it's, it's the, it's the kind of thing people are asking. And as I say, it's the kind of stuff I was being asked about just around the summit when we were looking for a sense of who's coming and why are they coming,

what are they looking to invest in. That was a question that just kept coming up. I mean, if that airport stuff is moving ahead, like, I don't know if Canadians would be okay with that. I feel like when we privatized. I think there are parts that maybe it would work really well. There are parts, you know, what part of the, the process. of landing in a major international airport in Canada is good. What part do you like the most? Although I do feel like when we privatized transportation infrastructure in the past, it hasn't exactly resulted in better service for Canadians, right?

I'm thinking about the railways. CN owns the railways and freight was prioritized, leaving passengers to wait more. I mean, I know people probably feel like their experience at airports can't get worse, but I'm sure it can. We do not lack for lessons to be learned from the past. The question is whether we will choose. to learn from them or not. Former Blackberry founder Jim Balsali was on the show earlier this week.

And as you know, well, I know you've talked to Jim lots of times. One of his big things is that we are giving up too much of our sovereignty to foreign interests and investors. And have you heard that concern around this pitch to foreign investors? Like, have you been hearing that concern? I have been hearing that concern and not just from from him who he makes a very good case. I've heard it from a bunch of people. And I've heard other sort of parts of that argument made in the last couple of days from people in what they call the innovation economy.

So people that are more on the tech side or the innovation, the entrepreneurship side, really of the economy. The concerns there are that twofold. One, will we allow foreign investment to come in and sort. sweep in and just sort of, as Jim says, take over too much of what is now under Canadian sovereignty. That's one concern. The other is how much as they repurpose how we think about investment capital from the government and investment capital from abroad, are we focusing on the quote unquote old industries. Obviously, we've had a big turnaround and how we think about oil and gas and energy and energy infrastructure in general, which I think is a net positive for

Canada, to be sure. But there is, we do need to really focus. And, you know, there are a bunch of organizations that there are right now that have been a really good job of highlighting the dangers that we've seen in too many Canadian entrepreneurs, specifically tech entrepreneurs being drawn out of Canada to go work in Silicon Valley or go work abroad in a bunch of different places, that there's too many regulatory burdens, the tax burden's too high. They just don't feel, whether those things are necessarily true or not, they don't feel like this. is a place that is really supportive of entrepreneurship and growth in Canada. And that, Jamie, I think, is an existential threat to the economy of this country.

We need to do more to make those people that graduate from the amazing Canadian universities that we have some of the best skilled talent in the world. What are we doing to encourage them to stay and build their companies here rather than go to the United States or Europe or wherever to build the companies there? And just coming out of this update, you certainly heard from people like Andrew Coyne, Global Mail call him this Andrew Coyne, who said that this update and what the government is doing right now is not nearly enough to address what you're just talking about. Whether you're talking about our deteriorating public finances, both federal and provincial,

or whether you're talking about our very slow economic growth, where we now celebrate if we get 1.7% of growth per year, that's a third of our rate in the 50s and 60s. There are big changes that are needed if we're going to address out of those fronts. There's really none of that in this budget. There are tinkering around the edge. Talk to me a little bit about people who feel like this is like a sleeper update. And this government needs to move much faster and go much harder here. So the most common criticism I've heard of Kearney, and I hear it from like investment people.

I hear it from small businesses. I hear it from tech people. And I hear it from global energy giants. The one through line to them is that this government has done a really effective job with saying all the right things and speaking to the concerns Canadians of all stripes have about where the economy has been and where it needs to get to, but that we haven't seen enough delivery of those promises, that the talk is great.

And even people that I'm a little surprised by that would agree with a liberal prime minister adamantly agreeing with him. but really worried that we haven't seen enough to show that that that change is actually happening and that what they feel this government really needs to do is get some wins in a win column and show some deliverables that here are the 10 projects that we approved that are done now or that are shovels in the ground now that are creating economic benefits. And yes, some of that is long term, but you do need to at some of the, some point, be able to hold something up into the frame and say, here's what we did. Here's how

this worked. And here's why we need to continue doing it this way. Yeah. I mean, they need something for all of these people in the trades that they want to train to do. For sure. And that's going to be a balance and it's going to be a tricky one. But they have the support. People I'm surprised by that they support a liberal government, people that are not traditional liberals in my conversations with them that are saying, I support this. I like this. I like the plan. But increasingly over the last few months, five months or so, they've been saying, I like the plan, but where's the, where's the action? We've got to see some action. That feels like a good place for us. And Peter, thank you so much for this. And thank you for also making this really tangible. I'm pleased that we

did not, I think, even talk about debt to GDP ratio. Oh, you want to talk about debt GDP ratio? I don't. I can go. We can do another whole half hour. Yeah, I do not. Yeah, thank you. Thank you. It's my great pleasure. Thank you. All right. That is all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow. For more CBC podcasts, go to cbc.ca.ca slash podcasts.