It was an uncharacteristically busy summer on the defence spending file. Not only did Canada face growing calls from allies at home and abroad in the runup to the July NATO Summit in Washington, D.C (including from Mike Johnson, the U.S. speaker of the House of Representatives, who labelled our lack of defence spending as “shameful”) to boost its military spending, but the Trudeau government made a surprise announcement there on the last day of the summit that it would indeed reach the 2 percent spending target by 2032.

The announcement was met with widespread skepticism. There were few details and even less evidence of follow-through. Call it “fire and forget.” This week’s return of the House of Commons will be the first opportunity for parliamentarians to question the government about its plan, including the details glaringly absent in Trudeau’s hasty announcement.

Although such a plan will be complex—including the mix of operations and capital, the role of procurement, etc.—, the fundamental question of how the federal government can fulfill its promise to boost defence spending is relatively straightforward. It starts with properly defining how Ottawa understands its core constitutional and fiscal responsibilities. To riff off James Carville’s advice to Bill Clinton during the 1992 U.S. presidential election campaign, “It’s all in the Constitution, stupid!”

To be sure, we also need a healthy and constructive debate about what Canada should spend its money on to achieve the NATO target of two percent of GDP, whether it is to devote more resources to defending the Arctic, recruit more personnel, deal with cyberwarfare, or buy new kit such as submarines, standoff weapons, surface ships or airplanes.

However, whatever plans and programs are ultimately decided, they will only be realized if Ottawa gets back into its lane and focuses on its core responsibilities as laid out in the Canadian Constitution, which includes taking its mandate for defence and foreign affairs seriously. It will also mean that Ottawa will have to shed those programs (some of which are very costly) that are not part of or central to its constitutional mandate.

Our leaders will also have to dial down the rhetoric. Surprise announcements devoid of details of the kind the prime minister delivered at the 2024 NATO summit will further erode Canada’s credibility with its alliance partners and contribute to public cynicism.

The current constraints on the public purse are pressing and real. Absent renewed clarity about Ottawa’s formal constitutional responsibilities, politicians and bureaucrats will continue to struggle, fumble, and ultimately stumble in their efforts to promote the security and defence of the nation and reach NATO’s target.

The federal budget for fiscal year 2024-25 is $537.6 billion.

That may sound like a lot of money, but little wiggle room exists. Almost half of the budget is earmarked either for fixed transfer payments to the provinces—established by a complex formula based on provincial differences in per capita revenues, revenue sources, and tax rates—or social programs such as Old Age Security, Canada Pension Plan, and Employment Insurance, which many Canadians rely on.

Canada’s public debt now accounts for 41.9 percent of the country’s GDP, with annual interest charges totalling a stunning $54.1 billion. To put that in perspective, Ottawa now spends more on servicing its debt than its health transfers to the provinces, or more than twice what it spends on defence ($28.8 billion).

Another 19 percent of the budget is accounted for by what in Ottawa-speak is called “grants and contributions”—essentially cheques that Ottawa cuts to businesses, organizations, and people. This includes things like subsidies to battery plants, payments to First Nations, and the new dental and drug programs.

This leaves $123.1 billion—or less than a quarter of the federal budget—for all of the operating and capital expenditures of some 129 federal departments and agencies. The Department of National Defence has to compete with all these departments and agencies for new funding.

The government’s much-awaited defence policy update, released in April, pledged to increase defence spending to 1.76 percent of GDP by 2030. It included new capital equipment investments totalling $8.1 billion over the next five years, which is still far short of the $75.3 billion additional spending that the Parliamentary budget officer estimated several years ago would be required to meet the two percent benchmark by the end of the decade. Indeed, in its most recent update, the PBO estimated that “military expenditures will rise from 1.29 percent of GDP in 2024-25 to a peak of 1.49 percent of GDP in 2025-26 before falling and stabilizing at 1.42 percent by 2029-30.”

Ottawa is now engaged in some belt-tightening to meet its fiscal obligations. In its 2023-24 budget, the government also announced it is committed to reducing “the pace and scale and growth of government spending” to pre-pandemic levels. At the same time, it is leaving no stone unturned to raise revenues with higher taxes, including the recent increase in capital gains taxation.

The writing is clearly on the wall. There will be less money—not more—in the next several years to fund new programs, not to mention expenditures that are already planned.

Unless the government is willing to debt finance a significant new increase in defence, there won’t be enough money to reach 2 percent in 2032 or likely even the more modest targets in the defence update.

Raising taxes is not an option. As many economists have pointed out, taxes are already too high and are stifling Canada’s economic growth and productivity.

Of course, the irony is that Canadians, who have long been lukewarm about their military as Canada reaped the post-Cold War peace dividend, now support significant increases in defence spending. Canada’s premiers also know that Canada’s trade relations with the United States may be jeopardized if we don’t up our game on defence.

The nub of the problem is that Ottawa can only reach the 2 percent target by shedding some of its programs, including its new housing, daycare, dental benefits, national school food, and pharmacare programs. As some of Canada’s provincial premiers rightly complained, these programs fall outside Ottawa’s constitutional orbit.

That does not mean such programs should be abolished. Still, the responsibility for managing and funding these programs should devolve to the provinces where constitutional authority and political accountability ultimately reside. Such a devolution could involve ceding tax points to the provinces to fund those programs as part of the bargain.

But the dollars “saved” from doing so will likely still not be enough. Accordingly, the government should also look carefully at its other programs to see which can be cut or transferred to the provinces to achieve efficiencies and reduce delivery costs.

The debate about spending more on Canada’s defence is sometimes presented (wrongly, we believe) as a stark choice between “guns” (defence) versus “butter” (social welfare), where the challenge is to persuade Canadians and their political leaders to tighten their belts because they are living in a more dangerous world.

However, the choices are not quite so stark. Instead, Ottawa must get back into its constitutional lane and let the provinces “make butter,” while it gets serious about executing its constitutional responsibility to defend the nation.

Today, after an eventful summer break featuring an NDP carbon tax climbdown, a torn up Supply and Confidence Agreement, a historic byelection Liberal loss, resignations, cross-country leadership tours, and early election whispers, Canada’s 338 MPs will be returning to their seats in the House of Commons.

The Hub has collected insights from a handful of wise political insiders from across the political spectrum to get their sense of the state of political play this parliamentary session.

Why are we wasting our time? Call an election already, Liberals

By Howard Anglin, former deputy chief of staff to Prime Minister Stephen Harper, now a doctoral student at Oxford University

My mother never graduated from high school. (I hope she won’t mind me revealing that). Until Grade 12, she travelled by train twice a year, five days each way, from Vancouver to attend school in Toronto. Back then, Ontario schools still went up to Grade 13, but because B.C. did not offer a 13th year, you could apply to The University of British Columbia straight after Grade 12. Which is what she did. It took Ontario another 30 years to realize the triskaidekan year was a waste of time and cancel it.

My point: the fourth year of a minority government is Grade 13. No one wants another year of this government and no one needs it. Everyone is ready to move on. It’s a superfluous temporal appendage, a political limbo in which Parliament will spin its wheels waiting for what everyone knows is coming sooner or later. I doubt a single one of the Liberal caucus members press-ganged to the Nanaimo caucus retreat to wave the red flag with the spontaneous enthusiasm of North Korean cheerleaders is looking forward to it. Canadians as a whole are dreading it. Trudeau needs to put us all out of our misery. Cancel the year and graduate straight to the election.

Betrayal, delusion, and disease

By Scott Reid, former communications director for Prime Minister Paul Martin, now a principal and co-founder of Feschuk.Reid

Minority Parliaments are a breeding ground for risk, betrayal, delusion, disease, ambition, and irrational decision-making. So, welcome back to all of that.

For the Liberals, the dissolution of their political pact with the NDP means the threat of an unintended election now lurks constantly. Every count must be perfect. Every vote must be calculated. Committees are grenades waiting to have their pins pulled. I’ll be watching carefully to see how the government navigates this newly treacherous terrain.

How does it manage its way forward even as low polling numbers weaken its leverage and undermine its ability to say “no” to opponents’ demands? But by far the most important question remains: “How does the prime minister return his party to a competitive electoral position?”

What change might he present to voters that could persuade them to reconsider their resistance to the Liberals? Since the loss of the Toronto-St. Paul’s by-election, this has been the great unaddressed question of Canadian politics. Now, the prime minister must somehow produce an answer in the loud swirl of a Parliament that has become far more hostile and much less stable. Failure to do so could mean this becomes the last session of Parliament over which Justin Trudeau presides.

Beware of procedural rapids

By Jordan Leichnitz, veteran NDP strategist and deputy chief of staff to the NDP leader, now running the Friedrich Ebert Stiftung’s Canadian program

Rough waters ahead.

After a sleepy summer, the sense of stagnation in the federal political scene is gone. The NDP’s surprise move to blow up the Supply and Confidence Agreement has kicked off a new dynamic in Parliament. The return to the daily slog of a traditional minority government will pull the Liberals deeper into procedural battles and vote calculations and further from the outward focus on connecting to Canadians that they need if they’re to have any hope of a reboot.

While Poilievre and the Conservatives are eager to set the table for a snap election, the NDP and Bloc will calculate their moves carefully. The NDP has no interest in handing the government to the Conservatives, so expect them to use the fall to further distance themselves from Prime Minister Trudeau in the public eye, while trying to eclipse the Liberals as the only viable alternative for voters opposed to the Conservatives.

While there’s not an election on the immediate horizon, the timeline has certainly moved up. This should put more pressure on the Liberals to re-evaluate all parts of their current strategy, but so far the message from the top is simply a doubling down on more of the same. The ball is in Prime Minister Trudeau’s court and everything argues for his exit.

A hot mess

By Andrew MacDougall, former director of communications for Prime Minister Stephen Harper, now director at Trafalgar Strategy

It’s Hurry Up and Wait time, where the word “election” will be on everybody’s lips but in nobody’s actions, bar one party: Pierre Poilievre’s Conservatives.

Poilievre is jonesing for an election. Motions of no confidence will be flying out of his caucus. But what if no one else wants to dance?

Justin Trudeau is in full “Baghdad Bob” mode, declaring himself and his caucus united and focused on their jobs, when anyone with eyes and ears knows that isn’t true.

Jagmeet Singh has spent the days since tearing up his agreement with Trudeau looking weak over what he might actually do about the guy he says he thinks is “too weak” to run the country.

And the Bloc Quebecois? A weak prime minister who doesn’t want an election and is looking for friends? That’s the stuff of orgiastic dreams. They will want this parliament going for as long as possible.

And so, Baghdad Bob and his retreating Liberal army will cling to their palaces for as long as they can. Liberals saw what happened to former U.K. PM Rishi Sunak when he chose to face the electoral buzzsaw early, and it wasn’t pretty.

Result? We’re in for another year of this mess.

Keeping the power to speak freely

Peter Menzies, senior fellow at The Macdonald-Laurier Institute, and a former newspaper executive and vice chair of the CRTC

People who want the freedom to watch and listen to what they like without the interference of government and its appointees need to sharpen their pencils, look to the front of the class and pay attention when Parliament and its agencies get back to school this week.

Most likely to grab the attention will be the continued progress of the Online Harms Act, an authoritarian wolf hidden beneath the sheep’s clothing of the worthy goal of children’s online safety. As is, the act would create a new regulator to oversee social media’s ability to protect children and youth, empower the Human Rights Commission to impose fines for speech that offends, and amend the Criminal Code to make it possible to be sentenced to life in prison for hate speech.

The bill was constructed in a way that allows the government to accuse those who oppose it of being unwilling to crack down on child pornography and abuse. The Conservatives believe they have developed the framework for alternative legislation—the framework for which was released last week—that will protect children and freedom of expression.

Therein lies the fight, the fury and the battle for the future of a safe, yet free internet, and the tension between liberty and authoritarianism.

A political bloodbath

By Kathleen Monk, former director of communications for NDP leader Jack Layton, now a principal at Monk + Associates

Never before have our political leaders been so unpopular with so many voters. As they prepare to clash in the House of Commons this week, parliamentary watchers should brace for a fall session that promises more heat than light.

Add to that provincial elections in British Columbia, Saskatchewan, and New Brunswick, and we can expect the political temperature to reach a fever pitch.

Jagmeet Singh and the New Democrats, newly liberated from their Liberal pact, are gambling big. They’re betting their freedom will translate into a surge of supporter enthusiasm and a flood of cash. But to capitalize, they must use the fall session to unmask Pierre Poilievre, painting the Conservatives as obstructionists hell-bent on slashing vital programs.

Poilievre, the Conservative ringmaster, will use Question Period as his personal colosseum. His strategy? A relentless barrage against Trudeau and other party leaders. Behind closed doors, it’s scorched earth tactics: block, stall, repeat.

Poilievre paints a picture of a “broken Canada” while his actions threaten to shatter what’s left. He’ll burn through Conservative coffers, casting himself as the people’s champion. Meanwhile, he’ll throw wrenches into the parliamentary gears, blocking any actual relief for those crushed by inflation.

The Liberals find themselves in a precarious juggling act. They’re desperately trying to cast Poilievre as the bogeyman. Trudeau is attempting a political Jedi mind trick: trying to convince people that Poilievre isn’t the change they’re looking for. But can the Liberals pull off this sleight of hand while simultaneously wrestling with the realities of governance?

So, what do I think we will see? New Democrats taking initiative, Conservatives on the offence, and Liberals responding to one bad news story after another. Last week it was another MP calling for Trudeau to step aside, the Liberal campaign director quitting in despair, polls underwater. What bad news will next week bring? This is the backdrop for what will almost certainly be a very ugly fall parliamentary session.

Brace yourselves. The stage is set for a political bloodbath this fall, and I fear there will be no winners.

Get serious

By Tyler Meredith, former lead economic advisor to Prime Minister Justin Trudeau, Bill Morneau, and Chrystia Freeland, now founding partner of Meredith Boessenkool & Phillips Policy Advisors

Inflation is down and interest rates are dropping—albeit far too slowly. But Canadians remain anxious about the direction of the world. The same story is playing out almost everywhere for every incumbent government in the developed world. And yet our policy elites are focused on a productivity discussion we’ve been endlessly talking about for three decades, with ideas that haven’t changed in two decades. Canadians don’t care about that—they want real ideas to make housing less expensive, food more affordable, and immigration more stable. As we approach less than 12 months to the next election, I’m watching to see if our leaders get more serious than the slogans we’ve heard and if our thinkers actually rise to the occasion too.

Sleeper issues

By Karen Restoule, vice president at Crestview Strategy and co-founder of BOLD Realities

While seemingly obvious issues like cost of living, housing affordability, and public transit are likely to continue to dominate the political discourse this fall, there are a few (wild) sleeper moves that could emerge when Parliament returns today—assuming that it holds up:

One. With the efforts to align Canada with the global energy transition and the noted importance of resource-abundant regions, there’s potential for the Trudeau government to make unexpected moves to support Canada’s energy sector, including oil and gas. And while, yes, Trudeau has focused exclusively on green energy in his nine years at the helm, a shift to supporting energy infrastructure—especially in oil-producing provinces—could be a surprising way to court voters impacted by inflation and high energy prices. (Unlikely to actually happen, but a girl can dream!)

Two. With discussions on private health-care solutions heating up in legislatures in Alberta and Ontario, Trudeau could ride (on a well-groomed horse, of course) into the debate with either a strong endorsement or strong opposition towards privatization. A clear and firm position on this issue could raise attention on long-standing access to health-care concerns that have dominated provincial debate and provoke debate on cost and quality of Canadian life, particularly in suburban areas. (Sure, health care falls within the province’s sandbox, but jurisdiction has never really held Trudeau back on this front.)

Three. Trudeau could resurrect promises on electoral reform in a (weak) attempt to appeal to younger and progressive voters. Sure, the NDP-Liberal marriage has lost its sizzle but it doesn’t mean that Trudeau can’t continue to fan his woke feathers to the NDP base. And sure, it’s a long shot, but if the Liberals are interested in appealing to young, disaffected voters, they might make a renewed commitment to proportional representation or other voting mechanisms as a way to regain favour with urban and suburban progressives.

These sleeper moves—whether there’s a non-confidence motion or not—could help the Liberals to shift voter dynamics, mitigate opposition gains, and/or surprise critics, allies, and Canadians by offering unexpected solutions to ongoing challenges.

Whether or not these three wild predictions happen or not, nobody should be surprised by sudden (and unique) policy pivots that appear designed to attract swing voters or address emerging issues that they may have overlooked to this point.