Prime Minister Justin Trudeau has rejected a call from the Business Council of Canada (BCC) to limit spending, instead arguing that “strong countries … invest in themselves and their people.”
He continued, “And that doesn’t come with austerity and cuts, as proposed by many members of the business community, as proposed by many, many Conservative politicians. We continue to believe that strong, confident countries invest in themselves and in their people.”
After acknowledging businesses want to be “profitable and growing,” the prime minister said it is important “that Canadians get the support they need now, to make it through these tough times.”
The letter from business council president and CEO Goldy Hyder, addressed to Mr. Trudeau and dated Jan. 21, expressed concerns and provided recommendations regarding Canada’s economic strategy and public finances.
Mr. Hyder recalled a previous letter sent before the Liberals’ summer cabinet retreat, which urged the government to focus on three key areas: establishing a robust fiscal anchor, implementing promised reforms to permitting processes, and capitalizing on the energy transition opportunity.
“Unfortunately, sufficient progress has not been made in any of these priority areas,” Mr. Hyder wrote.
“The government’s failure to act with urgency has weakened and worsened our domestic economic growth. Consequently, Canadians continue to struggle with affordability challenges driven by high interest rates, persistent inflation, and low productivity.”
The letter highlighted specific concerns and recommendations in each key area.
It criticized the government’s current fiscal plan, which aims to keep deficits below 1 percent of GDP from 2026–2027 onward. It also questioned the credibility of the plan given the government’s history of increasing expenses annually since 2016.
The BCC, along with former Bank of Canada Governor David Dodge, had previously suggested a debt-servicing cost-to-revenue ratio as a more effective fiscal anchor.
The letter said the government’s commitment to outlining a plan for more efficient assessment and permitting processes for major projects by the end of 2023 was not fulfilled. Mr. Hyder pointed out that there had not even been a draft plan or public explanation for the delay. Such inaction, he said, creates uncertainty and discourages investment, hindering Canada’s transition to a low-carbon economy.
Mr. Hyder also expressed frustration over the government’s failure to deliver on commitments related to accelerating investment in energy transition and creating a level playing field with the United States. Specific shortcomings include delays in implementing tax credits for “clean technologies” and the creation of a carbon contract for difference program, in which the government and businesses agree on a price for carbon credits that are tradable as they reduce carbon output.
A recent pause in activities by the Canada Innovation Corporation and delays in developing an Indigenous Loan Guarantee Program were also highlighted as problematic.
In his closing remarks, Mr. Hyder emphasized the critical importance of tackling these key issues, underscoring their potential for immediate and significant benefits to Canada’s economy and the overall well-being of its citizens.
“As we wrote to you on the eve of your last cabinet retreat, addressing these priorities would have an immediate, positive impact on the Canadian economy and would enhance prosperity for all Canadians,” Mr. Hyder wrote.
“Failing to address the above priorities, however, invites greater uncertainty and exposes Canadians to a further erosion of their living standards.”
