The Decibel - Takeaways from the Liberals’ first economic update as a majority

Episode Date: April 29, 2026

The Liberals’ spring economic update lays out $54-billion in new spending over six years, including $6-billion towards boosting employment in the trades and more money for sports. The update also shows an estimated deficit of $66.9-billion for the 2025-26 fiscal year, an $11.5-billion improvement over what the government had projected in the Nov. 4 budget. Campbell Clark, The Globe’s chief political writer, joins the show to break down what the Carney government’s first piece of fiscal policy as a majority government tells us about how they’re wielding their newfound power. Questions? Comments? Ideas? Email us at [e-mail] Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

We now have a sense of how Prime Minister Mark Carney plans to keep Canada's economy going. The government tables their spring economic update yesterday. This is the first fiscal outlook we've gotten since Mark Carney secured his majority government. So how is he wielding that newfound power? Campbell Clark is the Globe's chief political writer. He's here to break down the big beats of the spring economic update, from affordability measures to the creation of a new sovereign wealth fund

to the billions they plan to spend on skilled trades. I'm Cheryl Sutherland, and this is the Decibel from the Globe and Mail. Hi, Campbell, great to have you back on the show. Thanks for having me. So, Campbell, before we get into the highlights of this update, on a scale of bold to blah, how would you rate this economic update?

Did this give us the generational transformation that Carney talks about? No. It was more blah. It was a lot more blah than bold. It's kind of the right question in some ways because, you know, they now have a majority government. And so Mark Carney and his finance minister, Francois Philippe Champagne, last fall when they presented their first budget, they were talking in those terms, transformational, generational, generational. They were going to change the structure of the economy to deal with all these troubles ahead.

This statement, you know, there's still some troubles ahead. Now they've got a majority government. You'd think, you know, they could work on longer term timelines. They could take political risks. They could really do some things. What they did was sort of tinkering around the edges with a little bit of liberal political patterns thrown in there. Federal governments do these outlooks between annual budgets to update their projections,

right? So this is something that happens all the time. How does this one compare to ones of governments past? So the true government had sort of made these more and more. into many budgets. So the economic statement, and just, you know, to clarify, the seasons have been reversed, right? The budgets used to be in the spring and the updates in the fall, and now the budgets have been changed to the fall and the updates are in the spring. Yeah, the opposite now. And everybody's language has changed to sort of follow along. So these things used to be,

you know, generally at one time they were updates. They would tell you about how the finances were going, the economy was going, and it would be an update. And then occasionally there would be what they call the finance department measures. And if there were a lot of measures, it essentially became viewed as a mini budget. Sometimes the mini budget was even bigger than the budget. Under the Trudeau years, it became pretty much the norm to make these into mini budgets.

And so that meant you essentially had a fiscal policy laid out in the budget, and then an additional fiscal policy laid out halfway through and a lot more spending, and it tended to be a little bit undisciplined. So this one was a little bit less of that, although there was a fair bit of spending before the economic update since the budget. And so that had to be accounted for in this. But it wasn't the real sort of mini budget.

And it certainly didn't have an attempt to do those big structural things that don't necessarily cost money to work on the economy of the future. There was no tax reform. There was no additional effort to cut spending to follow Mark Carney's philosophy of spending less to invest more. So this was not the big transformational statement they could have made with the majority government. Let's start with the new spending in this economic outlook. There's $54.5 billion in new spending over the next six years. And one of the big things they're spending on is getting more people in the trades. Can you tell us about that?

Yeah, this is kind of an interesting thing. They've got a program to recruit basically apprentices and train them. they've called it using the liberal slogan, Team Canada Strong sounds a bit like a series of cartoon superheroes or something, you know, Teen Titans Go. They've taken to, you know, putting the Canada Strong label on a lot of things. Yeah, like Build Canada Strong, Team Canada Strong. There's a theme going on here.

Yeah, and it happens to be right off the cover of last year's liberal election platform. So the apprenticeship thing is an interesting idea. So first of all, you know, there are good jobs in the trades. We are supposed to be a nationally going on a building spree of major projects and housing and infrastructure. So there's going to need to be more labor in those fields. And so this is a program to recruit and train and subsidize the pay of these apprentices. So they would, for example, pay employers subsidies so that they would offer apprenticeships. They will pay to expand the programs that exist, including some of them are union training programs.

and then they would be a top-up $400 a week over and about the EI funds for these apprentices to, you know, basically to pay so that they can make a living while they're training to be, you know, I don't know, a pipe fitter or a welder or, you know, something in the trades. And, you know, that could be solid economic policy. It remains to be seen whether it's enough to really move the dials to get the 80 to 100,000 people they want in Team Canada strong. but it's certainly something that fits in their sort of economic industrial labor strategy. It's also pretty politically valuable for the liberal government because it hits the right demographics. Okay, yeah. So you mentioned that they are looking to recruit, train, and hire 80 to 100,000 of this team, Canada's strong. How much are they going to be investing into the trades?

That program would be almost $6 billion over five years. In budget terms, it's not huge. It works out to basically it settles down at around $1.3 billion a year. But it is an important training program. And, you know, it is the needed training issue to make the skills of the country's labor force match with the industrial plans you have for the future. So is that the reasoning here? Like they want to have the labor force match with the things that we need right now and, you know, housing infrastructure. Is that the reasoning?

Or that we expect to need over the next five years, yes. There's already, you know, some demand for those jobs that's in the labor market. And there have been forecasts that if indeed we do all of the infrastructure building and major project building and housing building that we are supposed to be doing, that there will be a shortage of those workers. More, in fact, than the 100,000 that are supposed to be recruited under Team Canada strong. Right. We need the people to build all of the infrastructure projects that we want built. Okay, that makes sense. Campbell, a big thing on people's minds is, of course, affordability.

And the government did say that they were going to address this in this outlook. What do we see here? So it's important to point out that most of their affordability initiatives that are accounted for in this statement actually were announced before. So in January, they announced a groceries and essentials benefit, which is really the old GST credit, bumped up by 25%. And more recently, they announced a break on gas taxes, the reduction of the federal. excise tax on fuel. And, you know, there's also claiming some general victories, I guess, or advances from some other measures. Like they point out that rents and house prices have cooled because population growth has cooled because of the tighter immigration policies,

the reduction in temporary foreign workers and foreign students. And that those things have also reduce what labor market weakness so that unemployment is lower than otherwise, would be and people have jobs. There are one or two small new measures that are directly aimed at affordability. One is lowering the premiums for Canada pension plan, which means you get less deducted off your pay. That has to be agreed with the provinces. It apparently was agreed. It's being announced and it'll be put forward through legislation, which is good for, you know, people that have to pay pensions. It's good for employers. It's not huge. It'll be $133 a year for somebody who makes 70,000 a year, and I work that out to $2.56 a week. So, you know, you won't be

getting rich off it, but, you know, incremental reductions in the burden are, you know, the way things happen. They go down incrementally if you want them to, if they go down at all. Can you help me understand? How does Lauren the CPP contribution rate help affordability? Can you explain that? Because doesn't that actually help you in the future? No. So the way the CPP works, like much of a pension plans, but is that people put into it and you get that money later. But both the employers and employees pay a certain amount every pay, every week, and it goes into the investment pool. And if the stock market's doing well, then you don't need to put in as much to pay for the benefits years down the road. So there's an actuarial calculation. So the stock market's

been doing really well. They are overfunded in the Canada pension plan. So the, the nine provinces and the federal government agreed that they don't have to put in as much. If you recall, like that amount, the amount of the contributions has actually gone up a lot in the last 20 years. So it has been reduced now because essentially the calculations are that we can afford to put in less. It's pretty good for employers too. Like if you have 50 people, that $2.56 a week might not seem like a lot, but, you know, $100 a week for an employer, you know, it can add up. Yeah, it adds up. Okay. There's also something that kind of caught my eye was there's also this announcement on more sports spending. Can you tell me about that? Yeah. So it's actually a fair bit of money. I mean, I said that this is not an economic statement that's full of big measures. But for sports, you know, we're talking about $755 million over five years and, you know, in budgets that doesn't sound like a lot. But it's quite a lot for sports. The finance minister said, and I haven't yet checked this, that it's the biggest injection of funds for 20 years. It's not just for, you know, everyday grassroots sports. It's also for attracting big events into Canada. And it's kind of a brand marketing thing.

that governments get drawn into every now and then. You know, if you recall before the 2010 Olympics in Vancouver, there was a program called On the Podium. And it's, I suppose, what you would call it as a sort of national pride program that was referred to by the finance minister as being an investment in national unity, which I thought was an interesting way to sell it. But, you know, some of these funds are for bring events to Canada, elite programs, things that will supposedly incur national pride.

Is there any sense that this has anything to do with our poor showing at the Olympics? I mean, we didn't win as many medals as we expected. I wonder if that has something to do with it. It certainly has to do with the sort of campaign that occurred for more money. You know, after every Olympics where Canada does poorly, people go, you know, whose fault is this? And, you know, somebody points their finger at the government. And it does, I suppose, add pressure.

I think it did add pressure. to the government to sort of, you know, invest more money in sports. You know, I'm not sure that we could see the straight line between Canadian government spending and the podium and the middle count four or eight years from now, but it certainly does increase the lobby. We'll be right back. Campbell, we learned on Monday about this new sovereign wealth fund, which is $25 billion towards the government's big infrastructure spending.

Can you explain to me what this is exactly? Well, it's not necessarily infrastructure. It can be all kinds of Canadian projects, major projects. I suppose in theory it could be a pipeline. It could be a lot of things. And they haven't defined it very clearly what those things will be. Like, for example, the big projects in the major projects office and other projects that have federal participation is one of the sort of phrases that was used.

So we don't really know. But it's supposed to be essentially an investment fund. You know, it's going to invest on commercial terms in projects, in initiatives and use that money and hope to make a return earnings on the funds that would increase the value of the fund. What's unusual because there's lots of countries that have sovereign wealth funds and they're usually countries that are resource rich like Norway. You know, Norway has and had large oil reserves and they socked away a lot of those

earnings sort of to spread the money out over future generations. What's different in the case of this one is that, you know, of course the Canadian government doesn't have a surplus that they can sock away. We are running deficits and building up debt. And so this will be $25 billion of borrowed money put into a fund that will then invest in Canadian projects and promises, at least the promise is that it will earn money. It will earn returns. It will make money and that the value of that fund will grow. It's also got another unusual feature that the average Canadian will be able to invest in it. You know, like you you once bought Canada savings bonds,

and now you can buy, you know, units, I suppose, in the Canada Strong Fund. The Canada Strong Fund. Here we are. Yes. The branding is all pretty similar, yeah. Yeah. It's not, by the way, the $25 billion that's being put into it,

which is supposed to be put into it over three years. It doesn't have an impact on the deficit. It's what's called a non-budgetary transaction. So, you know, that money that we're borrowing adds to the debt, but it doesn't appear on the annual deficit. Okay. Can you also help me understand how big of a deal this is? I feel like there's been a lot of noise around it.

Even on one of our stories, there's like 2,000 plus comments. So people are talking about this. But is it a big deal? Well, I suppose it depends on how you look at it. Like $25 billion, as much as it sounds like a lot, it's not like a massive sum to move the Canadian economy from one place to the other, right? This is an economy that's, what, $3 trillion Canadian dollars plus $3.1, $3.2 trillion a year. So, you know, a $25 billion fund isn't going to, you know, change everything. The argument that Mark Carney has made, and he's been making it basically since he got into politics at the beginning of 2025,

is that in a trade war, a trade war that affects Canada, private investors aren't going to be putting money into projects, into initiatives, into the economy, into business, the way they normally would, that they're going to be hesitant because of the uncertainty and that the public money has. to be used to invest to push the economy along. And so he has argued, and he did extensively during the last election campaign, that if Canadian public funds are used, they can help to catalyze private investors. You know, you can go into joint ventures with private investors so that you, the public sector, the government basically, or the public fund takes on part of the risk and the private sector only has to take on a lesser risk of a project. So he's been big on these kinds of things.

I guess the sort of other aspect that they put forward is that this will somehow spread the wealth of Canadian growth for future generations. But, you know, since it's borrowed money and borrowed from future generations, that remains to be seen. Okay. Let's talk about the deficit because the government is actually framing this as a good news story. The government now predicts that the deficit for the 2025, 2025, 26 year was lower than expected. $66.9 billion, which is $11.5 billion less than the 2025 budget had planned for. First off, Campbell, how is that possible? So, I mean, the real answer to this question, even though the government tried to take credit for it with their wise economic policies,

the real answer is that government revenues went up because of some changes, at least relative to expectations. So oil prices went up, and that helps the Canadian government's revenues, commodity prices as well, or some commodities, And, you know, the impacts of the trade war were not as bad as some beard a year ago or even six months ago because, you know, while we are paying tariffs on autos, auto parts are exempt, U.S. content is exempt. The effective tariff rate is lower than it might have been. So, you know, there are $17 billion, there were $17 billion more in revenues that came in last year. that's the 2025-26 fiscal year.

So they spent an extra $6 billion, and that's how they got to an $11 billion deficit. It's worth noting like, so there will be extra revenues in this current fiscal year as well, and then a sort of smaller and smaller increase over the projections in future years. But all of that money's already been sort of spoken for in the sense that the finance minister is pretty much earmarked all of that. All of the additional revenues have been earmarked. So the deficit projections are the same as they were in November's budget, even though they expect now to have more revenues. Essentially, they're now expecting to have more money coming in, but also spend more money for future years so that it works out as a wash of their figures on the deficit.

Okay. Campbell, what has been the response from the opposition on this economic outlook? Well, the leader of the opposition, Pierre Paulyev, has basically said that it was spendthrift, that this budget builds up too much debt. he compares it to the forecast that the last Trudeau budget made in 2024 for what should be the deficit in this current year, which was $31 billion, and the Carney budget, the Champagne budget, has it at $65 billion now. So he said, everybody thought it would be impossible to outspend Justin Trudeau, but this prime minister came along and said, hold my champagne. You know, obviously a lot's happened since then, but there is a main argument.

there that the Canadian economy hasn't been as racked by the trade war as people expected that the revenues are actually up over what we expected last November and the deficits have still grown substantially. Clearly, the Carney government is arguing they should be spending to build for the future. And a big part of the, well, a substantial part of the extra spending, including the spending that is accounted for in this economic statement, but that happened before it was released. is, you know, those industrial supports to, you know, workers and companies in the steel industry, for example, that have had layoffs and have been hit by tariffs.

So there are, you know, billions of dollars being spent on that industrial strategy, the Strategic Response Fund, the support for workers. But, you know, they are still spending in a big way and running pretty large deficits. Not the largest in the world, not large by international standards, but large by Canadian history standards. Broadly Campbell, what does this economic outlook tell us about how the government sees the state of the economy? You know, that's a really good question because they keep arguing that, or rather they

were arguing today, that the economy's been pretty resilient, that it has done better than expected. And that's true. I remember the deep, dark fears that we all had a year ago about what this trade war was going to mean for the Canadian economy. And since then, there's been war in the military. Middle East. You know, it's been a pretty sort of uncertain time. And, you know, the finance minister talked about that today as an unprecedented fog of uncertainty. So, you know, they still are telling us,

you know, we've weathered things well. The plan is working, at least in their view, but there is a lot of uncertainty ahead. And I think that's why, you know, you might have expected that they would try to do some more sort of deeper structural things in terms of, you know, attracting investment. or tax reform or cutting on the spending side or something along those lines, something more transformational and generational. Because they are saying dark clouds are still overhead. But again, they're also saying that we've been more resilient, that we've gotten through things okay so far.

So I guess what they have reached out for mostly is sort of supports affordability measures, giving people, sort of breaks on their feeling that they can't make ends meet. And I guess that's also pretty good politics. That's their political objective as well. What would you say then what this outlook tells us about how Carney's new majority is operating, like how they're wielding this new power that they have? Yeah, that's a really interesting thing. And I think so far what we've seen is they're not wielding it that much differently

from when they had a minority. Let's put the counterfactual in there. If they still had a minority and they were still thinking they might be into an election in six months or a year from now. I think this is the kind of economic update they would have released. So, like, this is a minority government economic update. You know, it's not necessary to change your whole outlook on things when you have a majority government.

But they had room to gamble here because they could have said, well, we've got up to four years and we're going to do the big things. It's a common pattern in majority governments, or at least it used to be when we had regular majority governments to do the tough things early on, right? So Jean-Cretchen was elected in late 1993. The 94 budget was, but then the 95 budget, I guess it was a year and a half into the Cretchen term, was the big ax-swigging budget that changed the nature of Canadian finances for the long term, the biggest sort of change in direction in our history, really. So that 1995 budget, when Paul Martin was the finance minister and Jean-Cretchen was the prime minister, it was a rare occasion. when the government actually changed the whole track of government spending.

Essentially, the track of public spending went up and up and up every year, and then it went dramatically down in that one budget, and that was a very rare event, and it changed the sort of course of Canadian public finances. So that was getting things out of the way and taking the big political risk when you still had a couple of years before the next election. That's what majority of governments often did in the past, right? They take the big risk in a year or two years in knowing they would have time to do the politics afterwards to try to recover.

This government is not doing that yet. Campbell, I think that's a great place to end on. Thank you so much for coming on the show again. Thank you. That was Campbell Clark, the Globe's chief political writer. That's it for today. I'm Cheryl Sutherland. Our associate producer and intern is Emily Conahan.

Our producers are Madeline White, Rachel Levy McLaughlin, and Mikhail Stein. Our editor is David Crosby. Adrian Chung is our senior producer, and Angela Pachenza is our executive editor. Thanks so much for listening.