Carney’s revenue cuts show shrinking the public sector is the priority, not deficits

If balancing the budget was his priority, cutting billions in revenue is funny way to go about it.

In just the first few months of his government, Mark Carney, Canada’s Bay Street businessman turned prime minister, has cut over $75 billion from public revenues over the next five years, according to an analysis by economist Angella MacEwan.

Without these significant revenue cuts of about $15 billion a year, Carney’s spending cuts, reported to be targeting $21.5 billion, would be largely unneeded.

Four major tax cuts massively adding to the deficit

If cutting the deficit is Carney’s goal, he’s going about it in a very strange way. MacEwan identifies four key tax moves by Carney that have massively added to the deficit:

• $19 billion over five years to give a tax break to investors earning more than $250,000 a year in capital gains

• $28 billion over five years for a tax break giving the maximum benefit to the highest income earners

• $6 billion over five years to big tech companies, at Donald Trump’s demand

• $22.5 billion lost over five years by agreeing to exempt U.S.-based companies from a global treaty being developed to require all companies to pay at least 15 per cent corporate tax

The total of $75.5 billion over five years is an average of about $15 billion a year.

Without his revenue cuts, Carney’s spending cuts would be largely unneeded

According to a Toronto Star report citing government sources, Carney has ordered ministers to implement a 15 per cent cut to operational expenditures over thee years, a cut of about $21.5 billion in 2028-29.

And because he also complied with Trump’s demand that Canada triple military spending, Carney’s program cuts in areas other than the military will need to be even deeper than 15 per cent.

Had Carney not reduced revenues, these cuts would be mostly unneeded.

According to MacEwan, the scale of Carney’s cuts will now be greater than those of former Prime Minister Stephen Harper, whose seven per cent reduction resulted in 19,000 jobs lost. During the election Carney promised to cap, not cut, the public service.

The priority is cuts, not deficits

Carney has already slashed environmental reviews and, with Conservative help, passed a law allowing him to waive any law and intrude on provincial jurisdictions for a project he names. Shrinking the public sector to “unleash the private sector” has been a main economic strategy Canada and most other advanced economies for the best part of 40 years. The result has been slowing economic growth and widening class divisions.

Shrinking and weakening the public sector is a major power shift that should be concerning in a period when Canada faces a tariff war from Trump.

Loyalty to Canadian sovereignty isn’t for everyone

The top priority of CEOs will never be the defence of Canada’s sovereignty. And while there are certainly divisions in corporate responses to Trump trade war, major business lobby groups have be vastly more likely to urge compliance with Trump demands than Canadians, who’ve supported a more “elbows up” approach. For example, the MacDonald-Laurier Institute and the Canadian Chamber of Commerce opposed the digital services tax because it created a “trade irritant” — that is, Trump and his backers didn’t like it.

George Grant, the conservative public intellectual of the 1950s and 60s, argued no small nation can rely on the loyalty of its capitalist class against demands of an empire.

Mark Carney says public cuts and boosting corporate power is a defence against Trump. In fact his strategy will strengthen political forces whose loyalty is to profit and weaken those whose loyalty is to the defence Canadian sovereignty.