Margareta Dovgal: Unsurprising that central banker Carney thinks debt is ‘sovereign wealth’ 

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Not only does Canada lack a healthy surplus, the country is actually buried so deep in the debt pit that the surface is a dim and distant glimmer.  

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The smarter move would be to generate that wealth in the first place by getting government out of the way. With sound fundamentals, a competitive private sector can carry the risk and deliver wins for the public purse.  

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Our broader productivity gaps come from regulatory drag, an uncompetitive tax structure, and weak domestic competition. To boot, much of Canada’s headline GDP growth this past decade came not from productivity, but now-slowing population growth.  

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Adding $25 billion in federal debt, even if somewhat offset by federal asset sales, only worsens the burden of public-debt-per-capita.  

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These factors require a bit more work to resolve than more borrowing and spending. 

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One could make the mistake of calling this bread and circuses. There would actually have to be bread to go around. A record number of Canadians are using food banks, a fact that repeats and worsens nearly every quarter.  

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Perhaps economic management-as-performance is the true circus. 

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To the crux of the matter, do Canadians care about real economic literacy or just a passable pretense? 

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One of my recent favourite lines at cocktail parties, when federal politics inevitably rolls around, and someone brings up Carney, is to innocently ask “So what exactly did he do as Governor of the Bank of Canada?” 

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Most steadfast supporters proceed to define what a central bank does.  

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I nod. They may even note that his term covered the 2008 financial crisis and its aftermath.

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Well, as a central banker, Carney, like every central banker, encouraged debt.

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His ultra-low interest-rate policy and forward guidance helped stabilize markets during the global financial crisis. But the broader growth model that crystallized in that decade, defined by debt-financed household consumption substituting for productivity growth, is the one Canadians have been stuck with ever since.

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The model worked, in the narrow sense that it kept the lights on through a global crisis. It also locked in the debt overhang that now constrains monetary flexibility, the speculative housing dynamic that distorts every other investment decision, and the consumption-driven mirage we still pay for.

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The same packaging that turned Carney’s easy-money housing bubble into a political credential is now starring centre-stage: borrowed billions sold to Canadians as nation-building while the economy falters.

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Canadians have seen this show before. The question is no longer whether we will applaud the ringmaster. It is whether we will finally demand the tent come down. Thanks to the government’s carefully crafted majority, this is the show we’ll be watching for the foreseeable future.

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That doesn’t mean the next several years have to be wasted ones. There is a version of this idea worth pursuing. Unleash the resource sector, let the provinces collect what’s theirs, and let real surpluses build a fund with principal that isn’t borrowed. That is what sovereign wealth actually looks like. A year of Carney’s policy has left the country’s C-suite critics embittered, which is no small problem for an economy that needs them to perform. Engage their complaints honestly, rather than absorb the Trudeau-era reflex of treating the productive economy as a problem to be managed.

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Margareta Dovgal is a public policy commentator, focused on the intersection of resource economics and Canadian sovereignty.

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