An interview with the Right Honourable Stephen J. Harper.

A major highlight of the 2024 ACE Conference and Expo in Niagara Falls (October 17-18) was an exclusive live interview in which Digital Innovator and Investor Bruce Croxon, sat down with former Canadian Prime Minister, the Right Honourable Stephen J. Harper.

The overarching topic for the discussion was Canada’s current and future state, and a packed and attentive audience watched and listened with anticipation as the conversation got underway.

The first major talking point centered around the economy. Harper recalled that during his time in office, in which Canada had to navigate through the Great Recession and Global Economic Crisis of 2008, the federal government’s deficit of $5.8 billion was needed in order to prevent economic collapse. He noted that expansionist monetary policies, such as we saw enacted during the depths of the COVID-19 pandemic, where the money supply was expanded, should only be done on a very limited basis and for short periods of time. When it happens on a continual basis, the result is higher inflation and higher interest rates, which combined with higher debt levels—results in slowing growth, where money goes to paying bond holders instead of productive investment. It was a situation we witnessed during the 1970s and that we’ve seen reoccur over the last several years.

Harper also noted that for governments, spending money and lowering taxes tend to be easy political decisions, but when things get tough and you have to cut spending and raise taxes, there is often a great deal of political resistance. He noted that during his time as Prime Minister, the Government of Canada was able to perform modest spending cuts in order to balance the federal budget. He also noted that if you take away the fiscal anchor of a balanced budget, you’re into a world where the deficits just get larger and larger, until there’s an economic crisis.

Regarding the 2025 Canadian federal election, Croxon asked how much time the next government will likely have to turn things around economically. Harper said it will be important for the next government to not only understand what’s at stake economically, but also to put together a mandate that will drive a real, serious change in direction of both the country and the economy within two years of being elected. “It means that you have to be bold, and you have to take credible steps to show how you are getting your fiscal house in order.” Harper said that, if as a government you can do that and demonstrate to business and investors that things are actually moving in a positive direction, they will respond very well. He noted, that from an economic perspective, there has virtually been no expenditure management from the Government of Canada over the last decade and for the next government, tackling this situation is going to be very challenging.

Another key topic of focus during the discussion, was Canada’s immigration system, with specific reference to the explosion of the temporary foreign worker and international student programs under the current government. Harper said it was important that when it comes to files such as immigration, the day-to-day mechanics of watching and monitoring and adjusting policy where required are essential, and, what’s happened over the last several years is that immigration policy has largely focused around bringing people in for those businesses whose profitability hinges on scale. Harper noted that often, in these kinds of situations, is that while those businesses become more profitable, the result for economy and the nation are lower living standards, since a large influx of people puts more pressure and strain on everything from housing to infrastructure, to healthcare, education and integration into the larger population. Harper said that we’ve seen these issues multiply in recent years and that it is likely that going forward, immigration levels to Canada will be scaled back significantly.  

Regarding energy—another political hot button these days—Harper noted that Canada has a huge advantage in that by having the third largest energy sector in the world, it has an enviable opportunity to not only supply North America with energy needs but also emerging economies around the world. “Emerging economies need ever growing quantities of energy and commodities, and they need them from transparent, rule of law environments that are far removed from conflict zones.” He said that if Canada can re-kick start its energy sector, it will allow the country to tackle many of the current issues it faces, including slow economic growth and higher cost of living, as well as being a hugely valuable resource centre for much of the world. The key to it, however, is cutting barriers to resource development.

Moving onto the automotive sector, specifically the mandates imposed by the current federal government on EV adoption, he noted that the whole area of climate change policy is unique in that there is no real analysis of what’s truly achievable and in most cases, governments are setting targets—including EV mandates without understanding what’s required to meet those targets. “We have no idea how what the power system will look like, how it will be fueled, what the composition will be, nor how we will get all of the materials to fund the batteries,” he said. Harper also noted that at present, there also aren’t enough resources available to make this transition to EVs and it’s an area of public policy where an entire rethink is required. He said that ultimately, the market will decide and currently, “the market is not telling us that nobody wants an internal combustion engine vehicle by 2035.”

In concluding, while Harper said that in many respects, the world is a more challenging, dangerous and unstable place today than it was during his time in office, he did say that despite the cost-of-living crisis, conflict in Ukraine and the Middle East, and political upheavals taking place across the globe, he remains optimistic about the future, for both Canada and the world. “We’ve got a high cost of living, slowing growth, declining living standards for working- and middle-class people. We’ve got deep social, political, cultural conflicts in our societies. We’ve got authoritarian leaders and dictators on the march around the world. It all sounds terrible, but what I just said also describes 1979, a time when I was a young guy.” He noted that what was remarkable about this, is that democratic, market-oriented societies are extremely resilient and adaptable. “When problems get to a certain point, in my view, they inevitably create a new generation of leaders that put us on another direction. And while 1979 might have been horrible,” he said, “10 years later, our economies were booming, the Soviet system was collapsing, and freedom and democracy were spreading around the world as never before.”