“Tlevel of uncertainty higher than what we have seen and felt for generations,” Federal Finance Minister François-Philippe Champagne told the House of Commons in early November, describing the current state of the Canadian economy.
The transition Canada is going through, including the overhaul of the “rules-based international order and trading system that has driven Canada's prosperity for decades,” is a “true generational change,” he said. And it was in that spirit, he told MPs in the House of Representatives, that he presented this year's budget, the first from Mark Carney's Liberal government. Champagne then quoted former Prime Minister Jean ChrĂ©tien: “Let us accept this role with humility, but also with confidence.”
The plan, dubbed Strong Canada, aims to mobilize roughly $1 trillion in public and private investment over five years, shifting Ottawa's focus to nation-building with major spending on housing, infrastructure, clean energy, defense and innovation. If it's true that with a budget like this we're entering a new era, then it seems worth remembering what we're leaving behind.
It so happened that Chrétien began this era as finance minister. One in which markets were seen as more reliable than states, in which efficiency mattered more than opportunity, and in which governments were expected to be frugal, limited and distant. An era dominated by privatization and deregulation, tax cuts and free trade agreements based on a consensus that growth could be coordinated from without rather than built from within. As for people's expectations from governments, yes, they provided citizens with less and less support, but this was at the discretion of the market.
This period of neoliberalism worked—at least for a while. As Champagne noted, Canada as a whole prospered. We became a central, albeit relatively small, cog in a huge global market that, fortunately for us, revolved around the robust and enormous American economy. But it delivered on its promise in other ways, too. Neoliberalism claimed government was the problem and then spent forty years turning it into one by weakening it from within. The government has outsourced expertise, cut capacity and allowed its delivery mechanisms to rust.
Neoliberalism was finally brought to an end by a series of stresses that exposed its limits, including the 2008 financial crash and the COVID-19 pandemic. Each crisis showed how much this prosperity was built on the shaky ground of speculation and debt and how little institutional trust supported the entire apparatus. We are now living in a post-neoliberal moment. We are watching the state try to do what it could have done decades ago. Big things like housing support, infrastructure building, or national security coordination. Or smaller ones, such as timely issuance of passports, mail delivery or military recruitment.
The real problem for Prime Minister Carney and his budget is not scale. It's about execution. A larger state that still cannot plan or build will only increase cynicism. Now it is important to show that the government is working at all. Canadians, for the most part, believe he is capable. In a pre-budget poll, Nanos found that 59 per cent of Canadians said Carney is the leader they trust most to support economic growth, ahead of Conservative Leader Pierre Poilievre in every region.
But restoring administrative capacity is not only a management problem, but also a political stake. If Carney can prove that government can act with consistency and purpose, he can create a new voting bloc organized around restored institutional competence. In a sense, his entire project depends on it.
The is Justin Trudeau Liberals did try to revive the role of the state, but did so without fully recognizing the changes that had occurred. They still believed that the rules-based system that underpinned neoliberalism remained largely intact. Trudeau became prime minister in the fall of 2015 as something of a personification of mid-century Canadian confidence.
While in power, the Trudeau Liberals governed as if the neoliberal state was still functional. His government has issued subsidies and transfers, created financing packages and an infrastructure bank, and poured money into housing, clean technology and child care programs, among other things. Some have worked, but many have stalled—not for lack of ambition or good intentions, but because core state capacity has more or less disappeared, along with the trust that once animated state institutions. The Trudeau years revealed the truth of this post-neoliberal era: you can spend without being able to build.
In any case, the era of neoliberalism is already over. Even Champagne seems to admit this. It was replaced by something new. First, the old left-right spectrum has broken down; voters are sorted along lines that move away from traditional ideological territory.
You can see this in the strange coalitions now forming around issues like immigration, housing and public health, where parts of the left and parts of the right often find themselves on the same side, driven less by ideology than by anti-elite resentment or institutional mistrust. Movements as diverse as anti-vaccination protests, the housing debate and populism against a carbon tax are all based on these overlapping pools of frustration rather than traditional party identities. The political “center” once occupied by liberals is not just contested; it evaporated.
Meanwhile, the economy has changed. The old order envisioned open markets and deep global integration. At its core was a stabilizing and internationalist America and a general global economic system that prioritized efficiency over sustainability.
No more. The United States is in an ideological hole, divided and disoriented, paralyzed and lost somewhere in its private reality. The logic of the last forty years or so has gone with it. Today's economy is plagued by fraud. Entry-level jobs are filled with resumes written using AI. The career seems rewarding. Side gigs abound. Things are getting more expensive all the time. This is an era of highly fragmented and increasingly antisocial individuals, constantly confused or resentful, in which trust in institutions and elites seems naive because nothing seems to ever change. Everyone is climbing. Everything is upside down. And now the state has again become the fundamental unit of political agency.
The task of the Carney liberals is thus architectural. Some parts of the budget continue to rely on the familiar pattern of pushing markets. Tax incentives for private capital in housing and clean technology, loan guarantees designed to mobilize corporate investment, and public-private partnerships to build infrastructure. But consider other things: the new housing agency, the military-industrial strategy, the Buy Canadian policy, the Critical Minerals Sovereign Fund, and funding for Arctic infrastructure projects. All this can be considered a return to big government.
Success is scary. This will mean that two things are going right. First, the state can be restructured so that it can function smoothly, reliably and at scale. And secondly, Canadians see that it works.
So far, Carney looks like he might do better on the former than on the latter, even if the latter is more important. He must redefine voters' expectations of the government and then meet them. By doing so, he could find a new, defined place for the Liberal Party within the chaotic ideological realignment that is still underway.
Nobody knows how this will all end, but the stakes are clear. If Carney succeeds, the political center will become more than just a compromise position between left and right. Finally, this will be a place where the state will work again. If he fails, the void will remain.
