John Ivison: Carney’s warp-speed spending gets a pass from the central bank — for now - National Post

Copy URL Facebook Linked In X (Twitter) Loading account options Sign In Manage Account Close account menu Sign Out Bank of Canada Governor Tiff Macklem appears before a House of Commons finance committee on Parliament Hill in Ottawa Nov. 3, 2026. (Blair Gable/Postmedia) By John Ivison November 4, 2026 at 6:00 a.m. Watching the governor of the Bank of Canada field questions from MPs at the House of Commons finance committee was like viewing an episode of Star Trek: Next Generation, in which Jean-Luc Picard grapples with the Prime Directive.

This general order prohibits Starfleet personnel from interfering with the natural development of primitive alien civilizations.

Tiff Macklem managed to do no harm, despite his clear irritation at the incoherent interrogation pursued by Conservative MP Tamara Jansen.

Fiscal policy is the domain of Parliament and has little impact on monetary policy, he protested repeatedly.

Yet, in his desperation not to introduce advanced economic theories to the undeveloped partisans at committee, he let slip his tacit approval of the Carney government’s policies.

Conservative MP Greg McLean was asking the governor about a recent report by an officer of Parliament whose job is to monitor fiscal policy and to sound alarm bells when it appears to be unsustainable.

The recent economic outlook from Parliamentary Budget Officer Annette Ryan warned that real GDP growth will be lower this year than predicted previously (0.9 per cent); that increased fiscal room of $37.4 billion over the next five years will be more than offset by new spending of $52.6 billion; and that the government’s chosen fiscal anchor of a declining deficit-to-GDP ratio will not be met.

McLean highlighted the rise in public debt charges from $59.3 billion in the current year to $83 billion in 2030/31, when they will account for 13.7 per cent of government revenues.

McLean pointed out that one of Macklem’s predecessors at the central bank, David Dodge, had suggested the rule that governments not pay more than 10 cents in any dollar of revenue on interest payments. “Going from 10.6 per cent now to over 13 per cent in four years is a bit of a runaway…Can you comment on that as far as what it means as far as Canada’s sustainability?” he asked.

Macklem remembered the Prime Directive, and then chose to ignore it.

“I’m not going to comment on fiscal rules. Those really are the responsibility of parliamentarians. (But) maybe I could comment on how Canada’s fiscal position is seen in global markets,” he said, pointing to rising global bond yields.

Canada’s 10-year rate is below that of most other countries, and about 120 basis points below the United States.

“To the extent that it is about fiscal concerns… markets are looking around the world, and the message is that they’re still quite happy to buy Canadian-dollar debt,” Macklem said.

The broad thrust of government policy has been clear, with a large part of spending comprised of increased infrastructure funding and incentives to boost private investment, he said. (The new productivity mega-deduction accounts for $36 billion of the $52.6 billion in new spending).

Macklem explained that the bank raised its policy rate by 25 basis points to 2.5 per cent last week because the outlook for inflation had deteriorated due to the war in the Middle East.

But he said the government’s fiscal plan has not had much impact on inflation. He pointed out the economy still has excess capacity, not excess demand.

“If it works, it will increase supply in the economy,” Macklem said.

The Conservatives clearly hoped that the governor was going to help them go faster than the speed of light.

Instead, he gave his tacit endorsement to the prime minister’s plan to borrow heavily to build infrastructure and attract investment.

That is, one supposes, reassuring. Macklem has breached the Prime Directive in the past, when high-paced government spending was adding demand faster than supply could increase. The policy was “not helpful,” he said in 2023.

Before the finance committee on Tuesday, he said that he only criticizes fiscal policy when spending reaches unsustainable levels or directly works against monetary policy. Neither circumstance pertains, he said.

But maybe he should have added the caveat “for now.” With a budget coming down in two days, public debt charges are set to boldly go where none have gone before.

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