As Canada invests and builds, is anyone keeping an eye on the piling debt? — SkimNews
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- Prime Minister Mark Carney vowed in Aug. 22 remarks and a subsequent Forward Guidance video to make Canada "one of the most competitive and attractive places in the world" for business investment, with the Canada investment summit showcasing the push this week.
- The Government of Canada now pays just over 4% interest on a 10-year bond, compared with roughly 1.5% before COVID-19, as international bond markets show nervousness over inflationary risks and rapid global public debt growth.
- Recent nation-building announcements — the West Coast pipeline project and Labrador hydro and wind development — involve tens of billions of dollars in pledged public support through a mix of tax credits and public investments, but the column notes details on structure, expected returns, and risks "remain scant."
- Public financing vehicles like the Canada Infrastructure Bank, the Canada Growth Fund, and the proposed Canada Strong Fund require public borrowing even when their spending is off-budget, while tax credits and direct business aid hit the deficit one-to-one.
- Carney framed Canada's position during his first White House visit by telling President Donald Trump he had consulted the "owners of Canada" and that the country "is not for sale," a line the authors invoke to argue those owners deserve clear reporting on returns from public investments.
- U.S. government debt now exceeds US$40-trillion with no plan to address it, a backdrop the authors cite as a cautionary tale that loss of bond-market confidence "happens suddenly."
Why it matters: Canada's pivot to large-scale industrial policy — with tens of billions already pledged to pipeline and clean-energy projects — is being financed at borrowing costs nearly three times pre-COVID levels, so the budget and the upcoming investment summit are the first venues where the government must justify structure, returns, and execution risk to taxpayers, equity investors, and bondholders.
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