David Dodge, the former governor of the Bank of Canada, has shared his insights on the current state of the Canadian economy and the government's fiscal strategies. Dodge, who has a long history in public service, including roles as deputy minister of finance and health, has been a consistent voice on economic policy since he moved to Ottawa in 2003.

Dodge's perspective on economic growth has evolved over the years. In 2014, he criticized the former Conservative government for prioritizing debt reduction over public investment, which he believed was essential for economic growth. He later supported the idea of temporary deficits to fund infrastructure projects, a stance that resonated with the Liberal party during the 2015 election.

However, Dodge expressed disappointment with the 2021 budget proposed by then-finance minister Chrystia Freeland. He argued that it failed to focus on enhancing Canada’s economic capacity. "My criticism is that it does not focus on growth. To me, it would not accord with something that is a reasonably prudent fiscal plan," he stated.

This week, Dodge reflected on the first budget of the Carney government, noting that it differs from Freeland's approach. "Yes, this is different," he said. He acknowledged that while there may be aspects he would adjust, the overall direction is positive. "It is pushing in a direction towards growth, rather than distributing money that we don’t have," he added.

Dodge compared the current fiscal situation to the 1990s, when he and former finance minister Paul Martin implemented significant budget reforms. He emphasized the need for a multi-stage approach to the current budget, suggesting that it is just the beginning of a longer process. "It got a bit overhyped, but it is budget No. 1 in what is obviously a two- to three-stage process," he explained.

He also warned about the risks of high debt levels, noting that debt charges currently consume 11 cents of every dollar, projected to rise to 13 cents by 2029-30. Despite these concerns, Dodge believes that exceptional circumstances require bold measures. He stated, "This is a totally different problem. In ’95, we had an economy that was structurally in relatively good shape... You don’t have those good things this time."

Dodge concluded that borrowing could be justified if it leads to private sector investment and successful government projects. "The real question is whether those investments are going to pay off in terms of additional GDP, or whether we end up writing them down," he said. His insights reflect a cautious optimism about the government's direction, emphasizing the importance of sustainable growth strategies for the Canadian economy.