Front Burner - Politics! Carney meets Trump again, Smith pitches a pipeline

Episode Date: October 6, 2025

Aaron Wherry, senior writer at CBC's parliamentary bureau, is back today to talk Canadian politics.We get into Mark Carney’s upcoming trip to Washington and what it might mean for the possibility of some sort of trade stability with the United States.Plus, Alberta Premier Danielle Smith says her province will propose a new bitumen pipeline to B.C.’s coast to the federal major projects office. But with significant opposition from indigenous communities and the B.C. government, is she just trying to pressure the federal government to get involved?We'd love to hear from you! Complete our listener survey here.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

Of the seven great nations that make up the G7, it is Canada that imposes the highest taxes on beer. 46% of what Canadians pay for beer is government taxation. When the G7 leaders get together, I bet Canada doesn't brag about that. Enough is enough. Help stop automatic beer tax hikes. Go to hereforbeer.ca and ask yourself, why does the best beer nation have the worst beer taxation? This is a CBC podcast. Hey, everybody, it's Jamie.

I am here with Erin Wary, senior writer at CBC's Parliamentary Bureau. And today on the show, we are going to get into Mark Carney's upcoming trip to Washington in the state of trade talks with Trump, Danielle Smith's game of pipeline chicken, and we're also going to discuss if the country's finances are about to fall off a cliff, which sounds alarming. Aaron, hey, thanks for coming on. Hey, Jamil. Let's start with Carney's upcoming trip to Washington. His office announced last week that the Prime Minister would be heading to D.C. Monday evening for a. quote, working visit and meeting with Donald Trump.

Of course, this is happening at a time that certain sectors are getting pounded by tariffs over the summer. The U.S. hikes steel and aluminum tariffs to 50 percent, for example. And so what are you hearing could come of this meeting? Yes, so there's some suggestion that there might be some movement on steel and aluminum tariffs coming out of this. I think, as always, you have to acknowledge that it's hard to predict. what's going to happen next in Washington and where any of this is going to go. The prime minister going down would suggest that there's some reason, or at least that he sees some use in going down, that his presence would be useful.

He's bringing a few cabinet ministers. So, you know, just to even move things forward. But as always, we'll just have to kind of wait and see you. I know the last time that he was in Washington, it was May right after the election. And since then he has, of course, as you and I have talked about, face. criticism from the opposition, for example, that he's given up too much with nothing to show for it, repealing the digital services tax, for example, dropping many of the counter tariffs. And I was expecting that when the call was reported, that we'd find that President Trump had

given us something in return, but not so. Today we learn that it is even yet another capitulation and climb down by Mark Carney. His elbows have mysteriously gone missing. If he doesn't come away with something tangible after this meeting this week, could this be a real problem for him, you think? I mean, I think every day that sort of things go on without some kind of resolution is another opportunity for the opposition leaders or maybe even some of the premiers to kind of wonder what's going on or suggest that Mark Carney is not pulling off the wind that he was supposed to pull off, that he's not managing the situation, that he's. you know, failing to kind of contain the threat or maybe not being tough enough. You know, some people think I've criticized him for traveling. It's not his traveling. It's his results.

He goes to Washington. The Americans double tariffs on Canada. He goes to Europe, twice to UK. And what do they do? Lock in the blockade against Canadian beef production. He meets with the Chinese Premier. And what do the Chinese do? They double tariffs on our farmers and fish.

harvesters. Everywhere he goes, we end up with higher tariffs. I guess the question then becomes again, sort of what the Canadian public expects out of this. Do they think he should have been able to fix this very quickly, or do Canadians sort of understand and appreciate that Donald Trump is who he is and is not easily managed? And there's always this pressure on the Prime minister to figure this situation out. But I don't know necessarily that that means he needs to go out and get a deal tomorrow because any deal that he makes is going to be measured in terms of the tradeoffs. All right. Let's do the pipeline now. Alberta Premier Daniel Smith announced last week that her

government is going to champion an application to the major projects office for a new bitumen pipeline to the north coast of B.C. What stands before us right now is a once-in-a-generation opportunity to unlock our wealth of resources and become a world-leading energy superpower. But to realize this potential, the federal government must make meaningful and substantive reforms to Canada's regulatory environment to revive investor certainty. I was surprised by the move. I don't know if there is no private company that has stepped up to finance this yet. This route is still unclear. But can you walk me through what Daniel Smith was doing here? What is she doing here? Yeah. So Daniel Smith's argument is that the reason a private proponent hasn't come forward

is because of the existing federal regulations on environmental assessment and, you know, a tanker ban in the north course of BC. And that essentially until those regulations go away, there won't be a private proponent. You will not see companies sink billions of dollars into new major projects unless the federal government overturns or overhauls is Trudeau-era anti-resource development policies. You can't build a pipeline to the northwest coast and still have a tanker ban. You cannot have an emissions cap that is so aggressive that companies would have to shut

in operations in order to achieve it. And you can't have enthusiasm to export natural gas and win the AI data war and then have punitive policies against using natural gas on Alberta's electricity grid. And so her solution to this situation is that Alberta will become the proponent. It will take care of the planning. It will figure out where the pipeline would go. It will at least start consultations with indigenous groups, and it will push this project forward to a point where the federal government

will have to make a decision whether or not to put it on the major projects list, which is this list of projects that the federal government considers, priority projects, major nation-building projects that have to move forward. And she said that this will be, quote, a test of whether Canada works as a country, and just flesh that out for me. Yeah. So her language on this is very interesting. Her argument essentially is if Alberta can't get its resources to market, if other

provinces aren't going to, you know, facilitate that work with Alberta. then that will prove that Canada isn't working the way it's supposed to. Because if we can't build with a collaboration of the federal government and between provinces, if it's everybody gets to get their products going to market except Alberta, that's not a country. A country is one where we support each other. I think you can sort of turn that around and say, well, is the question really whether or not a pipeline can get built that is a test of whether Canada is working

or is it whether a pipeline can get built in a way that is, you know, environmentally responsible and socially acceptable to people who are going to be impacted? And I think further to that, you can ask who exactly is responsible for passing the test here. Is it Danielle Smith or is it Mark Carney or some combination of those two, along with perhaps British Columbia Premier David Eby? You know, Daniel Smith is very, I think, almost explicitly trying to put the onus on Mark Carney. I think it's fair to ask whether that's a realistic way of looking at this. Well, let's pull that apart a little bit here.

So we heard very quickly from BC Premier David E.B. Who said essentially that this was a very vague project that was too reliant on government money and that he will not support removing the tanker ban, for example, which is a requirement for the pipeline to be built. Daniel Smith is flat out saying that the tanker ban has to be abolished. Also, worth Also, worth noting the president of a group of First Nations along B.C.'s coasts said that they won't support a bitumen pipeline, quote, now or ever. So this collision course has been set up

here. And so what is going to happen now and what position does this put Carney in? Yeah. So I think the first question to be answered is, what can Daniel Smith do about the concerns that have been raised? As you say, as soon as she made her announcement, Coastal First Nations in BC said, we don't support this project. Well, we've been working very hard as coastal communities to bring in conservation economy, you know, maintaining a healthy and pristine ecosystem that we rely upon for our culture, our spiritual needs, our livelihood. You know, that doesn't, you know, her project is not aligned with the position of our communities. So what is she going to do to consult with First Nations groups, try to address their concerns, try to find agreement? And in addition,

with the Premier of BC, what is she going to do to kind of maybe make this easier for him to be on side with. David E.B. is hardly the first BC Premier to object to a pipeline from Alberta going across his province. And Daniel Smith has said the ball is in Mark Carney's court. First of all, there is no ball yet. And second of all, I think in putting the ball together, I think it's sort of interesting to see what she does exactly to alleviate these concerns. because as much as you can sort of make a kind of broad legal argument that one province shouldn't be able to block the infrastructure that another province wants, it's not that easy and not that simple. And I think the question becomes, if you're pushing a pipeline,

what are you doing to address the concerns that people have? Do you get the sense that she's going to be doing that in the coming weeks? I mean, just on this tanker ban, using the tanker ban as example, she's saying, And you have to get rid of the tanker ban to build the pipeline and E.B. saying no. Yeah. What's even, how do you even compromise there? I think before we get to the discussion of removing the tanker ban, what about the concerns that indigenous groups and communities have about this pipeline? What about the concerns that people have about climate change?

What about the concerns that people have about co-ownership and who's going to profit from this? you know, there's all these sorts of issues that have to be discussed, I think. And I think you could make the case that it's skipping a few steps to say, well, we need to get rid of the tanker ban to build this pipeline because, you know, right now, the premier of the province the pipeline is going to go through and the First Nations groups whose territory of the pipeline is going to go through aren't keen on the idea. I take your point that there's no ball yet, but do you think that it does put some pressure on the prime minister to pick some sort of lane here? Smith has said that she wants some movement

on this by November. Kearney has said that he will not force a project on a jurisdiction, but he also hasn't said no to an oil pipeline. He's in talks with Alberta about getting rid of emission caps on industry. Like, there are signs in both directions here, right? So does this put some pressure on him to, like, come down on one side? I think it could eventually. If you look at the statement that Natural Resources Minister Tim Hodgson put out after Daniel Smith's announcement, I think you can read it as sort of a list of almost like a checklist of things that the federal government is expecting to see from Alberta.

So just a quote from that statement, quote, building major projects. includes meaningful consultations with indigenous rights holders, working with all affected jurisdictions, and alignment with Canada's objectives with respect to climate change and clean growth. Once any proponent has done this work, the federal government is open to evaluating a project on its merits. So I can't imagine that statement was accidental because it does read like a checklist of things that the federal government is expecting to see from not just this project but any project. and I think it sets up the question of how far is Daniel Smith going to go to deal with these items and these issues that the federal government has laid down.

So that's the first part. The second part, though, then becomes what happens if she and Alberta do do a lot of work in this regard and still don't come to agreement with First Nation groups and with the government in BC? You know, to a certain extent, that's the situation that Justin Trudeau faced on on Trans Mountain, which was the government of BC didn't want that pipeline. And it fell to the federal government to say, well, the pipeline's going to get builds. The Prime Minister interrupted an international diplomatic trip

to deal with a domestic political feud, throwing the might and the money of the federal government behind Alberta to get a pipeline built to the BC coast. The Trans Mountain Pipeline expansion is a vital strategic interest to Canada. It will be built. be built. Ottawa will start formal talk. There's a world where this gets to a point where Mark Carney has to make some decisions.

I don't think we're there yet. I think the onus is still on Alberta to, as the proponent, to kind of make the case for this pipeline and do the work to try to get it built. I think it's worth noting in that statement from Hodgson, he talked about climate change and clean growth. And, I mean, that's always going to be a question with a pipeline. But in this case, for all the talk about a grand bargain that Daniel Smith has talked about, that Tim Hodgson has talked about that Mark Carney has talked about,

Alberta is opposed to the federal price on industrial emissions. It's opposed to a cap on oil and gas emissions. And so is Alberta going to move on those policies in a way that aligns with the national goals on climate change? And if Mark Carney does go down this road and decide to try to get a pipeline built, is he going to come out of it with a real consensus on climate policy? Because for it to be worth it, arguably for the federal government, you would think that has to be part of it. It's sneaky, underhanded.

It's sneaky, underhanded. to talk about it. But in Canada, beer tax increases are automatic. They go up automatically, yes. Even though at 46% Canada already imposes the highest beer taxes of any country in the G7.

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And in the lead up to this, the current parliamentary budget officer, so this is like, watchdog role, the budget officer gives independent analysis of government spending and budgets, etc. He goes on our friend Vasi Capellos' show at CTV, and he talks about how the country's current fiscal outlook hasn't gone over the precipice, but is looking out over the cliff, which sounds very bad. Sounds very bad. And so what, first of all, what is he even talking about? His language is rather traumatic. It does sort of sound like we're one step away from peril. You know, the basic argument that the PBO, the current parliamentary budget officer is making,

is that essentially federal finances have moved from being in a sustainable position to being in an unsustainable position. Based upon our numbers, things cannot continue as they are. And I think everybody knows that, right? So what we've done is we've taken what everybody's feeling in terms of the anxiety across the country at this point, positive economic growth that doesn't necessarily feel very good. And we've actually put numbers around it with respect to the federal government's deficits over the next. The metric that the PBO has laid out in the past for measuring that is whether our

debt to GDP ratio is slated to go down over time or whether it's slated to go up. And the PBO is now saying, based on their numbers, the federal government's debt looks like it will start growing faster than the economy. And that is due to a couple things in their early projections, one being slower economic growth and the other being higher spending, higher deficits for things like national defense. At one point, Vashi is asking him, Jason Jakes, this is the current budget officer, what that would mean practically? And he just said nothing good, which was not helpful, right?

And like, what does that mean practically? So I think what he's getting at is that if you stay on that track for an extended period of time where your debt is growing faster than your economy, you get into a situation where you have to take some pretty dramatic action to get things back in the right direction. And that's basically a callback to what happened in the 1980s and the 1990s where the debt wasn't under control. It got to a point where the federal government needed to make pretty drastic cuts to continue spending. And it was a pretty massive shift in federal finances, some pretty dramatic cuts. Well, this was the day we'd been waiting for, of course,

holding our breath, wondering how bad it would be. Here are some of the highlights of the government's new spending plan. RRSP contribution limits frozen at this year's level for two years. 45,000 public service jobs will be eliminated. Block transfer payments to the provinces slashed by $4.5 billion, beginning in 1997-98. As for the deficit... It's worth noting that by the current PBO's projections, the debt-to-GDP ratio would get to about 44%. And the debt to GDP ratio in the mid-90s was nearly 67%. So I'm by no means an economist or an accountant, but I think...

think it is fair to say that as much as you don't necessarily want to get on that track of your debt to GDP ratio climbing and climbing and climbing, there's still a fair bit of room between where we are now and where we were in the mid-90s. And then just to add to all of this, and I don't know, maybe it makes it more confusing. The former budget watchdog Kevin Page has now come out and said that the current budget Watchdog is wrong. Tell me a little bit more about what happened there. Yeah, so Kevin Page is making, I think, a couple arguments. One is the language is a bit much. Well, I think the language from the current Promptu Budget Officer, Mr. Jason Jakes, is just wrong. And he should walk that back, quite frankly.

She should take those, you should tell people that those are, you know, our fiscal situation is sustainable. In his interview, Kevin Page's interview with our colleague, David Cochran, at CBC's power and politics said, you know, you wouldn't see that sort of language from a governor of the Bank of Canada. You wouldn't see that kind of language from the auditor general. And I think that kind of the other language of those other words, stupefy, shocking. It's not, you wouldn't see a governor of the Bank of Canada or the auditor general use that kind of language. I think it's definitely inflamed certain passions around, you know, Canada's fiscal situation that I think are not consistent with the numbers. The idea being like these are nonpartisan, independent

offices that are supposed to be kind of cooler heads and aren't supposed to be sort of using sort of headline-grabbing language to describe things. So I think there's- I mean, that's actually why I found it so alarming. I've never like literally never heard a budget watchdog talk like this before. Yeah, they're supposed to be, you know, fairly boring. And this was not boring. The second part, though, I think, is that Kevin Page is saying we maybe don't yet have a full picture of what the federal finances are going to be, even by the current PBO's admission, they're not taking into account both even higher defense spending and the cuts that Mark Carney's government has already promised to do. So we don't yet have an entirely clear

picture of what federal finances are going to look like. Kevin Page, his assessment is if you look at federal finances, they're not yet in an unsustainable position. So how is this all going to inform how everyone is going to be looking at this, what has been billed as at least a historic budget coming early next month? Yeah, so understandably, you know, the official opposition, the Conservative Party has seized on the comments that the current PBO has made and talked about, you know, we're headed for a crisis and we're on the precipice. this is kind of confirmation to them of what they've been saying about federal spending under

the liberal government. It does put pressure to a certain degree on Mark Carney's government to show that federal finances are sustainable, that we aren't headed to another situation like the 1980s and 1990s. I do you think the PBO is probably onto something in that we're probably in a situation where the federal government, if it's going to be spending more on defense, if it's going to be facing a more uncertain economy, if it's going to be trying to invest in major infrastructure projects and housing, there's some tough choices to make. You know, Mark Carney and Francois Fulip-Champin have said there are tough choices coming.

They haven't yet really explained what those tough choices are going to be, but they have suggested that there are tough choices. Because if the federal one is going to be spending a lot more in certain areas, it's probably going to have to change how much it spends in other areas. or raise taxes at some point. And so I think it does sort of underline this budget is going to be taking place in a tough environment and that the spending capacity, you know, the kind of idea that we can just sort of spend whatever we want and deficits don't matter, that we're kind of running up

against the edge maybe of where that actually is. And I think as much as the conservatives want to say, aha, look, we're in a fiscal crisis. and the liberals to a certain extent want to say it's really not that bad. Our credit rating is still high. We still compare well to our G7 partners that everybody, I think, is going to be facing the fact that there are investments. Everybody agrees we have to make and how are we going to make them? And what does that mean for the spending we're already doing? And, you know, that I think sets up a really tough debate, you know, not only for the liberals who have to kind of make a budget and defense.

it. But I think for everybody to explain, okay, if you don't like the choices the liberals are making, what exactly would you do differently? And we might be getting to a point where, you know, it's not as easy to say, well, just cut waste and consultants, but actually talking about how we're going to reshape federal finances going forward. Yeah. Okay. Well, I'm, I'm glad we did that. That was good. I hope everybody else is due. Aaron, thank you. Thank you. Anytime. All right. That is all for today. I'm Jamie Poisson. Thanks so much for listening.

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