B4 G THE GLOBE AND MAIL | THURSDAY, MARCH 5, 2026 | REPORT ON BUSINESS OPINION & ANALYSIS N o country is more like Canada than Australia. The two countries are far from identical, but the parallels are hard to miss. Parliamentary democracies with British colonial roots. Significant nat- ural resource sectors. Similar-sized econo- mies. Two middle powers that rarely get to set the rules but often must live with the consequences when rules stop work- ing. Even the small talk in both countries is about the same stuff: the cost of housing, wages, energy, the weather, the distance between cities and what China and the United States are doing this week. Canada and Australia are both mining superpowers. Australia alone accounts for 36.4 per cent of the world’s lead reserves, 29.4 per cent of its manganese and 29 per cent of its iron ore. Meanwhile, Canada is a global leader in nickel and potash. Beyond these similarities, our shared values matter, particularly today when de- mocracy is under siege. Prime Minister Mark Carney went to Davos, Switzerland, and said middle pow- ers should collaborate through practical coalitions built around shared interests. Mr. Carney’s visit to Australia this week is the perfect moment to prove it can be more than talk. If Canada is serious about trade diversi- fication, Australia should be the first call. Imagine Canada and Australia as al- most the equivalent of one common mar- ket. Together we would have 70 million people and an economy worth more than $5-trillion. While Canada and Australia are both signatories of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), there is the oppor- tunity to further harmonize our econo- mies and reduce trade barriers. Working together could involve harmo- nizing mining standards between coun- tries, co-investing in refining and process- ing facilities and co-managing strategic re- serves of critical minerals. This could also include further aligning professional licensing standards between the two countries. So, licensed profession- als such as physicians, engineers and vet- erinarians could easily work in both coun- tries. And what if the two countries practical- ly opened borders so citizens could easily move between the countries without hav- ing to go through immigration approval? This isn’t an out-there idea – Australia and New Zealand already basically have this. Freedom of migration would signifi- cantly enhance ties between the two countries, thereby increasing trade. Let’s be even bolder – separately, the two countries have limited diplomatic clout but together we can have outsized influence. Canada and Australia could sign a com- prehensive diplomatic collaboration agreement. This could involve the two countries further sharing diplomatic ser- vices and co-locating embassies. Imagine what a combined diplomatic apparatus would look like? In regions where Canada has a larger influence, such as Latin America, Austra- lian companies could get access to en- hanced consular services to expand their exports. Likewise, Canadian companies could access Australian consular services in the Pacific, where Australia has a bigger pres- ence. Of course, a lot would need to be sorted out in terms of sharing diplomatic servic- es. There would still be a Canadian diplo- matic corps. Dozens of countries lack a Canadian embassy, and in working with Australia, we could increase our diplo- matic reach without increasing diplomat- ic funding. As part of a comprehensive diplomatic agreement, Canada and Australia could enter an alliance where we establish trilat- eral trade relationships with other coun- tries. By working together, we could in- crease the number of free-trade deals we have access to. Our combined economic clout gives us more bargaining power than if we negotiate separately. Canada and Australia could also align on key diplomatic policy files so that our efforts can be combined. For instance, if the United States meddles in Canadian domestic affairs, Canada and Australia could publish joint diplomatic state- ments. Likewise, if tariffs were put on Australia by China, Canada and Australia could respond together in putting reci- procal tariffs on China. Canada has spent years talking about diversification. Australia is one of the rare partners where values, institutions and economic interests line up without forc- ing it. That is exactly the kind of relation- ship a middle power should build before the next shock hits. What I am arguing for is not a new country, it is a new level of practical in- tegration. Two independent democracies that build a shared operating system in trade, mobility, diplomacy and critical minerals, so we have more leverage and less duplication in a world where big pow- ers are less predictable. It’s time for Canada to look down un- der. Canada-Australia team would be unstoppable The two middle powers could have a powerful combined influence when working together SCOTT STIRRETT OPINION Founder of Venture for Canada and the author of The Uncertainty Advantage Defence Minister David McGuinty talks with Prime Minister Mark Carney as they walk to a news conference in Sydney, Australia, on Wednesday. ADRIAN WYLD/THE CANADIAN PRESS T hat Canada needs a new fleet of submarines to re- place its four surplus Brit- ish lemons is clear. This country has the world’s longest coastline and asserts un- recognized claims over Arctic waters, now one of the world’s most contested regions. The abil- ity to have the military equiva- lent of underwater eyes and ears is therefore no longer a luxury. It is a sovereign necessity. But in getting new subma- rines, the Carney government will have to perform a delicate balancing act between learning from procurement mistakes, piv- oting to new supply chains for non-traditional naval suppliers and meeting North American al- liance commitments. No easy feat. Considering that it took the army 21 years to get new trans- port trucks, the more technically sophisticated Canadian Patrol Submarine Project (CPSP) is moving at lightning speed. Formally stood up in summer 2021, the request for information from interested bidders dropped in September, 2024. In August, 2025, two companies were deemed to have met the navy’s requirements for a stealthy and Arctic deployable diesel-electric powered fleet: South Korea’s Hanwha Ocean Co. Ltd. and Ger- many’s ThyssenKrupp Marine Systems. A contract award is expected some time this year with the first new sub in the water by 2035, just as the existing maintenance- prone Victoria class submarines begin decommissioning. Both companies say this target can be met but if there is any slippage, the navy risks managing a costly and dangerous capability gap. When the navy’s 1970s-vin- tage Protecteur class refuelling ships rusted and burned out in 2015-16, before their replace- ments were ready, Ottawa turned to leasing a converted container ship and buying access to Chi- lean and Spanish refuelling ships to avoid losing the refuelling ca- pability altogether. Those re- parts, Canadian submarines and surface ships have long been equipped with sophisticated Pentagon technology, like torpe- does and combat-management systems. The 15 River Class de- stroyers now under construction in Halifax are similarly to be equipped with U.S.-made sen- sors, missiles, electric motors and radar. The replacement for the CP-140 maritime patrol air- craft (itself an American prod- uct) is Boeing’s P-8A Poseidon. Canada’s future submarine fleet will need to share secure sensor and communication data with U.S. counterparts to meet pre-existing maritime warning responsibilities under the bina- tional North American Aero- space Defence command. That the Trump administra- tion specifically singled out Can- ada in its recent National De- fence Strategy to fulfill a “vital role” in defending the continent against undersea threats reiter- ates how critical our southern neighbour sees this as part of our joint defence commitments. In seeking a non-traditional submarine supplier, Canada can- not completely separate itself from 80 years of the joint de- fence of the continent. when Canada lacks the means to build domestically. Whether Ottawa opts for South Korean or German subs, it will be a symbolic and operation- ally significant break for a coun- try that has always relied on ei- ther British or American subma- rines since the 1960s (who now use solely nuclear-powered sub- marines). Should all dozen subs be acquired over the 2030s and 2040s, then close to half of Cana- da’s future naval combat power will be connected to either Seoul or Berlin for decades to come. Yet there are limits to this de- viation. History and geography matter. Prior submarine purchas- es reflected, in part, Canada’s Cold War duties to work primar- ily alongside the Americans in training, detecting, deterring and if necessary, defeating Soviet submarines in the North Atlan- tic. Then, there was the human element: familiarity in customs, language, training and joint ser- vice beginning with allied naval battles of the Second World War, and forged through generations of global service, off Korea, the Persian Gulf and the Caribbean. To enable interoperability with their American counter- placements are still not expected to be fully operational until 2028 and unlike the 1990s, when the Victoria class boats were ac- quired, there is no used-subma- rine dealer available. And if schedule is king, chang- ing the procurement machinery will require deft handling. A new defence procurement entity, the Defence Investment Agency, was created last October. It is expect- ed to get its own legislation this spring and is handling the CPSP among its initial tranche of ma- jor capital projects. There are many good reasons for moving to a stand-alone model (concentrating expertise for example), but staffing up a new bureaucratic machine is never easy in the best of times. It will require focused and deliber- ate development to minimize delays as new people are hired, processes are ironed out and an organizational culture takes shape. The agency will also be en- trusted with executing several big planks in the Defence Indus- trial Strategy, launched late last month. The strategy, a Canadian first since the Korean War, com- mits, among other things, to partnering with “trusted” allies Submarine conundrum: Buying a few boats is harder than it looks JEFFREY F. COLLINS OPINION Associate professor of political science at the University of Prince Edward Island and author of the 2024 book, Canada’s Defence Procurement Woes A cross the country, stories are emerging of precon- struction condo buyers facing the unsettling reality that their units are now worth less than what they agreed to pay years ago. It is a stark reminder that in housing markets – no matter how slick the narratives are – gravity eventually reasserts itself. The current pressure on condo buyers is only the most visible part of a deeper, long-standing misunderstanding about hous- ing as an asset. Canadians rou- tinely treat homes as reliable investments, sometimes even primary retirement vehicles. But economically, a home is over- whelmingly a consumption good with an investment component, not the other way around. Most of the money homeowners pour into their homes – maintenance, repairs, upgrades, insurance, property taxes and mortgage in- terest – creates continuing con- sumption value, not financial re- turn. Yet the popular belief that real estate is “the safest bet” blurs the line between consump- tion and investment, obscuring the fact that much of what peo- ple think is wealth-building is re- ally just the cost of living. And when markets soften – as condo buyers are now discover- ing – the risks of housing sud- denly become impossible to ig- nore. Illiquidity is one of them. Unlike a portfolio of securities, housing cannot be sold in pieces or offloaded quickly to respond to market conditions. The timing of a home sale is rarely discre- tionary when life events inter- vene, and sellers often face buyers influenced by the exact same macro forces. For those ex- posed to preconstruction risk, il- liquidity is even harsher: They committed to a future asset with- out the ability to adjust their po- sition as economic conditions changed. Concentration is another risk. Even financially sophisticated households end up with the ma- jority of their net worth tied to a single property in a single neigh- bourhood of a single city. If this were a financial product, no ad- viser would recommend it. But in housing, we normalize this as prudent behaviour. The condo buyers in distress today are not unfortunate outliers – they are participants in a system that asks ordinary Canadians to take on extraordinary levels of undiversi- fied exposure. Layered on top of this is lev- erage. Mortgages amplify both gains and losses, and households tend to anchor expectations to the conditions present when they first take on debt. When rates rise or valuations soften, the math shifts abruptly. This is exactly what many preconstruc- tion buyers are experiencing now: loans arranged or imagined during low-interest-rate periods suddenly collide with today’s higher financing costs and lower appraisals. Leverage that once felt advantageous has now be- come a source of vulnerability. These dynamics feel new only because Canada has enjoyed a long stretch of housing apprecia- tion. But the country – Toronto especially – has been here before. According to the Toronto Region- al Real Estate Board, the average Toronto sale price peaked in 1989 at $273,698 after a dramatic run- up in the late 1980s, before drop- ping for seven consecutive years to $198,317 in 1996, a decline of roughly 27 per cent. It would take 13 years, until 2002, for prices to regain that nominal peak. And when adjusted for inflation, it took even longer: Toronto did not return to its 1989 purchasing power peak until around 2011, a full 22 years later. In other words, what looks in hindsight like extraordinary appreciation through the 2000s was, to a sig- nificant extent, a long recovery – catch-up to values Toronto had already reached in 1989, not the creation of new inflation-adjust- ed wealth. In that sense, today’s downturn isn’t teaching us some- thing new – it’s reminding us of something we have seen before. This history is not an argu- ment that today’s cycle will mir- ror the early 1990s. But it is evi- dence that real estate is neither a guaranteed nor a rapid wealth generator – and forgetting that history is precisely what fuels re- cency bias. For a whole genera- tion, housing has seemed to rise almost monotonically, and that experience has shaped beha- viour: Households stretch for larger mortgages, invest heavily in improvements, and treat home equity as a kind of finan- cial inevitability. The truth is that homes deliv- er enormous non-financial value – stability, community, belong- ing. Those are reasons to buy. But as financial assets, they come with structural constraints: They are expensive to maintain, diffi- cult to trade, impossible to diver- sify and usually purchased with significant leverage. The invest- ment component is real but vola- tile, and its return path can be long and uneven. For home buyers now facing losses, this is not an individualized failure. It is the predictable outcome of socie- ty promoting an undiversified, il- liquid, highly leveraged asset as if it were the ultimate life goal. The myth of home ownership as an investment is wreaking untold damage J. ARI PANDES OPINION Associate professor of finance and an associate dean at the University of Calgary’s Haskayne School of Business