Executive Summary

Robust economy despite challenges
Canada’s economic position is strong, despite lingering barriers to internal trade, high household debt and overheated property markets in major cities. The Canadian government has managed to avoid major economic disruptions during the recent NAFTA renegotiations, but remains at the mercy of an unpredictable U.S. administration. The federal government debt is moderate and sustainable, but the provinces have come under increasing fiscal strain from rising health care costs, which are likely to rise further in the foreseeable future.
Reform record strong…
The government of Prime Minister Trudeau has been praised for its 2018 budget which introduced gender conscious accounting of impacts, expanded parental leave and introduced the Canadian Workers Benefit (a refundable tax credit for low-income earners). The Liberals under Trudeau also expanded benefits under the Canadian Pension Plan, which remains fiscally sound, and recently legalized cannabis, fulfilling a high profile campaign pledge. The government has also been celebrated for its positive messaging toward immigrants and returning Canada to an active role in U.N. peacekeeping operations.
…but falls short in some areas
On other policy issues, the government has had trouble meeting the high expectations it established during the election campaign and in the early years of its term. Key bills on security oversight, environmental regulation and access to information remain before parliament, but are at risk falling off the agenda if they are not passed before the upcoming federal election in October 2019. Campaign promises notwithstanding, the government has yet to develop a national strategy for childcare and early childhood education. High expectations have also proved difficult for the government with respect to transparency and governance. Efforts to reform the electoral system and the functioning of parliament have been tainted by perceptions of undue partisanship and mostly abandoned. At the same time, the administration’s continued inability to fix the Phoenix pay system has resulted in delayed paychecks for tens of thousands of government employees, and revealed longstanding and fundamental failures of governance and oversight.
Rocky relations with provinces
Federal-provincial relations is another area where the government is having difficulties living up to its own publicity. Before and after being elected, Prime Minister Trudeau had rhetorically paired the implementation of a national carbon pricing scheme with the approval of several controversial pipeline projects. Most of these projects have since died, with only the Kinder Morgan pipeline expansion remaining on life support after being purchased by the federal government for CAD 4.5 billion. These failures have emboldened many provinces to loudly resist the national carbon pricing scheme. Relations with the provinces are also affected by disputes over the level of federal funding in areas like health care and education. Health care spending in particular is a concern due to Canada’s aging population, and relatively costly and inefficient health care system.
Indigenous policies
lagging despite promises
Government relations with Indigenous peoples also remain fraught. Overall, Indigenous people face worse outcomes in the labor market and justice system than non-Indigenous Canadians. As in other areas, the government of Prime Minister Trudeau has had difficulty meeting its commitments. The educational system on reserves, overseen by the federal government, remains underfunded compared to provincially managed schools off reserve, while infrastructure, particularly in relation to drinking water, is still critically inadequate. The government’s National Inquiry into Missing and Murdered Indigenous Women and Girls was initially greeted with cautious optimism, but is now widely seen as flawed due to high profile mismanagement and resignations.
Reform backlog calls for resolute action
Overall, Canada remains fairly well placed with respect to sustainable governance but there are many issues that have been ignored for far too long. The government will have to act with resolve if it wants Canada to maintain its relative position in the world.
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