Here is the full transcript of Canada’s 24th Prime Minister and leader of the Liberal Party Mark Carney’s interview on The Prof G Pod – Scott Galloway episode titled “Canada’s Role in a Shifting Global Order”, April 17, 2025.
The interview starts here:
Introduction and Background
SCOTT GALLOWAY: Prime Minister, where does this podcast find you?
MARK CARNEY: I’m in Montreal right now, Professor.
SCOTT GALLOWAY: The majority of the world spends their news as 10 minutes domestic and 20 minutes international. In the US we’re kind of self-absorbed, narcissistic, we don’t talk a lot about other countries. I think most people have heard of you, have seen you on TV, but don’t know much about you. Can you give us sort of your backstory, your origin story?
MARK CARNEY: Sure. So I was born in the Arctic, the north of Canada, a place called Fort Smith, Northwest Territories. I grew up in Edmonton and those who might follow hockey, it was the days of Wayne Gretzky when he was playing for the Oilers – that was when I was a kid.
I went away to university in the US and then I worked on Wall Street or versions of Wall Street. I worked for Goldman Sachs in London and Tokyo and New York and ultimately Canada. And then about 20 years ago, I became the deputy governor of the Bank of Canada, which is the equivalent of the Federal Reserve in the US, and ended up being the governor during the financial crisis of 2008.
So I worked through that process of the financial crisis. We had a “good financial crisis” if you can have a good financial crisis in Canada. We got through it better than anyone else, emerged stronger, our banks stayed together. Then ultimately, kind of slightly bizarrely, I was asked to become governor of the Bank of England. So I became the first foreign governor of the Bank of England. I did that through the period of the Brexit referendum as it turned out and in the aftermath of that.
Then I came back to Canada in 2020, right in the middle of COVID. I think you probably had a better experience during COVID, if I’m reading your podcasts correctly, than I did. I did a lot of work on climate change for the United Nations, sort of pro bono, organizing the financial sector to help address climate change. But also at the same time I worked for Brookfield, which is a big asset manager, and I was chair of Bloomberg.
Then as of the start of January, I first ran for the leadership of the Liberal Party, which is one of the main parties here, and winning that became prime minister about a month ago. Now I’m running for election. Our campaign is 37 days and we’ve got two weeks roughly left to go – much shorter elections than the United States.
Canada’s Global Role
SCOTT GALLOWAY: A big friend of the Pod is Ian Bremmer, the geopolitical strategist, and he was on the Pod last week and he described you as an “open quote, generational mind for Canada on the global stage.” In your view, what role does Canada play on the global stage?
MARK CARNEY: We play several roles. We’re a member of the G7. In fact, we are chair of the G7 this year. So I’m chair of the G7. We’re a member of the Commonwealth, which is the old UK grouping. We’re a member of the Francophone, which is obviously the French-speaking grouping of about 60 countries. So we have our role in several different organizations or groupings.
I think one of the roles we play potentially in the new or the emerging global order is partly based on our assets. We are an energy, an emerging energy superpower in all forms of energy. We’re one of the largest critical mineral suppliers in the world. We’re pretty good in AI. A lot of people claim that, but I think we’re legitimately claiming that.
And so we can play a role as a country that believes in open markets, open systems, believes in trade, open ideas, diversity. We can play a role with like-minded countries to kind of reconstruct that bit of the international order which has been upended in the course of more intensively in the last few months. But a process that really began with the financial crisis 15 years ago.
Priorities for Canada
SCOTT GALLOWAY: Typically in the US, and I imagine the same way in Canada, when a new leader is elected, assuming you get elected, they have sort of a honeymoon period and an opportunity to get more done in their first year, more grace, if you will, than in the next two or three years. What would you identify as the two or three biggest issues facing Canada, and what’s your agenda? If you could pick two or three things you’re really going to go hard at your first year as Prime Minister, what are those things?
MARK CARNEY: I’ll set tariffs aside and focus in on three things. First is having free trade, actually within Canada. We have basically 13 economies here, 10 different provinces and territories, all with their own rules. It’s hard to move credentials and sometimes goods and services across the country, far harder than it should be. So a process, a very quick process of free trade. And by the way, just to put orders of magnitude on this, a reasonable estimate of the economic benefit of that is bigger than the economic hit from the worst version of the Trump tariffs. So we can give ourselves more than others can.
Second thing is we have a huge housing problem here, particularly obviously for younger Canadians. First and foremost, we need to double the rate of housing and we need to make major reforms in order to do that. We can do it in a way that actually leverages the Canadian supply chain, technology and all the lumber we potentially won’t be able to send southbound to the US.
Then the third thing – the world’s fluid.
If I can say one last thing, Scott, is that just being shaken so hard by what’s happening in the United States, Canadians are very open to all of those priorities. People are up for big things. They’re coming together and they’re willing to do big things because they know they have to do big things because the world’s changed so much.
US-Canada Trade Relations and Tariffs
SCOTT GALLOWAY: Let’s use that as a segue into tariffs. My understanding is Canada’s our largest trading partner. Now we tend to be obsessed with China. But you’re our largest trading partner.
MARK CARNEY: No, we’re your most important.
SCOTT GALLOWAY: Yeah, yeah. So give us the state of play. You’re the man representing our largest trading partner economically. To the best of your knowledge, describe the state of play between what is happening between the US and Canada. Where does it sit at this moment?
MARK CARNEY: So I’ll start with the bad news or the unjustified news, which is that tariffs are in place. We have still in place today tariffs that were originally justified because of fentanyl coming across the border from Canada. Just for the listeners who haven’t tracked this, less than 1% of the fentanyl imported into the United States comes from Canada. In fact, you’ve got a sophisticated audience, so I can say things like 19 basis points of the fentanyl comes across the border from Canada. We’ve taken major steps to reinforce the border – drones, helicopters, other things. And it’s fallen by a further 90% over the course of the last three months. But those tariffs hit a wide range of goods in Canada, with a few carve-outs, but it’s hitting hundreds of billions of goods. And those are 25% tariffs from the United States.
Then secondly, we’re also caught in the steel and aluminum tariffs, which are these “national security” tariffs, so-called 232 tariffs. We are the largest supplier of aluminum to the United States. We’re one of the most important suppliers of steel to the United States. And you can roll those up into hundreds of thousands of jobs in the US depending on Canadian steel and aluminum.
And then the third thing is we are caught in the auto tariffs. There was something called the Auto Pact which was signed the year I was born, about 60 years ago. And we have had an increasingly integrated auto system with the United States for 60 years. It got tighter with the Canada-US Free Trade Agreement 40 years ago and then with NAFTA and its successor. So literally these companies and the supply chains, the main parts suppliers, they’re virtually fully integrated. And now into the middle of this is coming 25% US tariffs, which in an industry that has 5-7% margins – this is absolutely damaging.
So we have three sets of tariffs. We are not subject yet to the so-called reciprocal tariffs of the US. So the state of the relationship is strained to say the least because all of these tariffs are in violation of what you call USMCA, we call CUSMA – the same trade agreement.
The good news or the better news is that three weeks ago or so President Trump and I spoke and we agreed that following the Canadian election there would be the beginning of a negotiation of a new comprehensive relationship – economic, security. So we are in the queue, so to speak, for those discussions.
Rethinking Trade Relationships
SCOTT GALLOWAY: It strikes me that these actions are about to inspire what they envision – that is, a tremendous amount of deal making. But deal making around us. If I’m a G7 nation and I have a trading partner that I used to be able to count on that was mutually very prosperous and now I just not only can’t count on them, but have no idea who I’m waking up next to, that’s incredible motivation to start establishing dialogue with other nations. Respond to that thesis. Is Canada aggressively and actively trying to reroute around America right now?
MARK CARNEY: Well, I would say trade is a world of “and” – it’s a positive sum game as you know. If you do it right, both sides win. It’s not a zero-sum game. So I might not choose the phrase “around America” but obviously, if we’ve got excess capacity or things we’re going to develop, I’ll use the example of critical minerals where we’re a big player – who are we going to trade with? Who can we rely on?
We’re sitting here, we supply 70% of the potash to the United States – one of the most important components of fertilizer, 70%. And there is a 25% tariff being put on potash. So when you think about it, well, maybe I might want to take another commodity. If we’re going to develop critical metals and minerals, maybe we want to develop them with a supply chain to someone who’s not going to slap a tariff like that on.
So not invalidating your thesis, we have begun to intensify discussions with other countries, other trading blocs. We have a pretty good set of trade deals in place. We have a free trade deal with Europe, we’re part of what was called the Trans-Pacific Partnership in Asia. So we have a number of those. But we’re looking to reinforce them.
And look, we’re hopeful – maybe hopeful isn’t the right word, but we’re open to a restart of the US trading relationship, provided there’s willingness on the other side and we can come to one of those positive-sum deals.
SCOTT GALLOWAY: So I would imagine you speak to a lot of other G7 leaders or G20 leaders. What’s the general consensus around American leadership right now? And I realize that you have more restraint and are a bit more diplomatic, but what is the thesis among this group of world leaders around what is going on here? How do they explain it? How do you explain it to each other? Or can you explain it to each other? Because quite frankly, here in the US a lot of this doesn’t even make sense to us. And this is our leadership.
The End of the Global System as We Knew It
MARK CARNEY: Well, I think the first thing is to recognize, as I have said and a number of those other leaders have said, including G7 leaders, is that the system as we knew it is over. When the anchor of the system has done a series of measures that the US has done, but also set out a series of objectives that are just inconsistent with the way the system has been operating for decades. Basically since the fall of the Berlin Wall, intensified since then. So you recognize that that system anchored on the US is over. That then leads to how do you react to it?
There’s partly the negotiation with the US in which you’ve been focused on, but then it’s also how do we deal with each other? I think it’s, you know, I go back to Peter Thiel of 10 years ago saying, take Donald Trump literally and seriously. And they’re looking to balance, to the extent possible, to balance trade, which is not the way we think about things, but is the way the US thinks about things.
You know, you do get into odd situations like Canada, where America has a trade surplus with Canada in goods. The only reason there’s an overall deficit with Canada is because of basically oil imports. Well, if you don’t want our oil imports, that will be a bit of a problem for a period of time because the only other option for the refineries that take Canadian oil is Venezuela and they’ve just banned those imports as well. So the logic isn’t entirely consistent, let’s put it that way.
But I think at the core recognizing this desire for more balanced trade, from the US Administration question I think in our mind is there are some industries, autos particularly, aerospace would have another element of this and then a number of commodity. There are a couple industries that are so integrated that it’s hard to see why for US competitiveness, let alone North American competitiveness, it makes sense to pull them apart. That would be our argument.
And then there’s other industries, forest products, steel, aluminum as three big examples where we’re such huge suppliers and such a safe, secure supplier. Again it doesn’t really to us make sense that that would be displaced or tariffed.
So we’ve seen that this trade policy is evolving as some of these choke points become more evident and I suspect we will see more. Maybe I’ll say one other thing if I could which is it strikes me a bit in the inconsistencies of U.S. policy is a desire to have some minimum tariff if possible which has a revenue raising element to it. And I think tied into U.S. tax policy that is also a possibility here.
The Current State of Canada-US Trade
SCOTT GALLOWAY: My understanding is about 99% of our trade is tariff free and that 1% is around things like dairy. Haven’t we largely been kind of a trade free zone between Canada and the US today?
MARK CARNEY: Yeah, we have and then we have, like any trading partners, the odd trade irritant and trade dispute but we have processes to deal with those. So we have ongoing things around forest products, sometimes steel and aluminum, but that’s handled. But yeah, trade is basically tariff free.
And when it’s your biggest trading partner, pulling that apart is quite costly. It’s costly for both. From a Canadian perspective, I’m out on the road, I’m running for office, I’m talking to lots of Canadians up and down. There is a very strong sense of “yeah, this is going to cost us but we are willing to take the price to restructure our economy in a different direction.”
It’s been such a sense of—I mean the word that’s used is betrayal. We signed a deal, we’ve had this partnership, we observe it in good faith. We set up businesses, we know lots of Americans, we like Americans, we listen to American podcasts. And all of a sudden, we get these attacks, which is the way this is viewed. So it’s going to cost us for a period of time and we’ll build out and build with others.
Comparing Tariffs to Brexit
SCOTT GALLOWAY: You were the first non-Brit to serve to run the Bank of England. You’re sort of the Bo Jackson of global economic leadership. I’ve compared this and it might be a crude analogy, but I want you to add some color. Fill in the blanks here. I’ve described these tariffs as the biggest own goal since Brexit. What similarities do you see and how does that inform how you respond to this and what you think ultimately the outcome is?
MARK CARNEY: Well, I think there are a lot of similarities and it starts with the economics, the economics of what’s happening.
SCOTT GALLOWAY: Actually briefly describe Brexit because just give us the headline news on Brexit.
MARK CARNEY: So the headline on Brexit is for a variety of reasons, and many of them not to do with economics, although it was sold as an economic win. But a lot of people because of reasons of identity and others voted in 2016 for the UK to leave the European Union.
The UK was even more tightly bound in trade and economic relationships with the European Union than Canada is with the United States, including free movement of labor, easy movement of capital, huge trade going both ways. And if your product met the product standard in the UK, you didn’t have to worry about it—you could sell to any country in Europe.
And so the decision was taken, as I say, for a variety of reasons, narrowly, but taken to leave the European Union. I remember when it happened, our view at the time was, okay, what’s going to happen is the economy is going to slow, unemployment’s going to go up, inflation’s going to go up, and we at the Bank of England are going to have to raise interest rates when this happens. And by the way, the currency will also go down.
The currency went down by 20-25%. It’s still on the floor relative to where it was because you had a big negative trade shock, a big loss of wealth, basically future wealth, and the currency market priced it first. And exactly what we expected to happen happened. I mean, it happened roughly at the same time as Covid was finishing, but you had a big negative supply shock to the economy because you ripped up trading relationships and the productive capacity went down relative to where demand was. So that was inflationary and combination of that meant UK rates are higher and it’s got a bigger inflation problem than other economies.
When you look at what’s happening in the US, the friction put into its trading relationships is going to cause the same thing. It is going to slow the rate of growth of that economy. It is going to affect the dollar. It has affected the dollar negatively, as we’ve seen. It’s going to push up prices on the margin. And so slower economy, higher inflation, higher interest rates, all things being equal.
Now, there’s a qualifier. The UK was a much more open economy, much more dependent on Europe. The US is more of a closed economy. It depends on the world, but it’s different orders of magnitude. So it’s same direction, different orders of magnitude.
I think there are a lot of parallels here and maybe the other parallel, if I can add one more, which remains to be seen, but the UK, I would say—and I’ll get hate mail from some UK listeners—but I would say based on the polling, it’s pretty well understood that the economic impact of Brexit has been negative in the UK. Let’s say two thirds of the people now understand that. But the path back to being closer to Europe is very difficult politically. It’s hard to rebuild that consensus.
And you think about the situation in the world right now for the UK, there’s a lot of logic being closer to Europe from trade perspective and even from a security perspective. They built this sort of what’s called a coalition of the willing with respect to Ukraine because the US is pulling back from support for Ukraine, by the way, Canada has stepped up and is part of that largely European coalition of the willing alongside Australia.
So there’s a logic to going back to that. But it’s hard to go back once you’ve broken up these relationships. And so the next 6-12 months, in my judgment, are going to be quite important for the United States and for the global trading system. Because the question is, okay, we understand that there is a big change, a big break with the old system, but how much of a break is it going to be?
And is there going to be a relatively open trading system for “like minded countries,” broadly like minded countries? I think of the G7 as being pretty like minded countries, not surprisingly. We value liberty, free speech, open markets in general. So are we going to have a relatively open system amongst ourselves or is it only going to be with a few countries or is it going to be with no countries? That’s kind of what to play for here. But the system won’t revert to what it was previously.
Addressing Claims of Trade Imbalance
SCOTT GALLOWAY: When we’re talking about these tariffs, there’s a general sense that, or at least a talk track from the Trump administration that the US has been taken advantage of by trading partners, including Canada, that they’ve just got the better end of the deal and that tariffs will help restore some sort of parity or equity in the relationship. Respond to that.
MARK CARNEY: Well, obviously we don’t see it that way because really, the way the Trump administration has defined being “taken advantage of” is do you run a trade deficit? And we can argue about that definition. If I lead on my economic training and my experience, I would say that isn’t being taken advantage of. It’s mutual exchange.
But the US runs the surplus with us. The US sells more. If anyone’s being taken advantage of, we’re being taken advantage of, by that definition. And the only place where they run a deficit is yes, we do ship oil to the United States. Now we happen to ship oil to the United States at a big discount to global prices. So we’re being taken advantage of again, on that definition on the goods trade side. And we’re getting taken advantage because we’re selling oil at below global prices.
So we want our money back. No, we don’t. We still see the broader benefits of the relationship. And I don’t think the auto sector is going to feel taken advantage of if these tariffs stay in place. As you say, you got to check your phone every once in a while just to see where things stand. There’s a possible exemption on the auto parts side that’s coming in in the United States, which we would have said right from the start would have to happen because the whole system will grind to a halt without it. So some of the mutual advantages will become more apparent and hopefully the US Administration can continue to be nimble.
SCOTT GALLOWAY: My understanding is that you ship us cheap energy or cheap oil, you’re obviously a very resource abundant nation. We apply our IP and refining capability and then we sell it at three times the cost. It sounds like it’s been pretty mutually beneficial.
MARK CARNEY: Yep. That’s absolutely right.
SCOTT GALLOWAY: How do you see this playing out? If you were tempted to speculate what the relationship is around global trade and tariffs on a macro level and then specifically with Canada and the U.S. when you try to plan an economy similar to where the CEO tries to plan a business, what are you expecting? You have to do scenario planning. Nobody knows. But what do you think are the most likely scenarios for how this plays out? Because I mean this and seriously, Prime Minister, we’re all befuddled by this. The majority of people who understand economics are having a difficult time seeing how this is a big win for the U.S. We’re just having a difficult time understanding how we win here. Maybe more people come to the—they claim there’s 75 nations lining up to cut deals with them. Is that the sense you get, that nations are lining up to cut a deal with us right now?
Economic Implications of Changing US-Canada Relations
# Risk Premium and Global Economic Impact
MARK CARNEY: Well, short answer, I don’t know. The “I don’t know” is on that second question. There’s a few things that happen here. One is that there’s a risk premium in US assets that wasn’t there before. And the question is how big is that risk premium going to be and where is it going to settle? That in part is going to depend on how coherent the new system is. And does the US credibly commit to a new system or a series of deals?
Remember we have a trading deal with the US that was signed by the current President which isn’t being observed. So I think that’s one thing – there’s a risk premium on US assets, and if there’s a risk premium on US assets then the cost of all other assets around the world is greater. Since we’re still priced off of US Treasuries, for example.
Second, I do believe that there are a series of like-minded countries. We very much want the US to be part of that group. But like-minded countries will develop deeper trading and security relationships as a consequence of this. It’s the world of second best. It’s not what we would all want, but it’s the logical thing to do.
Third thing that’s going to happen is that there is going to be much greater focus – and I know this for a fact, well, this will be a fact if my party is successful in the elections – a much greater focus on domestic drivers of demand. So building at home, building big infrastructure, building millions of houses, building out our own economies, more domestic procurement.
In a world where we’ve got excess steel and aluminum capacity, which we will if the US doesn’t change on trade, guess whose steel and aluminum we’re going to buy for a variety of things? Guess what defense procurement we’re going to do? Right now we spend about 75% of our defense dollars in the United States. That doesn’t make a lot of sense if we settle out in a more arm’s length relationship with the US. And if it’s true for us, it’s true for Europe, it’s true for the UK, so we’ll all move more domestic and more with each other.
We’ve got a world where we have higher risk premia – cost of capital is more expensive – and we’ve got a world where countries are doing second best things. So it’s a world that’s more expensive and it’s not autarkic, to use a fancy word – it’s not totally in and of yourself – but you’re putting much greater emphasis on taking care of yourself. We’ll do that and we’ll do it with like-minded countries and move forward.
# The Damaged US-Canada Relationship
SCOTT GALLOWAY: The surveys I’ve read said that two-thirds of Americans still think of Canada as an ally. We’re sort of like, “Oh you know, Trump – let boys be boys. We still love Canadians.” But two-thirds plus of Canadians no longer see the US as an ally. Quite frankly it feels like Canadians are just pissed off that they feel betrayed, and even if we’re able to go back to normal, hasn’t the knife been pulled halfway out of the back? But this injury takes years or decades to heal. What is the vibe around how Canadians feel about Americans and how long do you think it takes us to repair this relationship?
MARK CARNEY: I certainly recognize those figures. There is a feeling here about the actions of the US. There are several things. One is the trade actions. Secondly was this long period of threats to our sovereignty, our very sovereignty, which is kind of unique. There’s us and Denmark who’ve suffered actual threats to sovereignty. I guess Panama, we roll ourselves in with that. And on your hierarchy of betrayals, threatening somebody else’s sovereignty is pretty much at the top. I guess the top is acting on that threat. So that’s all mixed in.
Secondly, what has been striking has been the relatively muted response in the broader U.S. to these steps. The CEO class, if I can put it that way, the other major influencers, stakeholders – that’s changing a bit. But it was pretty quiet for a long period of time. So when you look at that from this side of the border, you think, “Okay, well, this is more deeply held, or the friendship is less firmly rooted.”
It’s like any relationship – when you have a loss of trust, it can be repaired to a degree. It takes a period of time, and it takes action to repair. Right. But it’s more than five words. I think that action can start in May. The Prime Minister of Canada at that point will meet with President Trump. I want to be the Prime Minister of Canada at that point. I’m working hard to get there. And they’ll sit down and start a process of redefining that relationship and building trust out from that.
Economic Challenges and Opportunities
SCOTT GALLOWAY: So just as a means of taking advantage of the fact that we have you on this podcast – we have real problems in the US around income inequality. For the first time in our nation’s history, a 30-year-old isn’t doing as well as his or her parents was at 30. Tremendous polarization politically, people just don’t like each other.
I would argue that comparatively the nation’s actually done quite well. But what ails us, the call is coming from inside of the house – we don’t like each other within America. You’re asked to be a journeyman and come be Treasury Secretary or head of the Fed. What policy plans do you think the US should adopt? And then I want to use that as a jumping off point to what are the biggest economic challenges that Canada faces and how you plan to address them?
MARK CARNEY: Well, that’s a big question. I guess the way I look at it is as follows – I’m going to come at this from an odd angle maybe. When I look at what’s going to drive economic prosperity, productivity growth for the next 25 years, what are the big drivers of that? I put down three big drivers.
AI – no insight there, I’d put at the top of the list. Probably the life sciences revolution where I’m less expert. And I would put carbon, the drive towards lower carbon. The US has taken a step back from that for the moment, but it’s going to come back because the underlying issues are there.
So if those are some of the big things that are going to drive economies going forward, the US can have mastery in all of those. But the question is how broadly that’s going to be shared within the US across various social strata and how ready people are going to be to take advantage of it. Is AI going to be purely an elite or largely an elite operation? Or is AI going to be used to train a lot of people to do a number of things?
I know that sounds very Panglossian or techno-optimistic, but the question is whether it’s a deliberate policy that’s steered by the federal and local governments in a way that’s going to ensure that in Appalachia you’re learning skills that are consistent with that and the energy transition over time.
If I can flip it back to us, we have the same set of issues or set of drivers. Those are global drivers. On top of that, we have a series of things such as critical minerals. We have large conventional energy. So how are we balancing all that in a way that builds the jobs as we move out?
We have to sort out our housing issues in this country. We have a massive economic and absolute social need, but we have a massive economic opportunity to create a new industry, new way of building houses at scale and driving that. And we’re going to shoot on that.
The last thing I’d say, which candidly worries me a bit about the United States and gives me greater comfort or strength in Canada, is around diversity. We have a huge opportunity here because we’re one of the most diverse countries in the world. We value diversity. We have a very strong sense of equal rights in a broad sense. We can be a magnet for talent. And as the US is pushing out brains, if you will, and it’s quite a hostile environment in the academic world in the United States now, we can take advantage of that. And then that cascades down through the AI revolution, life sciences, other elements, podcasters, creative class. Scott, come up here. It’s now above zero.
# The Housing Crisis
SCOTT GALLOWAY: You have a housing crisis, we have a housing crisis. And it seems like leaders have agreed that it’s a crisis for the last 10 years. I read that housing in Vancouver as a percentage of the average salary is the third most expensive city in the world, and that so much of it is in zoning and NIMBYism. The previous prime minister wanted to address the housing crisis. What’s the friction point? Is it capital, is it labor, is it zoning? What is different about what you’re proposing that is going to register any more progress than previous administrations?
Housing Strategy
MARK CARNEY: So it’s all of the above. And so you attack it in a comprehensive way. I’m going to simplify in terms of restriction zoning, development charges, and we work at multiple levels of government as part of the reason why those costs are there, they come from the municipal side. And so in effect, we put up a bunch of money to commit to cut the development charges in half. Okay, so that. And that’s subject to a series of other restrictions being removed. But we will, we at the federal level will pay for that to be cut in half.
The second thing, I mean, we believe very strongly that productivity in the Canadian housing sector, construction sector basically is flatlined for the last 20 years. We’re still building houses like we did before. And given the scale of what we need to do, we got to move much more rapidly, particularly in urban density and other things. So, modular prefab housing, mass timber, other innovations that are there, they exist.
And so one of the things we’re going to do to kickstart that industry, and this is Canada’s, not the United States, we have a different attitude toward these things. We have a problem with deeply affordable housing. Socially certain countries, you might call social housing. We just have not built that for decades, basically, in effect. And so we need to catch up.
And so what we’re doing, part of what we’re doing is we’re going to build huge amount at that level and set the specs, if you will, for that. We’re going to build and we’re going to build on our balance sheet as a developer and we’ll set the specs for that, which drive the industry upstream in prefab mass timber, et cetera, which gets the economies to scale there. But by and large we will rely on private sector build. We’ll make a bunch of land available, we’ll make cheap capital. 25 billion for developers in this case, which is bigger money up here. Cut those development charges in half, drive that and then we will give tax breaks to people buying their first time home. So basically they’re getting 5% off their first time home, which from a down payment perspective starts to add up.
So attacking it both on the supply demand side, the way we look at it is this is generational, like the scale of the problem is generational, such that we are building out a huge pipeline of apprentices in the skilled trades. And one of the core messages I give virtually every time I speak, so I’m going to do it now is this is going to be a great time for a career in the skilled trades in Canada, because we’re going to build for the next 25, 30 years.
We are going to add, if we get this right and we intend to, 3 to 4 points of GDP of investment. That’s a huge number, right? It’s possible. We used to invest at that scale relative to GDP in the early 70s. We can do it again. We can finance it. We got all the pension funds, we’ve got lots of money to finance it, but we need to kickstart it. And of course it’s housing. We start with housing. It’s not just housing, it’s energy, it’s other elements, but that’s what we’re going to do.
So we want to get young people into the skilled trades at scale. We’re going to pay for all their apprenticeships, we’re going to work with the unions to pull them through. We’re adding a bunch of capacity at post secondary education so they can get these trades at a scale. So we’re getting the hundreds of thousands, which again in the US doesn’t seem like a lot, but in Canada these are big numbers.
Climate and Energy Policy
SCOTT GALLOWAY: Let’s talk a little bit about climate and energy. You’ve evolved from being a climate finance advocate to scrapping the consumer carbon tax and calling for Canada to be an energy superpower. How have your views changed on this?
MARK CARNEY: I wouldn’t say my views have changed, to be honest. So I mean it’s very results oriented. So the consumer carbon tax in Canada was responsible for about 6% of our emissions reduction. So 94% of the work was being done elsewhere. Now it sent a signal to households, but it just wasn’t that important. But it was quite divisive because people viewed it as a tax and they saw the tax with the tax. They didn’t all give credit to the rebates that they were getting. So politically it was unhelpful, was undercutting the overall message. So we got rid of that a few months ago. It was the first thing I did actually when I got into office.
But what we are doing is making sure that the carbon market for large emitters works well and large emitters work well. And as a consequence of that, we’re getting them in effect to pay people for this is what will happen if we’re elected to pay people for driving EVs, retrofitting their homes, the other climate smart choices. And then on top of that there is a big element, big IRA type element to our climate strategy investment tax credits and others.
So we’re looking basically and having reasonable success with this, where we’re putting out a dollar federally and we’re getting $4 to $5 of private investment on top of that. And what’s really relevant to us, aside from caring about the climate and people up here do care about the climate as a whole, is that we think that this is going to be a fundamental driver of competitiveness. And if you look at who we’re going to be trading with more over time Europeans, the Brits, others, guess what, they care about this. In fact, as you know, carbon border adjustment mechanism is coming into in Europe.
And so we take a view that, okay, we’ve got to do this medium long term for competitiveness because that’s where the world’s going. Secondly, the Europeans and others are going to want us to do this. Thirdly, actually we’ve got a lot of the technology. So part of being an energy superpower is around small modular reactors. I mean we’re big hydropower, we’re decent on hydrogen, we could get better carbon capture and storage. All these things we can do.
And I guess the last point which goes back to the US is right now, and I’m going to grossly generalize. The U.S. doesn’t care about climate. Six months ago it cared about climate. Guess what? You’re going to care about climate again down the road. And when you care about climate down the road again, we want to be in a position where we’re much more competitive and maybe have leapfrogged a number of US companies.
Lightning Round
SCOTT GALLOWAY: So I just want to do a quick lightning round advice to your 25 year old self. You got 10, 15 seconds with your 25 year old self. What would you say to yourself?
MARK CARNEY: Relax and stay focused on what you like. I mean, I’ve probably spent more time doing things I didn’t really love than I should.
SCOTT GALLOWAY: Have you got a chance to go back and meet with someone who you’ve lost or who’s no longer around? Who would that person be and what would you say to them?
MARK CARNEY: Well, I think it would be my father, I’d say I love him.
SCOTT GALLOWAY: You’re at the end of your life, not going to walk on a beach again, not going to get to hang out with your wife, your kids. What does success look like for you when you look back, what is the box you want to have checked?
MARK CARNEY: I think strongly the answer to that is that you’re proud of the values of your children and people who’ve worked with you. I mean, I think that is the only real legacy, the extent to which you have influenced how others treat others in the world and how they react in the world. I wrote a book and that was the conclusion of that.
Closing Remarks
SCOTT GALLOWAY: Mark Carney is Canada’s 24th prime minister and leader of the Liberal Party. Sworn in this March as an economist, Prime Minister Carney steered the bank of Canada through the financial crisis and later became the first non Brit to run the bank of England. Between those roles, he served as UN Special envoy to Climate Action Finance, and as vice chair of Brookfield Asset Management.
I trust a lot of Canadians are listening, and I feel comfortable speaking for a lot of people. And that is Americans understand the largest undefended border in the world is the U.S. Canadian border. That’s for a reason. I love that question that Warren Buffett’s friend, who’s a Holocaust survivor, said. The way I judge my friends is I asked one question. Who would hide me? A lot of Americans remember that Canadians hid Americans in the Iran hostage crisis.
And I hope that your listeners and your voters recognize there is a huge swath of Americans that think of you not as not even as a friend, but as siblings. And that we hope and are committed to maintaining what is arguably one of the strongest alliances in history. That I don’t want to say don’t take what’s going on seriously. You have to. But there are a lot of Americans down here who are brothers and sisters in arms in Canada. We really do think of you as a sibling.
MARK CARNEY: Thank you, Scott.
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