Carson Jerema: How Justin Trudeau cost Canada $1 trillion

Former Prime Minister of Canada Justin Trudeau. (Photo by Chris Jackson - Pool/Getty Images)

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There is no great mystery behind why some nations are wealthy and others are not. The policy mix varies very little and is well understood. Countries with lower, neutral tax systems, minimal regulations, the rule of law and openness to international trade and foreign investment are wealthier than countries with higher taxes, more complicated regulations and closed off to the word. Economies are the sum of the countless decisions made by people on what to buy or sell, where to invest, or where to work.

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There is no point in trying to control what is essentially life, so the best that can be done is to let it thrive.

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In Canada the last 10 years, the Liberal party, particularly when led by Justin Trudeau, reasoned that its judgment was not just better, but far superior, than the market’s judgment, by which we mean the countless decisions made by people every minute of every day. The damage done to Canada’s economy has never been clearer.

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An RBC report released Tuesday confirmed that new investment in Canada has completely collapsed during the Liberals’ tenure in power. “Between 2015 and 2024, more than $1 trillion of investment exited Canada — the largest capital exodus in Canadian history,” the report says. “For every dollar of inward FDI, two dollars exited.” Partly as a result, GDP per capita growth, the best indicator we have of standard of living, has been less than one per cent the last decade, by far the lowest of any period since the Great Recession.

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The reason for this, the same reason why another $1 trillion in corporate capital is sitting idle is what the RBC report unhelpfully terms “burdensome regulatory, permitting and project delivery barriers.” In other words, the Liberals introduced regulations on top of regulations and endless processes, in the name of fighting climate change, thus choking off investment.

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The clearest examples are the introduction of the Impact Assessment Act, the government’s cancellation of the Northern Gateway pipeline, the carbon tax, the industrial carbon tax, the clean fuel regulations, and the constant atmosphere of uncertainty as Liberals kept promising new regulations, such as the emissions cap on the oilsands. If you want to achieve an environmental objective, the options are regulation or taxation. The Liberals opted for both, which was incoherent overkill, even from the perspective of centre-left environmentalism.

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Some 10-20 years ago, Canada was teeming with proposals to build pipelines every which direction, LNG terminals and oilsands mines. There was also tremendous investor enthusiasm in Ontario’s Ring of Fire mineral deposits. And then the Liberals came along and subjected everything to multiple reviews.

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When for instance, the private owner of the the Trans Mountain pipeline expansion pulled out, the Liberals did not take that as evidence that project reviews needed to be streamlined. They took it as evidence they needed to buy the pipeline, expending taxpayer dollars that should have never been spent if Canada had a functioning infrastructure assessment regime. By 2020, in all, about $150 billion in energy projects were cancelled or delayed.