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CTV News
24 minutes ago
- CTV News
Defence spending to add ‘staggering' sum to deficit by 2035, think tank warns
Prime Minister Mark Carney speaks with reporters on Parliament Hill in Ottawa on Monday, June 30, 2025. THE CANADIAN PRESS/Spencer Colby OTTAWA — OTTAWA - The C.D. Howe Institute predicts Ottawa's recently announced spending plans - which include a much bigger defence budget - will drive its deficits markedly higher in the coming years. In a new analysis released Thursday, the think tank said it expects Canada's deficit to top $92 billion this fiscal year, given Prime Minister Mark Carney's plan to meet NATO's defence spending target of two per cent of GDP. C.D. Howe expects deficit growth to slow after this year but predicts deficits will still average around $78 billion annually over four years - more than double the level forecast by the parliamentary budget officer before the spring federal election. But the report also considers this an 'optimistic' scenario that takes into account 'speculative savings' in the form of new revenues and cost-cutting efficiencies outlined in the Liberals' spring election platform. If those savings aren't realized, C.D. Howe estimates the federal deficit would average closer to $86 billion per year over the same time frame. Carney's defence spending announcement in early June came with an extra $9.3 billion in spending this year. He made the commitment before NATO allies pledged at last month's summit to ramp defence and security budgets up to five per cent of GDP by 2035. C.D. Howe's analysis sees defence spending adding a 'staggering' $68.4 billion to the federal deficit a decade from now. In addition to accelerating defence spending, the Liberals recently pushed forward legislation to speed up major project development and delivered a one point cut to the lowest income tax rate. The Liberal government did not publish a spring budget this year and has said it will instead push the planned fiscal update to the fall. In its report, the C.D. Howe Institute accuses Ottawa of making 'costly commitments' without showing the numbers to Canadians - but that's not the only area where the think tank says the Liberals are falling short on accountability. Carney also announced a plan earlier this year to separate Ottawa's budget into capital and operating streams, and to balance the operating side of the equation in three years. C.D. Howe said the rationale for introducing separate streams is 'unclear' and could deal 'a serious blow to transparency and accountability' if major changes are made to how the government defines capital or operating costs. 'Without clear standards audited by independent sources, this approach is ripe for abuse,' the report read. The Canadian Press reached out to Finance Minister Francois-Philippe Champagne for comment but has not received a response. C.D. Howe calls on the government to make steeper cuts to program spending and reduce federal transfers to provinces. Parliamentary Budget Officer Yves Giroux also did not issue any deficit forecasts in a limited economic and fiscal update published last month. He blamed the lack of an update on Ottawa's decision to forego a spring fiscal update and the fact that he still doesn't know how the government is defining its operating and capital spending streams. In pre-election estimates that did not account for the impacts of the trade war, the PBO predicted the federal deficit would come in at $42 billion for this fiscal year. Giroux said in an interview with The Canadian Press in June that he now pegs that figure at between $60 billion and $70 billion. By Craig Lord.
CTV News
32 minutes ago
- CTV News
SAAQclic: Judge Denis Gallant refuses to grant participant status to Karl Malenfant
Commissioner Denis Gallant presides over a special inquiry into the causes and circumstances underlying the problems with managing and implementing the CASA program for the Societe d'Assurance automobile du Quebec, in Quebec City on Thursday, May 15, 2025. (Jacques Boissinot/The Canadian Press) Judge Denis Gallant, who is leading the inquiry into the SAAQclic fiasco, refused on Thursday to grant participant status to Karl Malenfant. The former vice-president of information technology at Quebec's auto insurance board (SAAQ) had requested to be a participant on June 18. In his decision handed down on Thursday, Gallant stressed that Malenfant does not need such status as he will be invited to testify before the inquiry at the end of the summer. Participant status would have allowed Malenfant to cross-examine witnesses, as SAAQ lawyers have been doing since the beginning of the proceedings. The SAAQclic fiasco is expected to cost taxpayers at least $1.1 billion by 2027, according to calculations by the Auditor General of Quebec. Malenfant, whose name is constantly mentioned at the commission, laments facing a 'significant reputational risk.' This report by The Canadian Press was first published in French July 3, 2025. By Caroline Plante, The Canadian Press
Global News
43 minutes ago
- Global News
Supply management law not enough to shield system from Trump, experts warn
A new law meant to protect supply management might not be enough to shield the system in trade talks with a Trump administration bent on eliminating it, trade experts say. 'It's certainly more difficult to strike a deal with the United States now with the passage of this bill that basically forces Canada to negotiate with one hand tied behind its back,' said William Pellerin, a trade lawyer and partner at the firm McMillan LLP. 'Now that we've removed the digital service tax, dairy and supply management is probably the number 1 trade irritant that we have with the United States. That remains very much unresolved.' When Trump briefly paused trade talks with Canada on June 27 over the digital services tax — shortly before Ottawa capitulated by dropping the tax — he zeroed in on Canada's system of supply management. Story continues below advertisement In a social media post, Trump called Canada a 'very difficult country to TRADE with, including the fact that they have charged our Farmers as much as 400% Tariffs, for years, on Dairy Products.' Canada can charge about 250 per cent tariffs on U.S. dairy imports over a set quota established by the Canada-U.S.-Mexico Agreement. The International Dairy Foods Association, which represents the U.S. dairy industry, said in March the U.S. has never come close to reaching those quotas, though the association also said that's because of other barriers Canada has erected. When Bill C-202 passed through Parliament last month, Bloc Québécois MPs hailed it as a clear win protecting Quebec farmers from American trade demands. 2:17 Quebec dairy farmers fuming over Trump's trade war The Bloc's bill, which received royal assent on June 26, prevents the foreign affairs minister from making commitments in trade negotiations to either increase the tariff rate quota or reduce tariffs for imports over a set threshold. Story continues below advertisement On its face, that rule would prevent Canadian trade negotiators from offering to drop the import barriers that shield dairy and egg producers in Canada from price shocks. But while the law appears to rule out using supply management as a bargaining chip in trade talks with the U.S., it doesn't completely constrain the government. Get daily National news Get the day's top news, political, economic, and current affairs headlines, delivered to your inbox once a day. Sign up for daily National newsletter Sign Up By providing your email address, you have read and agree to Global News' Terms and Conditions and Privacy Policy Pellerin said that if Prime Minister Mark Carney is seeking a way around C-202, he might start by looking into conducting the trade talks personally, instead of leaving them to Foreign Affairs Minister Anita Anand. Carney dismissed the need for the new law during the recent election but vowed to keep supply management off the table in negotiations with the U.S. Pellerin said the government could also address the trade irritant by expanding the number of players who can access dairy quotas beyond 'processors.' '(C-202) doesn't expressly talk about changing or modifying who would be able to access the quota,' he said. Expanding access to quota, he said, would likely 'lead to companies like grocery stores being able to import U.S. cheeses, and that would probably please the United States to a significant degree.' Carleton University associate professor Philippe Lagassé, an expert on Parliament and the Crown, said the new law doesn't extend past something called the 'royal prerogative' — the ability of the executive branch of government to carry out certain actions in, for example, the conduct of foreign affairs. That suggests the government isn't constrained by the law, he said. Story continues below advertisement 'I have doubts that the royal prerogative has been displaced by the law. There is no specific language binding the Crown and it would appear to run contrary to the wider intent of the (law that it modifies),' he said by email. 'That said, if the government believes that the law is binding, then it effectively is. As defenders of the bill insisted, it gives the government leverage in negotiation by giving the impression that Parliament has bound it on this issue.' 2:01 Canadian farmers still uneasy despite dodging Trump's new tariffs He said a trade treaty requires enabling legislation, so a new bill could remove the supply management constraints. 'The bill adds an extra step and some constraints, but doesn't prevent supply management from eventually being removed or weakened,' he said. Trade lawyer Mark Warner, principal at MAAW Law, said Canada could simply dispense with the law through Parliament if it decides it needs to make concessions to, for example, preserve the auto industry. Story continues below advertisement 'The argument for me that the government of Canada sits down with another country, particularly the United States, and says we can't negotiate that because Parliament has passed a bill — I have to tell you, I've never met an American trade official or lawyer who would take that seriously,' Warner said. 'My sense of this is it would just go through Parliament, unless you think other opposition parties would bring down the government over it.' While supply management has long been a target for U.S. trade negotiators, the idea of killing it has been a non-starter in Canadian politics for at least as long. Warner said any attempt to do away with it would be swiftly met with litigation, Charter challenges and provinces stepping up to fill a federal void. 'The real cost of that sort of thing is political, so if you try to take it away, people are screaming and they're blocking the highways and they are calling you names and the Bloc is blocking anything through Parliament — you pay a cost that way,' he said. 2:12 Canada's dairy, lumber supply under threat by Trump as trade war escalates But a compromise on supply management might not be that far-fetched. Story continues below advertisement 'The system itself won't be dismantled. I don't think that's anywhere near happening in the coming years and even decades,' said Pellerin. 'But I think that there are changes that could be made, particularly through the trade agreements, including by way of kind of further quotas. Further reduction in the tariffs for outside quota amounts and also in terms of who can actually bring in product.' The United States trade representative raised specific concerns about supply management in the spring, citing quota rules established under the CUSMA trade pact that are not being applied as the U.S. expected and ongoing frustration with the pricing of certain types of milk products. Former Canadian diplomat Louise Blais said that if Canada were to 'respect the spirit' of CUSMA as the Americans understand it, the problem might actually solve itself. 'We jump to the conclusion that it's dismantlement or nothing else, but in fact there's a middle ground,' she said.
