Canadians love big government—even though it’s holding us back

The Macdonald-Laurier Institute estimates that Canadian government spending as a percent of GDP in 2024 was over 44 percent. After adding the effects of tax expenditures and regulations, that percentage grows to a staggering 64 percent. According to the Fraser Institute, over the period from 2014-2022, Canada ranked 28 th among 30 countries in GDP per capita growth, with annual growth of just 0.6 percent. At the same time, according to the Fraser Institute, Canada also ranked in the bottom quartile across most key health care measures, such as wait times and access to medical care related to doctors, MRIs, and surgeries. This is despite having the third-highest expenditures per capita. Our performance leaves much to be desired. Governments and regulations protect the jobs of many, especially in Eastern Canada, and have historically garnered strong voting support in return. Peace, Order and Good Government vs. Life, Liberty and the Pursuit of Happiness When Canada became a confederation in 1867 and formed a coast-to-coast nation, the outsized role of government was critical. While the United States focused on individual rights with its famous constitutional phrase of “life, liberty, and the pursuit of happiness,” Canada settled for a collectivist approach of “peace, order, and good government.” Our population was only 4 million, and to develop infrastructure such as railways and telecommunications, government involvement was necessary. Even today, thinly populated provinces such as Saskatchewan retain government-owned telephone services (SaskTel) and energy services (SaskEnergy). In Alberta and offshore the Maritimes, governments initially aided the energy industry to develop the oil sands and offshore oil and gas production. But the world has changed. Canada is now a country with 40 million people, competing in a world of 8 billion people and numerous established global trade routes. Western Canadians have been competing globally for decades now, whether it be oil and natural gas, mining (potash, uranium, coal), grain, or timber. There are few or no regulations or subsidies protecting these industries from global prices or competitors. In fact, in 2024, energy, minerals and metals, and food and produce were by far Canada’s leading export sectors with gross sales values of $197 billion, $124 billion, and $102 billion, respectively. The energy sector has achieved this result despite global competition and punitive carbon taxes and government restrictions, which no other global exporting country (or Canadian industry) faced. Is economic reality now hitting all of Canada? Most Canadians blame President Trump for the current concern over Canada’s economic challenges and support a strong move to “diversify our trade.” Of course, reasonable trade diversification is a laudable goal. But there is a much bigger issue that needs our attention, one that has been driving our declining culture and competitiveness: a pervasive and ever-expanding government involvement and misallocation of capital. If Canada wants to be a great country again—such as when we outpunched our weight in the two World Wars, or when our dollar traded at a premium to the American dollar in the early 1970s, or when our GDP per capita was more in line with the U.S. as recently as 2012—it will need to endorse greatness, not collectivism and equal outcomes; it will need to eliminate needless regulations and policies that hinder our competitiveness; and it will need to reduce the role of government and make room for private capital and business. Canada can no longer afford the burden of big government and excessive regulation. In the coming years, we will need to rebuild our government with a bias towards efficiency and the private sector, unless it is deemed critical for national security. We’ll need to limit environmental regulations to lower, more appropriate levels, abandoning our climate crisis philosophy for an unleashed energy sector. We’ll need to rewrite our tax and immigration systems to attract global capital and talent. We’ll have to re-emphasize education, with a focus on innovation and research to drive competition. We’ll need to reorganize our health-care system to match public-private methods seen in many European countries, while incorporating AI into the delivery model. We’ll need to change the judicial system so that all Canadians, whether they are Indigenous or not, receive equal treatment under the law and are not granted special rights that may be used to restrict the conduct of business. Finally, we’ll need to foster a culture of exceptionalism and equal opportunity, rather than equity of outcomes. Can we make Canada great? I believe we can make Canada great. This country has the necessary natural resources and fertile land, talent, and critical infrastructure. What we need now is government leadership, sound strategy and policy, and a winning, national culture. Canada has slipped badly, but not nearly as far as others (think Argentina, Europe, the U.K., and others). However, our road back will not be easy and will take decades. We may need to slide a bit further before we recognize the necessity for such bold change. Unfortunately, many Canadians are still too comfortable with being taken care of by governments and protective regulations, prepared to go along with the status quo. Unfortunately, critical thinking and vision are the exception, not the rule. But hope springs eternally.