In fairness to the Prime Minister, who knew that if you spent three months undermining your own Finance Minister, refusing to express confidence in her while your underlings trash-talked her to the press, then told her over a Zoom call that you were about to move her out of her plum job into another with no staff or power or responsibilities but, by the way, would she please stay on long enough to deliver a mini-budget with a $62-billion deficit in it so you could make it look like that was why you were firing her and then give her job to Mark Carney, she would take it the wrong way? Women, eh?
Well, no. It was spectacularly clueless on Justin Trudeau’s part, the sort of high-handed behaviour that has driven a number of his ablest ministers, male and female, to leave cabinet over the years. The best part is that, having irreparably alienated his existing Finance Minister, he discovered that he had failed to close the deal with her replacement, Mr. Carney once again electing to spurn his advances – possibly seeing a vision of his own future in his predecessor’s demise.
But if Chrystia Freeland’s reaction is understandable on a personal level, and shrewd on a strategic level – not only has she hastened Mr. Trudeau’s departure, but materially damaged Mr. Carney’s prospects in the bargain – it is harder to understand the principled differences over policy that supposedly led to the split.
In her letter of resignation, Ms. Freeland refers to the two having been “at odds” for several weeks, and makes it clear that the source of the division was her devotion to “keeping our fiscal powder dry,” as opposed to the Prime Minister’s taste for “costly political gimmicks.” She refers to “my strenuous efforts this fall to manage our spending” as part of a larger “fight for capital and investment.”
This would be a more inspiring message – Chrystia Freeland, hero of the fiscal conservative resistance! – were there some evidence of these “strenuous efforts.”
Why did Chrystia Freeland resign and other questions about Trudeau’s cabinet crisis, answered
Certainly it is hard to find it in the fall economic statement, the document she was preparing to deliver right up until the moment the Prime Minister fired her. As has been the habit under her watch, the government’s latest fiscal update takes all of the mountains of new spending in the previous statement of the nation’s fiscal position, last spring’s budget, and adds tens of billions more – nearly $40-billion over six years.
Deficit estimates have correspondingly ballooned. From fiscal 2024, ending last March, through fiscal 2029, the government plans deficits totalling $241-billion – $45-billion more than it projected in the budget, just eight months ago.
Much has been made of the “one-time” contingency liabilities, notably $16-billion to settle claims of discrimination by Indigenous people, that helped to produce that $62-billion deficit for fiscal 2024. But a) that’s still real money, all of it borrowed, b) a series of “one-time” contingencies is hard to distinguish from ordinary spending, c) even without the Indigenous claims, last year’s deficit would have been well in excess of the $40-billion the Minister promised in the spring and d) the deficit for the current fiscal year is already pegged at $48-billion – again, billions over previous projections, none of it because of contingent liabilities.
As Freeland calls for fiscal prudence, critics point to sizable deficits on her watch
And that figure, on previous form, is almost certainly an underestimate, to be revised upward in the months to come. By how much? Who knows? After so many similar revisions, there is simply no reason to attach any significance to this government’s fiscal projections, and no way of knowing, to the nearest $10-billion, what the deficit is at any given time. But a deficit of, at a minimum, $48-billion, on the verge of a possible recession at the hands of Donald Trump’s 25-per-cent tariff, leaves very little fiscal powder unmoistened.
Well. Perhaps the results would have been even worse were it not for her strenuous efforts. But what is the evidence of that? The one item of spending we are told she opposed was the $250 cheques the government wants to send to people earning less than $150,000. True, it’s not in the statement (it’s on hold, pending negotiations with the opposition parties) but that’s a one-time expense of roughly $4-billion. What about the other $20-billion?
Or perhaps there is some alternative fiscal statement she would have preferred to deliver, had the Prime Minister not insisted on his costly political gimmicks. Fine. Which items in the statement would she like to disavow? How much of the $490-billion in program spending planned for this year – $20-billion more than forecast a year ago, nearly $40-billion more than forecast two years ago, $60-billion more than forecast three years ago – does Ms. Freeland consider superfluous?