Peter MacKay WARNS against Carney's massive defence spending

Our guest today is Peter McKay, former defense minister in the Harper government.Welcome, Peter.Hey, Mark.It's great to be with you.Good to see you, my friend.Great to see you as well.

I want to start with this clip of the current defense minister, David McGinty, when he was asked about the sacrifices Canadians are going to have to make in order to pay for the huge military commitment that we've made to NATO.Let's listen to that clip.

1 .2 % to 2 % and Canada aims to get to 5%.Yes.Can you just say, do you think that the Canadian public is aware of the degree of sacrifice that it's going to have to make to achieve that kind of expenditure on defence?And where is that money going to come from?What has to be given up to get defence?

I think the Canadian people realize that there's been a lot of change.I think they realize that our geography no longer protects us as a matter of course.I think they saw through the Iranian, this recent war in Iran, that Iran, for example, deployed a missile which traveled over 5 ,000 kilometers, having announced to the world for two and a half decades that they had no such capacity, that they only had a missile that could travel 2 ,000, maybe 2 ,500 kilometers.The Canadian people know that the threat landscape has changed.The Canadian people understand that there are foreign interference activities going on.They understand that we need to make these investments.

Do they understand where the money is going to come from?Do you yourselves understand?

Yes, we do.We're growing our economy.We're making major investments in the defense sector to generate more wealth, create more jobs, and provide the resources we need to accomplish this goal.And we're well on our way.I mean, we have done things in the last 12 months which I think the Canadian people are very supportive of.I think they saw the announcement yesterday for the submarine choice and I think they said that's a very positive thing for Canada's security and sovereignty.

Our economy is not growing.We're actually in a recession.right now.But what I think I heard there, Peter, is that Canadians will make the sacrifices because we're all living in fear of Iran and Russia, not China, apparently, which has repeatedly interfered in our elections to help the Liberals.What do you make of what the minister just said?

Well, there's a lot of things to unpack there, Mark, to be honest with you.In terms of the threat assessment, sure, Canadians are watching with no small amount of horror, what's unfolding in Ukraine with that illegal invasion and the cost and casualties there.Yes, the closure of the Straits of Hormuz and the conflict with Iran.And of course, the ongoing concerns around what, if anything, China will do to Taiwan or their neighbors or us for that matter.So there is very much an increased awareness.How we pay for the type of investments that this government has announced or is talking about is indeed a fair and problematic challenge for our country.

Because I agree with you, we are not in a good place economically.The recession, the fact that 4 in 10 Canadian businesses are looking at relocating, where?To the United States of America.And this is before Donald Trump, amongst the many things on his plate, lowers taxes, personal and company taxes in the United States, creating even more of a vortex to pull Canadian companies south of the border.And the reality is that the announcements that have been made, like the submarine announcement that the minister alluded to, we, Canada, are not going to see many of those benefits for 10 years.And let's not forget that the submarine, the Tyssenkrupp Marine Service, is going to build it in Germany and in Norway.

So the talk of jobs and expertisebenefits are well down the road.And they're questionable.The numbers are speculative, a bit like, you know, Griffin's saying they're going to create thousands of jobs in Canada.If you track some of the reality of where they've created jobs in other countries, the numbers are minuscule.So a lot of it is spin.

A lot of it is more than aspirational.And I do believe that Canadians want to see our National Defense Department support it.I certainly do.I agree with it.But I also agree that it has to be done in a prudent fashion that isn't going to push our country even further into debt and deficit, which is where this is headed.

Yeah.I mean, when Harper, when your government ended, stopped, moved on, as it were, lost.Balanced budget, though.Well, you were out of balanced budget.I believe the last budget that your government tabled was balanced, from what I recall.

Balanced budget, after having been through a recession, I say humbly, and after having prosecuted a war in Afghanistan, where we were able to procure heavy -lift helicopters, Globemasters, long -range guns, armored cars, General Dynamics, we made major investments at the time.But we also were focused on growing the economy in the short term so that we wouldn't be passing this on to our children and grandchildren.It seems almost inconceivable to think that we had a balanced budget a little over 10 years ago compared to where we are today.

Yeah, the debt has doubled since then.We haven't had a sniff of a balanced budget ever since.Apparently, the budgets have not balanced themselves after all.And now we have a former banker, a federal banker,governor of the Bank of Canada, while you were there, as a matter of fact, at the helm and people had high expectations of how he would manage the economy of the country, given his credentials.And in fact, we've seen kind of a reckless approach to spending.

I mean, and then if you think the best way really to pay the cost of all this stuff, including the social program, is by ramping up our resource sector.What have we done with that?We've made a lot of promises.We've made a lot of commitments.There's been some photo ops.But in actual fact, very little is done to increase sales of oil to Asia and Europe.

I mean, when you guys left, the Northern Gateway had been greenlit, as was Energy East, which would have brought energy to your neck of the woods.And all of that fell by the wayside.And now we're at a point now where Canada's fiscal position is pretty tenuous when you look at it.Our dollar has continued to fall.We're not in good shape right now.So for us to make the kind of commitments that we are on the military front, you have to wonder how we're going to pay for this.

And all I can think of is increased taxes.I mean, is that what they're going to do?

I mean, I sure hope not, Mark.There's no capacity to increase taxes.We are already amongst one of the highest taxed countries in the world, and they're punitive and they're causing people to make really difficult decisions like go elsewhere, you know, not take promotions because it'll put them in a higher tax bracket.I mean, that does nothing for the productivity of the country.I mean, I agree with so much of what you've said, and the old adage, you know, when all is said and done, much more is said than done.That's what it feels like right now.

And I don't, I want to give the Prime Minister the benefit of the doubt.I know him, we worked with him, as you mentioned, in the Harper years.But one thing I do know about bankers, they're a bit like card dealers, the house never loses, you know, they're playing with somebody else's money.And printing money at a time like this, to me, doesn't feel right.Stacking more debt feels, as you pointed out, reckless at a time when we are in a precarious situation until such time as we're able to get our resources to Tidewater into the global market.I can't tell you how many times I've lamented the fact that we were not able to commit a pipeline.

It wasn't for lack of trying, I can assure you.We were running up against fierce opposition.We were running up against court challenges, all of it.Not to say that today is any different, but I don't know that the true commitment is there.Announcements are a far cry from completion of pipelines.We still don't have, of course, the investors, the private sector investments that will be required.

And, you know, even though British Columbia has nominally agreed to a southern route, That is still anything but certain.The past is the past, it's prose as the saying goes, but had we been able to get liquefied natural gas to the world market for the last 10 years, Canada's economy would be rolling in money, the jobs, the prosperity associated with that, and the geopolitics.If we'd been a steady and reliable supplier with liquefied gas produced ethically and priced fairly, I dare say we could have really collapsed the Russian economy and perhaps prevented some of the harm that they're currently doing inside Ukraine.But that's all behind us.Hope is not a plan, but there's still a lot of hope that we're going to be able to get these pipelines completed because we're missing out on a generational opportunity.And, you know, I would say the same of some of the other exercising of trade deals that we really have been complacent about.

Our government signed 51 trade agreements, including with the European Union.And we as a country have not really taken full advantage.The Americans don't have those agreements.Trans -Pacific partnerships, same.We've missed out on all of these opportunities and told the world for over a decade, there's no business case.That's right up there with balancing the budgetal balance itself in terms of ludicrous public statements.

Chinese vehicles are here.I can't imagine that's going to help our case with the Americans.The deadline has come and gone.the future of Kuzma very much in doubt.How do you see our relations with the Americans right now?

Well, certainly administration to administration, they're very strained.The institutional cooperation and relationships remain intact for the most part.Security of state to province, you know, the type of of chambers of commerce, all of that interconnected tissue is still very, very strong.But, you know, the Trump administration is not wrong about everything.And much of what they've done have caused us to recalibrate, particularly around things like security at our border and investment in defense.But I don't know the strategy, Mark, to be very frank with you.

And again, I'm not privy to the inside discussions that are happening, but the speech at Davos and Middle Powers Unite, he referenced China.China is our new strategic partner.That's nonsense.We know that they are the number one cyber attacker.They're constantly trying to steal intellectual property.property, signing on for 50 ,000 or close to 50 ,000 AVs coming into our country that are not the affordable brand that was talked about.

all of this, retaliatory tariffs that went sideways quickly, saying things publicly and something else privately.None of this bodes well for the current talks.And you only have to compare where Mexico is in this process.They've had one very serious substantive discussion already and another one planned.We're nowhere to be seen.So I don't know that the management of the relationship at the highest level was what was promised, certainly.

And I remember Brian Mulroney used to speak of the number one job of the Prime Minister of Canada, after the health and well -being of Canadian citizens, is the management of the relationship with the United States of America.And we've, you know, we have examples of that.I mean, Mulroney, Reagan and Bush was one thing, but Gretchen and Clinton also got along very well.You have to invest the time and effort.And it's hard.It is hard.

And it doesn't mean capitulation.It doesn't mean, you know, having anybody run roughshod over you.But I don't know.I'm very, very vexed by where we find ourselves today.And all of this to me is in the backdrop of the promise that we were going to have a deal, not this past July, but the one before.

Let's talk a little bit about the war in Iran.Your wife, of course, is from Iran.And so I know you're watching with close interest to what's going on there and wondering about what Canada's role should be, NATO's role, for instance.I mean, we've heard President Trump talk about the fact that NATO isnot come through with a little that they've asked the alliance to do in terms of playing some kind of role in keeping the Strait of Hormuz open.What do you think of that?

Mark, I think those are reasonable requests, quite frankly, and that may be a position that Canada could take in concert with others, but not while it's a hot war, not while there's missiles flying.And frankly, that it is more than disappointing to see where we find ourselves today.I think there was tremendous optimism in the early stages of this war that it would result in this theocratic, maniacal regime actually losing power and the people of Iran having the opportunity to rise up as they've attempted to do in the past and transition towards a democratic system.how and who and when still seems a distant dream for people like my wife and the diaspora outside Iran.And yet there's been a lot of effort, quiet effort behind the scenes to talk about a transitional government and to put forward thoughtful solutions, none of which has made its way into this calculus so far.And you know, replacing Ayatollah Khomeini with his son and other IRGC leaders will only exacerbate the situation, in my opinion, because they come back with vengeance.

They come back with the intention of causing more harm to their neighbors, to the West, and frankly, to their own people.You'll recall that there was a period of 48 hours where this unbelievable vicious regime killed 40 ,000 of its citizens.citizens.And over the course of the regime itself, 47 years, hundreds of thousands, untold numbers of innocent Iranian citizens being tortured, being killed, many left the country.And just, you know, think for a moment what it would do for global peace if you're able to remove that source of proxy warfare happening around the world.They support both financially and with weapons, Hamas, Hezbollah, the Houthis, other disruptive forces throughout the world.

And so that in and of itself and the efforts, of course, to deny them achieving an enriched uranium bomb were very much the goal.And they've always been the goal.And yet we don't seem any closer to that panacea of stability inside Iran.We've kicked over the anthill.We're now seeing, of course, some would suggest a war without exit.We've seen the impact on fuel prices, of course, because of the Strait of Hormuz.

It is going to require, I think, a more collaborative effort either from NATO, as you referenced, or through other coalitions of the willing, because the United States and Israel, some would argue, are too tainted and vested in this.I think, you know, some more thoughtful approach as to how this war is prosecuted may be required.But I understand countries like Canada are loathe to get involved at this stage.Consultation at the front end.And it's, of course, always easy after the fact.But if there was an effort to actually involve others, things might have gone differently.

As we wrap it up, Peter, because I know you're a busy man.those who miss having you around in politics will want me to ask whether there's any hope one day of having you return.Obviously, you still have a young family and things you want to do, but I have to ask, is there any chance you'll return to politics?

Well, Mark, I love this country.I've dedicated a good part of my life, not only through politics, but through public service.As a Crown prosecutor, public defender, I still engage in a lot of volunteer charity work.I'm always going to be interested and active in ways that I hope will improve my community, my province, my country.And I won't ever say never, but it's timing.It's timing within my own party and the process that is always involved.

And it's, of course, timing, as you pointed out, with my own family.It's something that I'm not spending a lot of time thinking about, to be quite frank with you.I support Pyotr Polyaev, I support our current leader, and I think he has a very good shot if things break his way instead of against him, as we saw in the last election.

Thank you so much for coming on the show.We appreciate it, Peter.

Great to see you again.Cheers.

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