Postcard from the sponsorship scandal
‘The test of the next Canadian building boom won't simply be whether governments can build quickly. It will be whether they can build quickly without inviting the suspicion that preferential access, influence, and money have been bent to purely commercial or political ends,’ says Ken Polk. / ISTOCK PHOTO
The private jets roared into Toronto. Then they roared out again, leaving behind a $500 billion in promissory notes.
All in all, the Canada Investment Summit has to be counted a major success for Prime Minister Mark Carney, as well as a validation of his much vaunted global rolodex of investment movers and shakers. Assuming the public tally of promised investment is accurate, Carney is now halfway to his Budget 2025 goal of attracting $1 trillion of new investment into Canada over five years.
True, the funds actually have be committed to specific projects. But another of Carney’s priority initiatives — the Major Projects Office (MPO) — currently lists 18 projects and nine transformative strategies (less concrete proposals) that have already generated $192 billion in new investment with an additional $500 billion in the offing.
Not bad for government work.
And as if all this was not enough, the Prime Minister took the opportunity at the Summit to launch what he called the Productivity Mega Deduction. For those of you out there who, like me, are attuned to the possibilities for rhetorical escalation, this may pave the way in Budget 2026 for the introduction of an “Ultra,” “Giga,” “Hyper,” or “Super Colossal” Productivity Deduction.
The inevitable political achilles heel
Of course, the success of any government’s operating philosophy almost inevitably contains the seeds of its own political undoing; an Achilles heel, if you will. Just ask former Prime Minister Justin Trudeau. He milked three election wins by focusing on progressive politics and policy. Then the post-COVID-19 pandemic shifted economic competence to centre stage, rendering Trudeau surplus to requirements as far as voters and the Liberal caucus were concerned.
It is still early days in the life of the Carney government, but already we can see the potential for serious trouble ahead. I’m not referring to the straightforward challenges entailed in actually delivering the goods.
The promissory notes still have to be redeemed. The bureaucracy is still in the process from regulatory overreach to regulatory restraint. Winners will rejoice. Losers will complain. The still-dormant political left may yet come back to life. Ministers may have trouble delivering on their files. Regional resentments — the straw that stirs the drink in Canadian politics — will reassert themselves over time.
These are the obvious potential pitfalls that await Carney.
What I am referring to is a more insidious problem completely beyond the Prime Minister’s direct control: the lure of speed and money.
The Prime Minister is clearly a man in a hurry: constantly on the lookout for economic, trade, and security partners; rallying global middle powers against President Trump’s errant bluster and policies; announcing another major investment; stealing another Conservative policy; and drawing more attention from global media than any Canadian prime minister since Trudeau the First.
Amid the steady stream of words and actions, Carney’s legislative and regulatory agenda has been about enabling the federal government to make decisions faster. Through the passage of the Build Canada Act and the discussion paper on getting major projects done, the Prime Minister is pushing all of the buttons he can to pare back the regulatory state and speed up project approvals. To embolden civil servants who have been constrained by the thicket of federal regulations, he has brought in private-sector leaders who, he hopes, can instill greater speed.
If speed is Carney’s goal, the other, as witnessed in Toronto, is money — lots and lots of money. Describing the scale of investment required to “Build Canada Strong” he speaks of hundreds of billions and trillions. And in a tour de force for a world-class economist, he has put the public’s money where his mouth is, recording among the largest non-COVID deficits in Canadian history with nary a complaint from anyone other than some lesser-known economists and Opposition Leader Pierre Poilievre.
And there is the rub. Speed plus money can mean big political trouble.
Postcard from the sponsorship scandal
The most challenging scandal I had to navigate in the PMO — the Sponsorship Scandal – came about precisely from that volatile combination of speed and money.
After the near-death experience of the 1995 Quebec referendum, Prime Minister Chretien envisioned a program of government sponsorship of public events and other projects — available outside Quebec but done within it — that would raise the profile of the Government of Canada in a province where it got little attention or credit. The program was funded at a little over $100 million per year over its seven-year existence from 1996 to 2003, and the Prime Minister made it clear that he wanted it up and running fast.
I won't go into the ins and outs of why it happened or how it was politically managed. (Partisans of Chretien and Prime Minister Paul Martin will be debating this long after we are residents in long-term care facilities.)
What is indisputable is that it was a real scandal involving criminal fraud convictions and prison sentences for people connected to the Liberal Party. It burned through the Liberal political brand like acid, helping set the stage for a decade of Conservative government.
The fundamental lesson of the Sponsorship Scandal is as old as government itself: ethics, like a chain, are only as strong as their weakest link.
Speed + money = worry
Far from merely introducing a single new program on the fly, Carney has much bigger ambitions, reflecting the stakes for the country. He is proposing to cut back government oversight of projects in which billions and billions of dollars are on the line.
In this context, the government’s vulnerability to ethical corner-cutting is considerable.
The challenge for Carney is that only one of his nation-building projects has to go ethically sideways for his administration to be comprehensively tarred. And you can be sure that the opposition parties, not to mention the Office of the Auditor General of Canada, will be scrutinizing these projects with a fine-tooth comb in the years to come.
The test of the next Canadian building boom won't simply be whether governments can build quickly. It will be whether they can build quickly without inviting the suspicion that preferential access, influence, and money have been bent to purely commercial or political ends.
