Our Most Important Economic Asset is Governability 

From: Michael Wernick 
To: Governance observers  
Date: June 26, 2026 
Re: Our Most Important Economic Asset is Governability 

News from London and images from the G7 summit have served to highlight that some of the largest economies are presided over by governments that seem unable to provide traction and leadership.  

Current leaders in the United Kingdom, France and Germany have quickly become deeply unpopular, as are the grand old centre-right and centre-left parties that dominated the last half of the 20th century. The leaders in the polls in all three nations (Farage, Bardella and Weidel) promote a nationalism that comes with heavy doses of economic protectionism and dismantling of Europe’s postwar economic architecture. In all three countries there is a gloomy questioning of basic governability. 

Most OECD countries are wrestling with common economic challenges and the fiscal dilemmas that flow from them. Plus, NATO countries are struggling to finance defence buildups while retaining their social policies.  

Our peers’ challenges do not stem from a dearth of policy ideas and prescriptions – there is a steady flow of them from academics, think tanks, advocacy groups and bespoke commissions and task forces. The deeper problem is the inability of political institutions and leadership to come to decisions and then to make them stick when inevitable resistance and pushback kicks in. 

This erosion of governability has led to the fracturing of political parties and the polarization of electorates, which enhances the power of small blocs who impede into order to gain leverage.  

Stakeholders and lobbyists have always been able to mobilize resistance and blocking coalitions. Opponents of those governments who do want to do big things are increasingly inclined to use misinformation or argue that if they don’t get their way the system is broken.  

Hindsight tells us countries can go through intense periods of reform. Whatever one may now think about the results, there is no denying the transformations in Thatcher’s Britain, not to mention Australia and New Zealand in the 1980s, as well as India and Ireland in the 1990s.   

The picture today is less rosy. In France, attempts at deep reform by Sarkozy, Hollande and Macron were all blocked. An attempt to increase the retirement age from 62 resulted in a dysfunctional fragmentation of French politics into left, centre and right. This led to the prolonged inability to pass a budget and a revolving door of prime ministers and finance ministers. 

In Germany, whose last major reforms to the labour market came 20 years ago, successive governments have been unable to come to grips with badly needed reforms to enhance competitiveness or restructure healthcare and the social safety net. Chancellor Friedrich Merz is about to attempt a high risk pension reform. Check against delivery. 

Canada has had a better track record than most. Brian Mulroney is rightly remembered for the first generation free trade agreement and for sales tax reform. Jean Chretien pulled off successful fiscal correction. Governments working together were able to refinance the Canada/Quebec Pension Plan, twice.   

Canadian governments, however, currently face a long list of policy challenges. Some are declared priorities of the Carney government or the premiers. Others are lurking and will return, such as healthcare or employment insurance reform. 

Our greatest asset is that Canada remains governable. For all its flaws, our combination of Westminster parliamentary government and federalism is firmware that still works. Extending beyond the formal institutions, Canada is compact enough that it is still feasible to get the right people around the right table at the right time.  

If we let governability slip away there is a diminishing likelihood that we will retain our prosperity and quality of life. All the policy briefs and op-eds, industry lobby days and submissions to parliamentary committees will come to very little. 

We tend to focus on the leaders. It will require the kind of political leadership in Ottawa and our provincial capitals that helps shape public opinion, not just follow it, that is willing to face inevitable resistance and pushback. 

But there is more we can do. Retaining and improving the governability of Canada will require focus and attention to many areas, all of which can be advanced without falling into the trap of attempting constitutional reforms: 

• Strengthening fora that bring together business, labour and civil society to look for common ground or at least mutual respect and understanding 

• Deep reforms to public sector capabilities in policy development and especially delivery and execution 

• Better use of the House of Commons and Senate as deliberative problem-solving bodies  

• Deeper collaboration among governments in the federation  

• Proactive trust building through candour, transparency and accountability 

• Bespoke bodies or initiatives to counter short attention span and generate a healthy supply chain of diagnosis and prescription on long term structural issues such as productivity, competitiveness and demographics 

It also means resisting and avoiding anything that weakens the ability of governments to take decisions and to stick the landings. 

Governments are there to get things done. They need a strong centre to provide coherence and traction, but one that is skilled at listening, multitasking and delegating. They will all be stress tested in the year ahead, but we should be more confident that while peace and order are scarce, good government is still attainable. 

Michael Wernick, a senior fellow at the C.D. Howe Institute, is Jarislowsky Chair in Public Sector Management at the University of Ottawa and former Clerk of the Privy Council. 

To send a comment or leave feedback, email us at blog@cdhowe.org. 

The views expressed here are those of the author. The C.D. Howe Institute does not take corporate positions on policy matters.