Can Canada balance growth and fiscal responsibility?
As prime minister Mark Carney’s newly elected Liberal minority government embarks on its first 100 days, RBC has outlined five urgent priorities that could shape Canada’s trajectory in the coming years. The analysis, published Thursday, calls for coordinated, pragmatic efforts to address trade, housing, energy, public finances, and artificial intelligence.
The top item on the agenda is securing an economic and security agreement with the United States. RBC analysts anticipate that Canada will push to preserve duty-free trade while the US seeks broader negotiations encompassing defence, energy and border concerns. Key areas of focus include resolving the softwood lumber dispute, advancing Arctic infrastructure and enhancing cross-border collaboration on issues such as immigration and trafficking.
Housing affordability, long a national concern, remains front and centre. RBC noted that its April 2024 Great Rebuild report aligns closely with the Liberal platform, which includes $25 billion in financing for prefab construction and $10 billion in low-cost loans. However, RBC warns that without substantial labour support - an estimated 500,000 additional construction workers - Canada will struggle to meet its housing goals by 2030.
In energy policy, the report urges the government to accelerate the construction of infrastructure corridors to support exports of natural gas, minerals, and fuels. With $175 billion in net exports from these sectors in 2024, RBC underscores the potential of energy corridors to strengthen national resilience. The report critiques current regulatory frameworks and calls for reforms, including a streamlined “One Project, One Review” approach and greater federal designation of energy projects as being in the national interest.
Aligning with evolving economic needs
Fiscal responsibility remains a critical concern amid slowing growth and geopolitical volatility. Despite Canada’s low net debt relative to G7 peers, RBC stresses the need for targeted spending that fosters economic growth. “The more that each dollar of public spending delivers greater growth dividends, the more the federal debt burden will remain in check, even with higher spending,” the report states.
Lastly, RBC highlights artificial intelligence as Canada’s most direct path to improving productivity. Despite strong domestic talent, only 26% of Canadian firms report using AI. RBC recommends a tri-pronged government role - as facilitator, champion and early adopter - to drive adoption. This includes treating compute capacity as essential infrastructure and setting AI procurement quotas.
As Parliament resumes its work, RBC’s recommendations offer a roadmap for addressing structural challenges while laying the groundwork for sustainable growth.
What are your thoughts on these priorities? Share your insights in the comments below.
