OPINION: Carney budget should target Canada’s waning living standards

Canada’s economic stagnation is neither an accident nor primarily due to President Trump’s tariffs. In reality, government policies have made Canada an unfriendly place for entrepreneurs and investors.

Published Nov 04, 2026  •  Last updated 30 minutes ago  •  3 minute read

Canadian Prime Minister Mark Carney speaks as the associate membership of Canada into the European Union is officially announced on Friday, October 30, 2026. Photo by Tim Snow /Montreal Gazette

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On Thurs. Nov. 5, the government of Prime Minister Mark Carney will table its second federal budget since taking office in March 2025. And unfortunately, Canadians can expect more bad news. The parliamentary budget officer (PBO) recently trimmed Canada’s economic growth forecasts, which reflect economic headwinds generated in part by the trade war and poor government policy. And the economy was already sputtering, with Canada projected to be the worst-performing advanced economy on the planet for the next four decades.

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What does all this mean for Canadians and their families?

Consider some quick history. Back in 2014, per-person gross domestic product (GDP) — a key indicator of living standards — in Canada was $55,055. That’s more than 10% larger than the Organization for Economic Co-operation and Development (OECD) average ($45,116) among high-income countries. Since then, Canada’s per-person GDP grew by 4.2% — the third-lowest growth rate of 38 OECD countries (ahead of only Mexico and Luxembourg) and well below the OECD average of 17.3%. This means that by 2025, Canada ($52,148) had fallen below the average of $52,940 (all numbers adjusted for inflation and expressed in U.S. dollars).

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If we narrow the focus to the G20 group of countries, we see a similar story. Back in 2014, Canada’s per-person GDP was 51% larger than the G20 average, but fell to 38% larger by 2025, with the fourth-lowest growth in per-person GDP during that 11-year period, ahead of only Mexico, Argentina and South Africa. And during that same period, among G7 countries, Canada’s per-person GDP fell from 98% of the G7 average to 92%. Now, Canada has the second-lowest per-person GDP in the G7 (ahead of only Japan).

Canada’s economic stagnation is neither an accident nor primarily due to President Trump’s tariffs (although the tariff war has made a bad situation even worse). In reality, government policies have made Canada an unfriendly place for entrepreneurs and investors.

Reverse course on bad policy

To get Canada back on track, the Carney government must reverse course on years of bad policy. It should reduce spending to tame the deficit and create fiscal room for meaningful tax reform to make Canada more competitive with peer countries, including the U.S. And it should cut red tape to reduce Canada’s bloated regulatory regime. These reforms would help create an environment that encourages entrepreneurs to start or expand new businesses and help existing businesses attract new investment — which ultimately leads to higher wages for workers and higher living standards for Canadians.

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Sadly, so far, the Carney government has only chosen targeted tax reductions rather than comprehensive reform and a government-led investment and development strategy — which benefits a chosen few who have the government’s favour — rather than broad-based regulatory reform that would benefit all investors, businesses and entrepreneurs. For example, the Building Canada Act allows Ottawa to greenlight energy projects deemed in the “national interest” rather than scrapping burdensome regulatory barriers to level the playing field for all potential projects. In other words, the Carney government is continuing down the same path that created Canada’s economic malaise in the first place.

Canadians are falling behind, not because of external economic forces but because of decisions made by government. Carney sold Canadians on his ability to solve problems and bring competent leadership back to Ottawa. Beginning with the upcoming budget, his government should focus on time-tested solutions that work, rather than making the same mistakes that brought us here in the first place.

Nadeem Esmail and Jake Fuss are research directors at the Fraser Institute 

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