Does Canada have the capacity to meet Carney ambitions?

As published on Substack

Prime Minister Mark Carney’s government has set a target of increasing investment levels in the economy by an additional $1 trillion over five years. Tomorrow, we’ll find out how close or how far he is from reaching that goal.

Statistics Canada will release national economic accounts data for all of 2025 that will provide the most comprehensive snapshot of the nation’s economic health during Carney’s first year in power. While much of the attention will focus on topline GDP growth numbers, I’ll be looking more closely at the investment data, specifically in the private sector.

In my column for The Hub earlier this week, I wrote about the federal government’s plans to increase Canada’s sovereignty by increasing the resilience of the economy. To do that, we’ll need to expand capacity in areas like infrastructure, natural resources, and technologically advanced industries.

This will require a lot of investment.

Short of a major surprise, the data are not expected to show any investment breakout in 2025. Canadian businesses spent $453 billion on investment in the first nine months of last year, a four per cent increase over the same period in 2024. Adjusted for inflation, the increase is closer to one per cent. In both nominal and real terms, business investment is growing more slowly than the broader economy. This is the reverse of where we need to be.

Capacity is on everyone’s mind.

At a Business + Higher Education Roundtable summit I attended this week, the discussion kept coming back to the challenge of balancing what the federal government needs to execute quickly and what it is actually capable of delivering.

There are two sides to this issue. First, there is definitely a sense of urgency about getting on with things much faster – not in years, but in months. Second, to get on with things faster, we need to be able to do more, and capacity is short and hard to build.

Three capacity chokepoints keep being raised as constraints: workforce, supply chains, and capital.

Each of these is potentially limiting how quickly our economy can change and transform.

In terms of workforce, Canada needs to be able to ramp up its defence industry, its energy infrastructure, its critical mineral projects, and its advanced manufacturing, all at the same time. But whether we have the talent to deliver on these fronts is very much in doubt.

There are also concerns about internal politics and huge regulatory hurdles. Concerns about accessing the capital we need.

Add to that, questions about how the government will support these sectors, and increasingly its role as a direct strategic buyer of goods and services at a time when federal government coffers are already stretched thin.

Canada’s economic sovereignty ambitions colliding up against major supply-side and resource constraints will be the big story of the next few years. And some difficult decisions will need to be made if we want to see ambition matched with results.