加拿大深化对欧合作与安大略省财政赤字激增

I'm Jeyan Jeganathan welcome to The Rundown. Canada says the new Alliance for the future Partnership with the European Union will, quote, create greater affordability, opportunity and sovereignty. So how will it work and what comes next? Lily Chang, Daniel Schwanen, Nelson Wiseman, great to have you on "The Rundown" really appreciate you guys taking the time to come chat.

Canada and the European Union are pledging to work towards the deepest and possible partnership with the ultimate goal of Canada becoming the EU's first associate member. As an economist, Daniel, what do you make of this?

Let's take let's, let's say, critical mineral, you do need to have governments backing the major investments that we need if we're going to, for example. Escape from the chokehold. You know, the that that that China represents. You know, they use they have they have the entire chain from the critical mineral itself to the product that can use them, whether it's for the green energy, for transportation, for AI and so on. And building that chain was not done by industry alone. It was done with government backing.

And I think Canada in that space alone. But in other spaces, Canada and the EU are learning that lesson a little bit late. That industry needs to be involved. It's got a lot of capacity, but it needs that guidance. And I think that's what's new that we didn't have in the CTV before. In the free trade agreement we have with them, but that we will have and are building under this alliance.

So I think, you know, we we know what's going on in the world today. We do need to diversify. And I think that there is a potential for two Democratic partners to work well together, but to encourage things like trade and investment, we also need to remember the workers who are centre in those particular sectors that Daniel was talking about.

So some of these sectors are not currently in the agreement. And while we do have some shortcomings in the agreement, I think we need to make sure that we remember that labour protections are not to be rolled back. And that is clear in the agreement.

So I think for us, there is great potential. We I guess it's always the proof is in the pudding. And what does the you know, the fine print say? But we we need to have government. Remember that workers are part of this. And to include workers voices and their union representatives as they are building out this, these these contracts.

Canada just did a review of our supply chain legislation that we have. So hopefully they will make some improvements there and sort of catch up to the European Union.

But I would say, you know, in terms of recent developments with the with the Canadian government and their changes to section 107 of the Canada Labour Code, we would say that if those changes go through with unamended, that we will be in a worse off position than many countries in the EU and definitely be the last place in terms of the G7. So I think that's not the place that we want to go right now. And we want to encouraging trade and investment.

So Europe is very divided and we're both. They're not a federal system. We're both federations in a way. But we see that different countries there go in different directions on on various policies. I can't I don't know technically about labour, but we have a Canadian army. Well, there's no European army. And when it comes to defence, well, okay, we're making a deal with what is it for the submarines with Germany and Norway, but it's not with the EU. Right. And so.

The devil is always in the details. And the only thing I picked up there were like 15, 20 potential policy fields listed. I saw in the media and in and in the speeches by Carney and von der Leyen to the European Parliament. But the only thing that actually came out of this summit, they had something they called a digital trade agreement. Well, hold it. We had some sort of digital trade agreement with them in six, seven years ago. I don't know the details, but I don't think much has changed.

And there are issues there because we're essentially digitally a vassal state of the United States. They are moving independent, and it could be one area where we could cooperate on is low orbital satellites. So we're not dependent on Starlink. We saw what it did to Ukraine last week.

So I think Canadian industry and government are quite. And I believe Labour are quite unanimous on this. We we would like to have some kind of a trade certainty at least, whatever the deal is with the United States. So we can resume exporting with lower barriers and. And investing.

The deal with Europe is going to be a little bit different. So we're not going to make up the trade volumes immediately. But look at what happened when we did sign with the United States. All of a sudden, supply chains became even more integrated, right? So what we did became an input into their production and vice versa, not just in autos, but food, you know, and, and aerospace and so on. So we're much more integrated. And that's what's creating all this trade volume, right?

That's also why they're unravelling right now. If you don't, if you if you if you block the trade, then you block the supply chain and both sides lose. Let's make no mistake that the US is losing.

What we're trying to do with Europe is recreate that dynamic. So industries like aerospace is already quite a bit of cooperation. But what about defence? Both EU member states and and and Canada are ramping up their defence spending. For better or for worse. We need to protect the Arctic. We now we have a much better idea of, you know, there are some pretty bad actors out there we need to protect. So that's what we're trying to do.

We're also. And Nelson mentioned this communications. Right. All of a sudden that becomes something that you really want to secure. Your digital economy is something you really want to secure. You can only do that with a trust, a trusted partner. And as, as the US unfortunately is becoming less, less trustworthy for us as well as some of the businesses that hold the high ground in some of these sectors. We're trying to find equally advanced partners or partners that want to advance to that, that stage of sophistication to work with.

So we're going to make things together. We're going to work together to in those industries or communications, AI defence, for example, to, to, to essentially help each other achieve our objective on security and on the economy. And that's what's going to make trade grow.

Look at agriculture. How can we the the Europeans are really interested in us as a potential market. Yeah, but they don't want our GMO modified products and we don't want to let them in. Because if we've got supply management.

I looked at what was actually agreed to at the EU and Canada summit, and I saw five things. One that struck me, but I don't know much about the institution, is the European Investment Bank says it's going to invest in critical minerals, which is everybody seems to want them there. There was what they called a digital trade agreement. But as I said, it's like.

And also on on free trade, I looked up statistics and I found different numbers based even from the government. And I saw it. Not only did it take us seven years to negotiate the free trade agreement with the United States, it's been in place now for ten years. Well, how much? You know, 6% of our trade was with the US about ten years ago, and now it's around 6%. So these things move very slowly.

And as Daniel says, our trade is going to continue to be overwhelmingly with the United States. It's more profitable. It's right there. We also have supply chains in in process. It's going to be turbulent. And we're still going to even if we make a deal, it's quite clear we're still going to. There's still going to be some tariffs on Canadian goods.

So from that point of view, it's it's going to make our economy more resilient. And the way we're going to do that is going to we're going to make more things with the EU, with EU investments, with EU workers together. And that's that's really important in areas where we we want to depend less on the United States. So from that perspective, it's very, very important. It makes our economy more resilient and it will do that.

I'm interested in the next steps that have been evoked at the summit. You know, how many other countries can sign on to these values? You know, of human rights, labour rights, democracy? I'm not so sure that there's going to be a huge group. And I think we're going to have to find our own agreements, maybe together with the EU, with different agreements, with the broad range of countries that want to retain a rules based trading system, which I think is still very important for all of us.

All right, Sabrina, we're gonna start with you. Ontario's projecting a deficit of $16.9 billion, as we mentioned, roughly 3 billion more than they projected in the spring. Help us understand what's what's what's ballooning this number here.

And you know, the story, the line from Finance Minister Peter Bethlenfalvy is that right now, you know, there's a lot of global uncertainty. He's pointed to tariffs south of the border and the impact that that's had on on the province and the provincial economy.

And I think, you know, just in terms of the the number difference there in the deficit, one thing that stood out to me is the contingency fund, and the government is adding another $3.8 billion to that. It's essentially the rainy day fund. They say that the ministry officials had told us they expect to spend it every year, but if they don't spend it, then they could use it to tamp down the deficit. And maybe conveniently, that would happen, you know, kind of around election time, which is when they expect to be back in the black.

But at this point right now, there's a lot of uncertainty. And, you know, that's what's driving the big change in the numbers.

I really think the the take home message for this fall economic statement is that the easy times are over and it's just tough choices ahead. And if you look at what they are projecting, I mean, the finance minister has said very explicitly, we're not going to cut health care spending and we're not going to raise taxes. And that doesn't leave you a lot of other options. And if you are not in the you know, broadly speaking, the health care sector, but you are looking at provincial spending, everything else is either flat or shrinking.

It sort of has left the federal government in the driver's seat. The province is playing catch up to match their measures, but it is the biggest single measure that's that's truly new in this mini budget.

But if you ask the opposition critics, you know, they say that this is just proof that the government isn't the prudent fiscal manager, that they paint themselves to be, that they're, you know, delaying the path back to balance. There's not enough in their eyes for health care, for education. You know, if it's not, I think the it was the budget watchdog that said that just to keep things, you know, steady as she goes in education, there's going to need to be a 2.1% annual increase in funding every year. It doesn't come close to that. And if you're not matching inflation, you know, education advocates, health care advocates, they say that essentially amounts to a cut.

At the end of the day, though, you know, they really want to highlight their business friendly policies, which is what this budget was all about. Government's like to leak or pre-announce. You know, the good news nuggets from their fall economic statement. And that's what we saw this time around. But then when it came around to actual mini budget day, the headline was then the deficit.

And I will say that, you know, there may be a silver lining politically for the Ford government here that, you know, playing Captain Canada really, you know, taking on Donald Trump and being elbows up, that has really worked for Doug Ford politically. I mean, that helped him win his third mandate, you know, a plan to protect Ontario, which we saw again on the cover of this fall economic statement. So I do think that that, you know, might be the the underlying benefit politically, while it doesn't really look so great for Ontario financially, politically, I do think this is something that, you know, just plays into Doug Ford's political narrative that he wants right now.

But yeah, I think the the deficit will allow this government to continue to spend more than I think some, you know, maybe more doctrinaire conservatives would would be comfortable with. And that is going to khush at least some of the cuts that they would otherwise have to make.

But I will just go back to what I said earlier. Like, you know, as stated, their current spending plan is anticipating some pretty substantial cuts, either outright cuts or certainly growing spending far less than population growth and inflation would would otherwise require. And that's going to show up in visible ways for voters before the next election.

And I do think that, you know, most Ontarians don't want to see a strike. And we are far away away from that possibility at this point. But we have seen in the past, just a few years ago, when Doug Ford, you know, tabled and then quickly repealed legislation that would force education workers back to work and not able to strike. We had seen Ford slip in the polls, you know, popularity wise.

So I do think that, you know, the answer might not just be throwing money at the problem here, like the same with health care. But I do think that, you know, they are, you know, walking a very fine line right now when it comes to education, just because that sector has the possibility to blow up in the next couple of weeks.