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By Kevin Lynch and Jim Mitchell 

January 24, 2026

The federal government is a complex beast to manage well, and Canada is a complicated nation to govern effectively, even at the best of times. And these are certainly not the best of times, as Prime Minister Carney set out so eloquently in his speech at Davos.

The postwar world order has been ruptured, and middle powers like Canada must chart and execute a new path. Governments operating at their best are what these perilous times demand and Canadians deserve.

In this context, our book, A New Blueprint for Government: Reshaping Power, the PMO and the Public Service argues that “balance” in how government operates has long been the key to successful governance in Canada’s Westminster system. And yet, pervasive governing imbalances have characterized the federal government for more than a decade, contributing to Canada’s underperformance.

In this neo-imperialist age of great power hegemons, Canadians need governments to bring their A-game to protecting the economy and safeguarding our sovereignty. Drawing from our book, here are several substantial ways in which governments can operate more effectively – something that is in everyone’s best interests.

Governing is a team sport

The federal government is the largest and most complex institution in the country. Running it effectively at any time, and particularly in these times of global disruption, is not possible from a single perch – the PMO.

Rather, it takes a team: a Prime Minister setting clear priorities and accountabilities, an empowered Cabinet, an empowered and purpose-driven nonpartisan public service, experienced political staff, engaged parliamentary committees and ongoing federal-provincial engagement.

Strengthening state capacity

The world has changed dramatically in recent years — technological revolutions, demographic shifts, rising populism and declining trust, pandemics, foreign interference at scale — and all that was before Trump 2.0. Yet, despite this scale of disruption, public institutions and government capabilities have changed very little.

It is hard to make a credible case that our federal institutions are just fine – no need to modernize, nor adapt and adjust to the new global reality. These core institutions have to retool for this changed world if we are to have the high-performing federal institutions that Canadians need now more than ever.

Fiscal policy becomes unbalanced when governments act as if there are no fiscal constraints. But fiscal balance is an essential element of successful governing. It requires constraints on fiscal choice in the form of credible fiscal anchors, credible fiscal forecasts, credible budgetary accounting and credibly ensuring that fiscal trends produce stability, not problems.

What about productivity in the government sector? The answer is: we simply don’t know because we assume it is more or less constant. Why does this matter? Because government accounts for over a fifth of total employment, taxes are about 35% of GDP and government spending is over 40% of GDP and yet, we have no direct line of sight on how productively we are utilizing the massive resources of governments. Per the aphorism variously attributed to the British mathematician Lord Kelvin and management guru Peter Drucker, you can’t manage what you don’t measure.

Policy vs. posing

Many political strategists appear to believe that ‘comms trumps policy’, especially in today’s social media-intensive world. The consequences of this view are many: the press release, not the actual policy, becomes the deliverable; flooding the communications zone dictates a proliferation of initiatives to feed announcements; and policy analysis takes a backseat to comms tactics.

One consequence — almost inevitable — of an excessive focus on communications rather than on outcomes is poor service delivery. Yet, service delivery is what matters most to Canadians — get that right and the public will notice.

The scourge of short-termism

In recent years, government policy has been geared excessively toward short termism — consumption spending and redistribution at the expense of longer-term investments in productivity, growth and defence. Balance is needed: it is not an ‘either-or’ world.

Similarly, Canadian business has been under-investing in capital and innovation for many years, contributing to our weaker growth and productivity. It is time both government and business rowed in the same direction. Short-termism undermines future living standards and our ability to compete in this Darwinian world.

While much of Canada’s wealth has been built on natural resources, the federal government has seemingly forgotten this in recent years. The times demand that we double down on our great national advantage — our natural resources — if we are to guard our economic independence in this era of Trumpian imperialism. Carney’s MOU with Alberta and his limited sectoral trade deal with China signal the beginnings of such a change, but it is only a start.

Besides securing new export markets, we must modernize our approach to how we harvest our natural resources. It’s all about combining leading-edge technology, innovation, new export infrastructure, and risk capital with our energy, mineral and agriculture assets.

Poor productivity is an existential threat

To paraphrase the well-known former European central banker Mario Draghi: unless our woeful productivity is tackled resolutely, it will make us less prosperous, less equal, less secure and less free to choose our future. Both our economic and political sovereignty is at grave risk if we do not tackle our anemic productivity with urgency and boldness.

The Carney government has been clear about its intention to pivot policy toward improving productivity and diversifying trade. But what are the concrete next steps? There are still too many provincial Internal trade barriers; too much regulation and red tape; too little focus on scale and growth in the tax system; and too much unpredictability in the immigration system. To tackle productivity, governments must be focussed, bold, and fast — Canada needs results in real time.

One pertinent example is the affordability crisis. The focus has largely been on high prices with too little attention paid to the near-flatlining of real incomes per capita over the last decade. This weakness in incomes has greatly exacerbated the price level effect on affordability. The best way to get housing prices down is to increase supply. And the best way to get real per capita incomes up is by increasing productivity.

Business-as-usual, RIP

These are not normal times: we are in an era of radical uncertainty. Complacency and business-as-usual stratagems are prescriptions for failure, not success. As Mark Carney said at Davos, we have to deal with the world as it is, not as we might wish it to be. That requires thinking and behaving differently, being proactive with a purpose and a plan, not waiting to react to the latest Trump policy assault.

By necessity, realpolitik is back in vogue, and Canada is setting out on a new path for middle powers.

What this suggests is an approach of ‘strategic diversification’ in who we trade with, who we invest with, how we rebuild our growth capacity, how we create national advantage and leverage, where we seek security partners and whom we call like-minded friends. Importantly, restoring balance in how government operates will make the planning and execution of this pivot that much more effective.

All roads no longer lead to Washington. Going forward, it’s all about building Canadian autonomy and resiliency in a fractured and dangerous world.

Kevin Lynch is a former Clerk of the Privy Council and Vice Chair of BMO

Jim Mitchell is a former senior official in the Privy Council Office.