By Daniel Béland

September 10, 2025

Last week, speaking to reporters, Prime Minister Mark Carney said in French that his government’s first budget, which is due sometime in October (tabling date TBD) would be “an austerity and investment budget at the same time, and that’s possible if we are disciplined.”

“We need discipline for our spending, it’s necessary,” Carney added. For example, the rate of increase of federal government spending in the last decade was over seven per cent, year-over-year. That’s faster than the rate of growth of our economy.”

These comments by the Prime Minister, including and especially his use of the term “austerity,” have been widely discussed in both the Canadian and the international media.

As management consultant and economic advisor Tyler Meredith hypothesized on social media, perhaps Carney’s mention of austerity in French “was a slip of the tongue in the absence of having a better descriptor at hand (and a lack of awareness of how that plays)”.

The other possibility is that the former Canadian and UK central banker — whose role in the global response to the 2008 financial crisis and presumed awareness of the subsequent connotative evolution of the word “austerity” from fiscal prudence to political third rail — knows very well what austerity means and wanted to send a not-so-subtle signal about “tough times ahead” to Canadians.

Certainly, austerity is a controversial term, especially in Quebec where, according to pollster David Coletto from Abacus, only 23 percent of people surveyed have a positive reactive to the term “austerity budget,” compared to 39% who have a negative reaction to it. Interestingly, outside of Quebec, that term only elicits a negative reaction from 17% of respondents. Paradoxically, last week Prime Minister Carney mentioned austerity in French, the language spoken by most Quebeckers, who on average are particularly worried about this very idea.

Austerity is particularly unpopular in Quebec for historical and political reasons. Since the Quiet Revolution, nationalism has fueled the expansion of the province’s welfare state and public sector. This has fostered strong mobilization on the part of the labour movement and community organizations to defend existing social programs and, more generally, the integrity of the public sector. Even the current right-of-centre Coalition Avenir Québec (CAQ) government, in power since 2018, decided early on to shy away from actions reminiscent of budgetary austerity.

Ironically, this approach stood in explicit contrast with the fiscal approach of the Liberal government of Philippe Couillard (2014-2018), which was strongly criticized for its apparent austerity turn and its negative impact on public services.

Austerity has been criticized for years in the aftermath of the Eurozone crisis of 2009 and the failure of UK Chancellor George Osborne to win the hearts and minds of citizens made to pay for mortgage market malpractice, if not malfeasance.

If the CAQ explicitly rejected austerity because it was unpalatable to so many Quebec voters, why would Carney, a Liberal Prime Minister whose party won 44 seats out of 78 in Quebec in April’s election, open this political Pandora’s Box by uttering the “A-word” in the language of Legault? More substantially, within the policy world, austerity has been criticized for years in the aftermath of the Eurozone crisis of 2009 and the failure of UK Chancellor George Osborne to win the hearts and minds of citizens made to pay for mortgage market malpractice if not malfeasance.

As political scientist Mark Blyth argues in his book, Austerity: The History of a Dangerous Idea, austerity, which he defines as “cutting the state’s budget to promote growth” is both economically and socially perilous. In fact, European countries that embraced austerity after 2008 have moved beyond this approach and recognized the need for a more balanced one that stresses the importance of state “social investment.” This shift is also reflects the recognition by economists such as Paul Krugman that austerity can actually hurt the economy, especially in tough times.

The loaded quality of the word — a term associated with a “tough” fiscal approach that cannot hide the social suffering among vulnerable constituencies created by large budget cutbacks — shouldn’t deter the Carney government from controlling spending and making the federal government more efficient. It is possible to do this without embracing austerity and scaring voters, especially those in Quebec who, earlier this year, helped the Liberals stay in power.

As I’ve written before in Policy, in preparing its first budget, the Carney government faces major trade-offs related to the trade war with the United States and the forthcoming increases in military spending.

Per Carney’s telegraphing of an austerity and investment budget, savings will have to be made in some areas to create room for new spending elsewhere. At the same time, new investments in the economy are necessary in times of acute uncertainty such as ours, especially in the context of a trade war seemingly designed to fuel such uncertainty.

Yet, as Blyth wrote in another of his books, Great Transformations, uncertainty can force policymakers to think outside the box and welcome new policy ideas instead of relying on old common wisdoms such as austerity, an idea stained by the economic and social pain it has created.

Indeed, the Prime Minister should ditch the word austerity altogether, not only because it is unpopular with some voters but because in the long run, it is bad public policy.

Daniel Béland is professor of political science and director of the McGill Institute for the Study of Canada at McGill University.