Canada needs to “become essential” to its largest trading partner and neighbour as it braces for a trade war with the United States, former Bank of Canada governor Mark Carney told a crowd in Ottawa Wednesday afternoon.
Carney discussed Canada’s economic and social policies with Fr. Raymond de Souza, a Catholic priest, economics professor and National Post columnist, at the think-tank Cardus.
In a lengthy and laughter-punctuated conversation, the two covered topics ranging from immigration policy to the environment to declining fertility rates.
It was the fourth event the two had participated in together and their comfort with each other showed. De Souza’s first question was about whether Carney could possibly be appointed chair of the US Federal Reserve, “completing a trifecta of central bank governorships,” referring to Carney’s time at the helm of the Bank of Canada and the Bank of England. Carney said “no” to a laughing crowd.
After about an hour of discussion, Carney joked that he had 15 minutes of prepared material he was trying to stretch. “You only have 15 minutes of things worth to say?” De Souza responded, as the crowd laughed. “You might be suited for electoral politics.”
‘Hinge moment’
Not everything was lighthearted, though — especially when discussing US-Canada relations.
Canada is facing a “hinge moment,” Carney said when describing the forces facing Canada, including president-elect Trump’s promise to impose 25 per cent tariffs on Canadian products.
Carney said leaders would be wise to prepare for a trade war with the US. Canada needs to recognize “we are the best solution to a huge constraint [the US is] going to have,” he told the crowd.
US companies need space to store their data and clean energy sources to run those storage facilities, and Canada can provide both, he said. Oil and gas are important, he said, but Canada could become a leader in clean energy if Canada chooses to invest in it.
The environment was a key theme in the nearly hour-and-a-half conversation. Carney, who is a special envoy to the United Nations on climate change and finance, defended the need for clean energy sources and Canada’s ability to become a leader in clean energy production.
“I don’t think we fully appreciate how fast things are moving,” he said, citing the fact that there is twice as much global investment in clean energy than there is in conventional energy sources. Large companies, like Microsoft, only want to use clean energy, he said.
Conservative Party Leader Pierre Poilievre has dubbed Carney “Carbon Tax Carney” because of his environmental policies. In the talk, Carney took on the Conservatives’ oft-repeated talking point of “axe the tax.”
“If you want to axe the tax … what are you going to put in that’s better?” he asked, noting Canada has a legislated goal to reduce carbon emissions. “If we decide we want to do something about climate change, then it becomes profitable to be part of the solution and costly to be part of the problem.”
‘Right-sizing’ immigration
Another key question in the discussion was whether the Canadian economy — long plagued by sluggish productivity — is strong enough to support key Canadian values like inclusion, solidarity and fairness in delivering social services.
“Productivity is at the core if we’re going to keep our people safe and meet our social obligations,” Carney said. An impending trade war with the US and the continued impact of artificial intelligence on the workplace mean Canada must take productivity seriously, he said.
Productivity is also key for meeting social obligations to newcomers, he said.
“We as Canadians value certain things,” he told the crowd. “Those values are choices. Choices change over time.”
Canada has not lived up to these values by failing to provide immigrants with adequate housing and access to social services, he says. But Canada “cannot afford not to” have robust immigration policies, he said.
The Liberal government’s recently announced reduction in immigration targets reflects a need to balance immigration policies — not eliminate them. “We have to right-size [the system],” he said. “That is very different from saying, ‘We don’t value immigration.’”
Need for humility
Much of Carney’s talk centred on the need for governments and financial institutions to show humility. Leaders need to admit when they have made mistakes, what potential problems still exist, and how these problems can be fixed, he said.
Public trust in institutions is crumbling — and understandable, he said. Governments failed to prepare for global health emergencies, like the Covid pandemic. Leaders need humility, he said. “You can go a long way with humility,” he said.
Institutions of all kinds need to create cultures and systems that inspire public trust. “You can’t, in the end, legislate virtue,” he said. “It’s not contractual. It’s cultural.”
Carney saved some of his harshest critiques for the education system. He called out federal and provincial governments for failing to properly fund post-secondary education and relying on international students to fill graduate programs. “If we value higher education in this country, maybe we should start funding our universities,” he said.
But the biggest problems are in elementary and high school education, he said.
The lack of quality education for children during the pandemic — and few resources to help them regain those losses — is “close to a scandal,” he said.
AI is changing the workforce. Workers need to be given skills to transition to new jobs, he said, but children also need to be taught skills necessary for an AI-dominated world. Canada needs a “fundamental reform of education,” he said.
Yet Carney did not think governments could fix all problems. He dodged a question about whether Canada’s plummeting fertility rates are a crisis. “Those are [personal] choices,” he said. Government policies to increase fertility have not been successful in other countries, he said.
Countries need to “forge” a cultural consensus about what their shared values are, he said. Every sector — from government to media — needs to be part of building that consensus. “We need to … pull people back into civic participation.”
