People Mentioned
Special Advisor, Ottawa
Paying more for gas and oil will be the new normal following the aftermath of the war in Iran. At the same time, Canada’s energy sector will benefit from significantly higher revenues, says Osler Special Advisor Stephen Poloz, in an interview with Amanda Lang on the WONK podcast, part of the Public Policy Forum.
This contrasts with 2015 when the energy shock that year caused the sector to retreat. “At that time employment in the energy sector fell and was flat in the manufacturing sector even though the economy was growing,” says Stephen. “Jobs in the most productive sectors of the economy were replaced by public sector jobs roughly equivalent to 3% of Canada’s GDP. That’s a major piece of crowding out.”
Stephen sees the new federal government approach as leading to budget deficit reductions. “Now the government is reducing the number of public service positions and the budget is dominated by catalytic spending or investment,” he says. “The money only goes out the door if the private sector money is there with a proponent and the project occurs. That means government money goes out only in the context of GDP that expands by more than the dollar the government puts in, and therefore so will tax revenues grow.”
“All the deficits in the federal budgets will be smaller either because the money won’t get out if a private sector participant isn’t found, or it does, and this will create more tax revenues than planned in the budget. This approach will improve our productivity data points.”
Complex volatility
Stephen says economic volatility today is becoming more complex. “The shocks are coming in multiple forms all at the same time,” he says. “The biggest risk is geopolitics and the uncertainty this creates around the future of trade and the future of CUSMA. If your company depends on CUSMA to operate, you’re not investing in anything right now. A policymaker’s number one job right now is to clear up this uncertainty to the extent this is possible.”
To replace the approximate 2% damage to our economy caused by U.S. trade policies, Stephen says Canada will have to create new opportunities. “It’s obvious that we’re going to grow our defence spending, so we may as well expand our defence capabilities at the same time to keep more of the money here and to create more jobs here,” he says. Critical minerals is another area to develop further.
In terms of the fourth industrial revolution with digitization and AI, Stephen says Canada should embrace this at high speed, offering super incentives for companies to invest in this new technology.
“We were laggards in the third industrial revolution,” he says. “This time we should promote it so it happens really fast while, at the same time, providing assurances to those who are going to be affected by these changes. We can cure a lot of ills by promoting an increase of 10% to 15% of GDP per person by embracing this revolution right away rather than waiting 10 years to get going.”
Watch the full interview with host Amanda Lang posted on April 8, 2026.
People Mentioned
Special Advisor, Ottawa
