Opening the Dialogue: A Look at Defense First, Additional Tax Reform Deferred

Let’s open dialogue in The League about other nations’ governments — and tie it back to Canada’s defense sector. It’s worth being curious about where Carney is taking defense spending before considering additional tax reform.

The policy mechanics around defense feel almost Conservative. It’s striking for a Liberal government, traditionally grounded in diplomacy, to plan so decisively around supply chain development and at such magnitude. Perhaps defense gives him a new line item — flexible enough to balance economic pragmatism with voter sentiment across the political spectrum.

Or… it could be a total scam. Definitely something to watch closely.

Tax Reform on Hold

Extensive tax reform would be premature now, given the scale of capital spending already underway. The PM doesn’t need to move on it yet — and trade volatility warrants patience. For now, we wait. Watch how things develop.

But we do have M. Milet to provide insight on how the Carney government has responded to Osler’s May letter to the Department of Finance regarding tax reform. Many recommendations have been initiated — but is it enough given where we are on the timeline?

Matias might know.

If you recall, The League asked M. Milet tough questions — and he didn’t shy away when put on the spot. A man not afraid of the tee box. He accepted The League’s invitation and was genuinely curious about what’s coming next.

He’d be worth listening to on the effectiveness of the current economic levers emphasized in the budget. Conventional wisdom says the productivity super-deduction will take time to take effect, as CCA works best when taxable income is sufficient — less effective for emerging sectors, but useful for those quick to revenue: the second movers benefiting from defense-pioneering innovation. Before that, there’s the increased SR&ED.

Yes — I said defense as pioneering innovation. I snuck it in there.

Is that what Carney is initiating? To mimic, at a smaller scale, how the U.S. channels defense spending into private-sector innovation — the best in the world at it. Without adopting aspects of that model, do we risk perpetual stagnation?

An integrated question — one for H. Chana. He might have the global sense of timing: when additional tax reform could be most effective, and when Canada could best respond to U.S. conditions. We’re not just lowering the burden on citizens; we’re also shaping a tax system that attracts foreign investment and builds emerging industries — including defense.

We are competing with the U.S. head-on when we consider further tax reform.

Which specific industries is Carney looking to bias? All indications point to exports — particularly to non-U.S. trading partners. Harry would be the one to ask for insight on potential effectiveness.

The Conservative Contrast

Let’s switch the conversation to the Conservatives. If they were in power today — what would they do? If they cut personal taxes first and delivered a smaller budgeted deficit, we’d still need to know: beyond resources and a repealed carbon tax, how would the rest of the economy be developed? Have they made that clear?

K. Hendrickson, well-informed on the party, might have thoughts to contribute.

I’d ask Karl: given the spending decisions already cemented into the Liberal strategy, do Conservatives need to build new talking points around economic development? That pressure keeps the system adaptive. Fresh ideas must be injected — but when?

How do Conservatives view the balance between income and consumption tax? Can they apply pressure for reform that nudges Liberals toward better outcomes — to benefit everyone now?

China doesn’t have to play that game. Centrally planned, able to model outcomes and react to global shifts without disruption — no win-and-repeal cycles. In this AI- and data-driven revolution, perhaps they hold the greatest advantage of all.

Is our democratic system — with its cycles of win and repeal — a true disadvantage in comparison? That’s a B. Szabo question.

Brian might have the insight.

The Conservative response matters. To turn a Liberal into a Conservative on policy, there must be new narratives. Are the right talking points being presented, in the right way?

We need that pressure in the system — not just partisanship, but economic merit — to compete with China. If we lose that balance, our internal debates become less adaptive.

Back to Defense

Will Carney actually expand it? We don’t know the man yet. But linking defense to domestic supply chains, mining, and critical technologies — metals for electrification and emerging tech — would be a bold move. Can he execute? Will it generate intellectual property that spills into other sectors? Could tech, manufacturing, and aerospace emerge from this?

It could be exciting — especially if it provides a new justification for high carbon. He doesn’t yet have that avenue. And even if he did, would the technocrat use it? In The League, we are watching closely and shaping our talking points.