At this time of global disruption, the implications for Canada cannot be overstated.

The Global Risks Report 2026, published by the World Economic Forum, identified the top five threats facing the world in the year ahead: geoeconomic confrontations, disinformation, societal polarization, extreme weather events and state-based armed conflict. Shockingly, only four months into the year, the world has experienced all of them.

The question is how to best protect our economy and sovereignty in an era of radical uncertainty and polycrises often fomented by U.S. President Donald Trump. These attacks, coupled with a decade or more of underachieving our potential and diminishing our resiliency, amplify the need to change our policy trajectory in a fractured world.

In our new book, A New Blueprint for Government: Reshaping Power, the PMO, and the Public Service, we argue that part of Canada’s sustained underperformance – anemic productivity, weak growth, stagnant per-capita incomes, the immigration mess, widespread affordability pressures, an underfunded military and the doubling of the national debt – has its roots partly in the way our governments are governing today.

We examine in depth how the largest and most complex institution in the country – the federal government – actually works and we contrast this with how our Westminster system of governance was designed to operate.

The gap is now a chasm, caused by a series of corrosive governing imbalances that affect everything that Ottawa does.

Centralization in the PMO is weakening execution

The most impactful is the extreme centralization of power in the Prime Minister’s Office (PMO) and with the prime minister personally. A parallel factor is the marginalization of ministers; dominance by political staff of the nonpartisan public service; prioritization of communications over policy and service delivery; and a declining role for Parliament in holding government to account. That must change.

The fundamental duty of the federal government is to protect the economic, political and territorial sovereignty of the country.

To do so today demands broad policy change, very much along the lines Prime Minister Mark Carney has set out: revitalizing energy and natural resource development; improving productivity; eliminating internal trade barriers; diversifying our trade; funding a major expansion of our military capacity; and building new alliances with like-minded middle powers in a world dominated by hegemons.

To achieve this bold new policy trajectory quickly and effectively will require a major overhaul in how the federal government operates. This must start with reducing the excessive centralization of power in the PMO, which smothers both initiative and execution capacity by cabinet ministers and their departments.

It also requires the federal government to stop jurisdictional ‘lane-switching’ and concentrate instead on priority issues in federal jurisdiction, letting the provinces and municipalities deal with the areas for which they are constitutionally responsible.

Because the risks from Trump are greatly amplified by our accumulated economic and defence weaknesses, we do not have the luxury of time or timidity in dealing with these issues. In our book, we examine the intersection between how the government operates and the progress made on major policy pivots with respect to productivity, trade diversification, resource expansion, military modernization and fiscal credibility.

Productivity, trade and defence require structural reform

We have an existential productivity crisis in Canada, according to the Bank of Canada and other experts, which is placing at risk our competitiveness, our living standards and our sovereignty.

Michael Ignatieff, writing in The Economist in April 2025, was blunt: “The incoming prime minister will face a long-gathering productivity crisis that makes the country especially vulnerable to American economic pressure.”

Carney has indeed made boosting productivity and growth a government priority. So, what is to be done? There is no single villain. Culprits include an excessively burdensome, complex and unpredictable regulatory system, a business sector that dramatically underinvests in capital and innovation relative to global peers and a tax system that needs to be more geared to growth.

In our book, we advocate the power of benchmarking to drive change, arguing for an independent National Commission on Productivity which would regularly provide the public, markets, investors and policymakers with productivity comparisons relative to our main competitors. Australia has had such a commission since 1998 and its productivity performance has gone from seriously lagging Canada’s to significantly exceeding it. We can learn from that experience.

All-powerful PMO, mistrust “destroying” the public service: Paul Tellier

Chrystia Freeland’s resignation points to final breakdown of cabinet government

Could ‘mission government’ solve Ottawa’s delivery problems?

Much has been written about the urgent need for trade diversification where a main focus of the Carney government has been on new international trade agreements.

However, eliminating internal trade barriers would be a massive diversification boost, stimulating more trade across the Canadian economy. The International Monetary Fund (IMF) estimates this would increase Canadian gross domestic product (GDP) by seven per cent. That is entirely in our hands to achieve.

The Carney government has removed the relatively small federal barriers, but the provinces – where the main impediments lie – have placed more emphasis on rhetoric than on action. This is a clear “public good” on which the Carney government should expend more political capital to target full elimination of internal trade barriers by a certain date, say Canada Day, 2028.

Natural resources are more than a key export and a significant source of national income. They create global leverage for Canada in a fracturing world.

So too does a capable military, given global tensions and threats, including to our Arctic. The planned increase in defence spending announced by Carney – a quadrupling within 10 years – is necessary to meet our NATO commitments. However, to maintain fiscal sustainability, this sort of massive spending will require difficult tax increases and painful program cuts elsewhere.

Fiscal credibility and focus will determine success

To spend this large sum wisely, the government urgently needs a new defence policy to guide where we spend, a revamped procurement system to spend efficiently and a nimble defence industrial strategy that leverages this spending into sustainable economic growth.

Canada’s fiscal credibility was crucial in helping to shield our economy during the global financial crisis of 2008-09. In a world of radical uncertainty and polycrises, countries want to have the best balance sheet in the neighbourhood, not attracting global bond vigilantes to test their resiliency. But as we set out in our book, fiscal credibility is hard-earned and too easily lost. The absence today of credible fiscal anchors and reliable deficit forecasts is a risk not worth taking.

Government operating at its best is what the times demand and what Canadians deserve. Business as usual is not a recipe for success for either business or government. It is a time for change: acting boldly, delivering quickly, believing in Canada and its incredible potential.