Finance Minister Dominic LeBlanc says he needs to take a hard look at the size of government as the country prepares for major new defense spending and a potential economic disruption from its largest trading partner.
“The continued significant spending in a bunch of areas has to be ratcheted down. My own view is things as simple as the growth of government need to be looked at,” Dominic LeBlanc said in an interview with Amanda Lang on BNN Bloomberg.
He also suggested he’s leery of the country’s elevated expenditures — which will increase further if Canada follows through on its promise to spend 2 per cent of gross domestic product on defense — and acknowledged the difficulty of finding additional tax revenues in the current economic and political landscape.
“I don’t think we can raise revenues anymore,” he said. “So what areas are we looking at to be able to be in a position to both be fiscally responsible, but meet the need of the moment? That’s the challenge that I hope I can work on.”
LeBlanc’s comments push back on the notion that the federal government would respond to a possible trade battle in a similar fashion to the COVID-19 pandemic. Beginning in 2020, the government spent hundreds of billions in support measures for businesses and households, adding to national debt and significantly eroding the country’s fiscal position.
He reiterated that any retaliatory tariffs collected by Canada would be redistributed to affected firms and households.
‘Optimistic’ on Trade Talks
U.S. President Donald Trump has threatened 25 per cent tariffs on imports of Canadian goods and 10 per cent on oil shipments, and Canada had been prepared to levy 25 per cent tariffs on imports of U.S. goods in response. On Monday, Trump delayed the implementation of the tariffs for 30 days after Canada made what he considered acceptable efforts to stop the flow of fentanyl and people across the border between the two countries.
“We can resolve the border issue,” LeBlanc said. “We can live to fight another day and we should be optimistic about that.”
LeBlanc said he believes incoming U.S. Commerce Secretary Howard Lutnick will provide Trump with advice on the “global trade balance circumstance,” which would reveal Canada’s relatively small surplus.
LeBlanc said he’s optimistic Canada won’t be “seen as a problem in that larger context.”
He also said he wasn’t open to negotiating supply management issues with the US, referring to Canada’s protected dairy industry, which was a sore point during the renegotiation of the North American free trade deal during Trump’s first term.
--With assistance from Sandra Mergulhao and Kevin Varley.
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