The 21st century so far: One damned thing after another
UNSPLASH PHOTO
As we approach the end of the first quarter of the 21st century, Canadians can be forgiven for wondering if things will ever actually get better. Looking back, we have sustained a full generation of cascading crises, each one with its own staggering price tag for the federal government and for Canadian taxpayers.
It is now with some mirth that many of us recall that the 20th century wound down with endless planning for the crisis that never was: the rollover of global IT systems to Y2K. It has been estimated that the federal government spent approximately $850 million stress-testing its systems in anticipation of the worst. “Better to be overprepared than unprepared” was the enduring talking point when it became clear that Y2K had happened virtually without incident.
As it turns out, this was the high point of federal emergency planning, as the next 25 years are a story of governments getting repeatedly caught with their collective pants down.
A generation of crises
9/11. Looking back, the attack on the World Trade Centre and the Pentagon was deemed to have been a “failure of imagination” on the part of the U.S. national security establishment, with an expensive spillover in Canada and around the world.
A subsequent report found that the federal government had to spend an additional CAD $92 billion on national security-related expenditures after the September 11 attacks, above what it would have spent had pre-9/11 budget trends continued. The legacy of this for Canadians was permanently aggravating air travel and participation in an ultimately failed war in Afghanistan.
The 2008-09 financial crisis. While the U.S. was the proximate host of this contagion, it went viral, sucking in governments around the world over the failure of U.S. financial regulators to monitor the irresponsible financial risk-taking of the “Masters of the Universe” trading on Wall Street.
The price was paid by taxpayers everywhere, with Canadians called upon to cover over $60 billion in measures to stimulate the economy and protect the banks, big car companies, big manufacturers, and big resource companies. The impact of the crisis was muted in Canada compared to other countries. Still, the memory and cost of the vulnerability of the Canadian economy to U.S. financial dysfunction gave Canadians an unpleasant taste of what was yet to come.
The 2020-21 COVID-19 pandemic. In hindsight, the Canadian public health response to the pandemic compares favorably to that of many other countries. However, the fact the virus spread so rapidly exposed the weakness of global public health defenses in the face of high-speed travel and trade. This fundamental failure was compounded by the eye-watering cost of dealing with it.
Depending on which figures you use, the federal government spent over $400 billion on a range of economic and public health programs. Even a prime minister as comfortable with deficits as Justin Trudeau must have blanched at this astronomical price tag.
Canadians continued to support the Trudeau Liberals during the public health crisis. But they parted company with him over his government's failure to prepare for the persistently high inflation and higher interest rates that followed the reopening of the economy. Indeed, this set in stone the issue of affordability that defined the federal political landscape, leading up to April 2025 and beyond.
President Donald Trump’s trade war
The surprising election of Prime Minister Mark Carney was made possible by the latest 21st-century crisis, with yet another enormous price tag for Canadian taxpayers: President Donald Trump's trade war. This week, Budget 2025 projected some $160 billion over the next five years to deal with the global “Disruptor-in-Chief’s” campaign to overturn the post-World War II rules-based global economic and geopolitical order.
Carney was elected on a wave of nationalism galvanized by Trump’s abusive, ill-informed treatment of Canada and Canadians after being re-elected. They were also convinced the prime minister had a better professional pedigree for dealing with Trump’s economic fulminations compared to that of Opposition Leader Pierre Poilievre.
The patriotic sentiment and the loathing of Trump remain in full vigour. The question is whether voters will remain as enthusiastic as the bills continue to come in and the sacrifices the prime minister has called on them to make, both to face down Trump and build a resilient, competitive, and productive economy.
It is clear from Carney’s budget plan that the first phase in this effort requires reassuring both Canadian and global investors that, Trump notwithstanding, Canada remains a good place to do business. At one level, this seems entirely the correct first step. The first rule of any government’s economic strategy in a global economy is that there is nothing more nervous than a billion dollars. You can’t take on the markets. You have to reassure them.
Carney's first budget seems to have passed this test. But for Canadians who have had to pay for one damned government failure after another over the past 25 years, the call for even more sacrifice may begin to ring hollow sooner rather than later.
Justin Trudeau’s doom was sealed by his failure to strike an empathetic chord with Canadians suffering under the remorseless pressure of the cost of living. The risk for Prime Minister Carney is that he may meet a similar fate unless he can find a way to show voters what is in it for them in his Build Canada Strong plan.
The fact that the government had resorted to an awkward pie chart, rather than a pithy sound bite, to show that over half of the government’s plan is directed at lowering costs for or otherwise supporting Canadians is a sign that the prime minister and his cabinet have a lot more work to do.
