‘Politics first and the country second’: Experts react to the finance minister’s shocking resignation, the state of the Liberal government, and the Fall Economic Statement

There is a new pair of fren-emies in Parliament, this time in its highest halls.

Finance Minister Chrystia Freeland announced this morning that she will resign from Prime Minister Justin Trudeau’s cabinet. She and the prime minister have found themselves “at odds about the best path forward for Canada,” Freeland said in her letter to the PM which she also published on X. Before this, Trudeau had indicated dissatisfaction with Freeland in her role as finance minister and tried to offer her another position within cabinet.

Freeland’s resignation comes on the same day as her planned release of Canada’s Fall Economic Statement. The statement contained a $61.9 billion deficit and $1.3 billion for border security, spending meant to appease recent demands from incoming President Trump.

Dominic LeBlanc has meanwhile just been sworn in as finance minister.

The Hub collected insights from experts on this remarkable day in Canadian politics.

Trudeau and the Liberals are putting politics first and the country second

By David Coletto, founder, chair, and CEO of Abacus Data

The real bombshell isn’t just the departure of a senior cabinet minister, it’s what her resignation letter reveals. By citing her opposition to “costly political gimmicks” and her insistence on fiscal prudence amid uncertainty surrounding the Trump administration’s next moves, Freeland effectively confirmed what many Canadians have long suspected: the Trudeau government’s priorities lean dangerously toward short-term partisan gain rather than genuine public interest.

At a time when the prime minister’s approval ratings are already scraping historical lows, this admission from one of his most respected and capable lieutenants is a devastating blow. It suggests that, behind closed doors, key policy decisions may be calculated more for political advantage than economic stability or the well-being of ordinary Canadians. For a government that has claimed the moral high ground so often, this revelation cuts deep.

This development dwarfs previous controversies. Even the SNC-Lavalin affair, a once-defining scandal that cast a long shadow over Trudeau’s leadership, now seems like a lesser crisis. Canadians, weary and increasingly distrustful, will view this as proof that their government puts politics first and the country second. It’s an indictment the prime minister may not recover from.

Don’t let the chaos in Ottawa distract from Canada’s worsening federal finances

By Trevor Tombe, professor of economics at the University of Calgary and a research fellow at The School of Public Policy

The federal fiscal update was nothing short of historic. And shocking—for two reasons.

First, the politics. Hours before delivering the update, Chrystia Freeland resigned. The Liberal house leader tabled it instead, marking the first time in history that a federal financial update was delivered by someone other than the finance minister.^{1I checked each one since 1939 when such statements started. Hopefully I didn’t miss one.} And in her letter of resignation, the minister rightly stressed the importance of “keeping our fiscal powder dry” during these incredibly uncertain times, warning specifically against “costly political gimmicks.” The prime minister, it seems, disagrees.

Which brings me to the finances. The update revealed a government struggling to maintain fiscal discipline. It doubled down on a familiar pattern: increasing spending far beyond its own previous plans.

To be fair, the increase in the 2023-24 deficit grew from $40 billion anticipated in Budget 2024 to $61.9 billion today for reasons largely beyond the government’s control. Most of the increase was because future liabilities associated with Indigenous claims grew.

Worsening federal finances is not just a one-time blip this year, though. The deficit is now projected to exceed previous estimates every year until 2029, adding $47 billion in borrowing beyond what was outlined earlier this year. And much of this isn’t due to external pressures. Revenues are actually expected to be $7.9 billion higher than forecast, while $26 billion of the additional deficit comes directly from new policy decisions.

Compared to Budget 2024, this year’s spending is nearly $5 billion higher. Compared to Budget 2023, it’s $26 billion higher. And against the plans from Budget 2022, it’s $63.3 billion higher. If the government had simply stuck to its fiscal plans from two years ago, we’d be looking at a $15 billion surplus instead of a deficit.

The chaos surrounding the fiscal update—both in politics and in finances—serves no one’s interest. There were some interesting moves in the update, such as reversing course on plans to raise taxes on business investment (a problem identified in The Hub back in May). But until the chaos and uncertainty end, such measures might have precious little effect.

Don’t let Trudeau and Freeland off easy when all this is done

By Howard Anglin, former deputy chief of staff to Prime Minister Stephen Harper, now a doctoral student at Oxford University

I have nothing to say about the Fall Economic Statement per se. The numbers speak for themselves. For non-economists like me, the sheer size of the anticipated deficit that Justin Trudeau and Chrystia Freeland—and yes, despite her resignation, these are her numbers as much as his—have added to the nearly-$1.5 trillion federal debt is so incomprehensibly vast it is like trying to analyse a natural disaster. But while we can’t rationally comprehend tsunamis or earthquakes or exploding federal budgets, at least in this case we know who caused it.

No, Freeland’s dramatic resignation should not let her off the hook. Whatever she may now say about her differences with the prime minister over fiscal policy (and expect her to say a lot in the coming days via pious quotes and poniarded leaks), she did not resign over money squabbles. Freeland was happy to pile hundreds of billions of our dollars on the fiscal bonfire and she had just signed off on another $62 billion deficit before signing her resignation letter. That deficit number was double-checked, translated into both official languages, and printed before she decided to leave. She may not have delivered the Fall Economic Statement, but it must be held against her.

Freeland’s new allergy to “costly political gimmicks” is particularly galling after five years of ruinous debt and a 2024 budget that former Bank of Canada Governor David Dodge called the worst in more than 40 years. Gimmicks? Give me a break. Her entire tenure as finance minister has been a tottering tower of gimcrack and gimmick. She didn’t leave because she suddenly learned basic accounting. She left, as she made clear, because she lost the confidence of the prime minister. It was a matter of principle, but those principles were personal, not public.

After this cataclysmic level of national sabotage, the sterile verdict of the ballot box feels like inadequate punishment. Perhaps we should adopt the custom of the old Venetian Republic, where after the death of a Doge, a commission—the Inquisitori sopra il doge defunto—investigated his actions in office and punished any misfeasance by levying heavy financial penalties on his estate. Barring adoption of the Venetian model, can we at least ensure that neither Trudeau nor Freeland are accorded the ritual honours bestowed by the Laurentian clique on defeated Canadian ministers?

There should be no corporate or Crown board appointments for them; no executive vice-president positions at Canada’s cartels of banks and telcos; no UN sinecures; no Massey College or Munk School fellowships; none of the usual emoluments of ministerial mediocrity. Freeland and Trudeau deserve to be shunned, and shareholders who care about fiscal competence and accountability should punish any board that engages them. We can expect the media to praise Freeland’s desperate gesture to salvage her political reputation—our journalists have always gone soft on one their own—but we should not forget her record.

Any remaining confidence in this government’s fiscal management is gone

By William Robson, CEO, C.D. Howe Institute

The resignation of former finance minister Chrystia Freeland hours before the federal government delivered its 2024 Fall Economic Statement overshadowed the statement itself. But her resignation and the numbers in the statement are variations on the same message: the federal government is not, and for years has not been, remotely serious about fiscal management.

The trajectory of spending projections in each successive fall statement since 2019 tells an astonishing story of fiscal recklessness. The fall statement for 2019—the last projections before COVID—put spending for 2024/25, the year we are now in, at $421 billion. By the time of the 2020 fall statement, after adding back pension costs that the government had omitted from its main presentation, spending for the current year had risen to $429 billion.

That was just the beginning. The 2021 fall statement projected $465 billion for 2024/25. The 2022 fall statement projected $505 billion. The 2023 statement projected $522 billion. Now, the government tells us that spending in the current fiscal year will be $543 billion. In five years, the projections for 2024/25 rose by $123 billion.

And we may not be done. The spring budget said spending in the 2023/24 fiscal year—which was already over when the government tabled the budget—would be $505 billion. Now the fall statement tells us it was $522 billion. Who would be so naïve as to think the government’s latest numbers for 2024/25 are any more reliable?

The federal government’s unserious approach to public money has left Canadians carrying too much debt and paying too much tax. Steering a prudent fiscal course that supports growth and rising living standards is a serious task. Canadians need a federal government that takes fiscal policy seriously.

Total. Boss. Move.

By Jennifer Robson, Associate Professor, Political Management at Carleton University

In public budgeting in Canada, there has always been a tension between what the Prime Minister wants and the priorities of the finance minister. Trust me, I have read the finance archives going back to wartime. When that tension is healthy, Canada benefits from better public policy that has been stress-tested for both a whole-of-government perspective and the more traditional priorities of finance and its usual stakeholders. Public budgeting in Canada relies on a “two-key” system; nothing moves unless the PM and finance minister both sign-off. But, when there are irreconcilable differences, someone must go. As the head of the cabinet and His Majesty’s government, the PM always reserves that power. Odds are always that it will be the finance minister who blinks.

But how should we interpret the fact that Minister Freeland resigned mere hours before standing in the House of Commons to deliver a mini-budget, the long-promised Fall Economic Statement (FES)? The security lists and spaces for the media and stakeholder lock-ups had already been set. The key chapter laying out the future economic outlook would have been written, formatted, and translated. The draft text of the rest of the document and the minister’s own remarks would have already bounced back and forth umpteen times between PMO and the finance ministry.

While not legally required of governments, mini-budgets and full budgets receive disproportionate investments of time and attention by the most senior political staff and senior public servants because they are such important opportunities to deliver the government’s communications and political message. Make no mistake, Minister Freeland has rained on that parade, and likely not without cause. I have no special information, but I can only interpret today’s unfolding drama as a signal that Freeland was being asked to deliver a mini-budget she no longer believed in, on behalf of a prime minister who had let her know he no longer believed in her.

It’s sadly not uncommon for women in elected office to be told their job is to be obedient and serve as the feminine face and voice of the message some clever advisors have crafted. Politics may be a team sport but women in office don’t have to put up with this. Resigning on the morning of FES day was a boss move. I say kudos to Minister Freeland.

Having read her letter of resignation, I cannot find fault in her assessment of the economic and political realities we face in Canada. The impending change to U.S. policy is extremely serious. We do need to retain some fiscal room to manage the response in the New Year. Canada should respond by fighting for capital, investment, and jobs. We have natural assets in this fight. We have a lot of what capitalism wants and needs. If a minister no longer enjoys the confidence of the head of cabinet (the PM) in their current portfolio, resigning is an honourable course of action.

This, on the heels of the resignation by Sean Fraser, ought to finally be enough to give some key folks in the PMO pause. Today can still be a day for honest reflection and humility going forward.

For my part, I have former students who have been serving in both Minister Freeland and Minister Fraser’s offices. To all of them, I send all my best wishes, encouragement, and thanks for their public service. Your next steps will come sooner than you planned but you will be ok. I may be on sabbatical, but I’m paying attention and happy to help in any way I can.

Justin Trudeau has lost his mandate

By Eric Lombardi, founder and president of More Neighbours Toronto, a volunteer organization committed to ending the housing crisis

Chrystia Freeland’s resignation as finance minister—on the very day she was to present the fall economic statement—signals that this Trudeau Liberal government has reached the end of its road. Unwilling to endorse economic policies she viewed as unserious “gimmicks,” Freeland put her principles first. Trudeau’s handling of her departure was deplorable, demoting her while demanding she take the blame for the Trudeau government’s incompetence.

Meanwhile, Canada’s fiscal health is off the rails. The deficit has surged from $40 billion to over $60 billion, just as Donald Trump’s return threatens a punishing 25 percent tariff. Defence spending is well below the 2 percent required by NATO, and urgent needs at our borders and ports mean the true gap could be even larger. These aren’t small challenges; Canada is not prepared for what lies ahead.

The most vital job of any Canadian prime minister now is to unite the country and its premiers to face an incoming trade war. Trudeau, who has clearly lost his mandate, is not up to the task. Even opposition leader Jagmeet Singh’s contradictory stance—calling for Trudeau’s resignation while still propping him up—only reinforces the dysfunction.

Canadians deserve a leader with a clear mandate. If we call an election now, we can have one by late January. It’s time for a fresh start.

At this point, the demise of the Liberals is when, not if

By Darrell Bricker, global CEO for Ipsos Public Affairs

Minority governments collapse for one of two reasons: either by design or by accident. As I noted several weeks ago, this government has “accident” written all over it. What we’re witnessing now is its unraveling in real-time, like a slow-motion car crash. Recovery isn’t entirely out of the question, but the path to it is murky at best and increasingly improbable.

This political chaos is unfolding against a backdrop of abysmal polling numbers for the Trudeau Liberals. Pierre Poilievre and the Conservatives have surged to a commanding 23-point lead, while the Liberals have plummeted to just 21 percent, now tied with the NDP. Since September, Liberal support has dropped by four points, and in Quebec—a critical stronghold for any chance of recovery—they trail the Bloc Québécois by a wide margin.

Most damning of all, 78 percent of Canadians believe it’s time for a new party to lead the country. This marks the highest level of dissatisfaction with the Trudeau Liberals since they came to power in 2015 and underscores a decisive shift in public sentiment.

At this stage, a dramatic course correction is no longer an option; it’s an urgent necessity. Their fall is quickly becoming a question of “when,” rather than “if.”

It’s fiscal anchors aweigh!

By Livio Di Matteo, a professor of economics at Lakehead University.

The federal government’s Fall Economic Statement has been one of the more extraordinary events in Canadian fiscal history. To start, it was presented much later than usual. Along with the delay in the release of the public accounts for 2023-24, this is not the most reassuring indicator that the government of the day has a firm grip on the nation’s finances or a strong interest in public accountability. Then on delivery day there is the resignation of Finance Minister Chrystia Freeland, her letter of epiphany that we need to keep our “fiscal powder” dry and not engage in gimmicks, and finally, the just-in-time appointment of Dominic Leblanc as the new finance minister. It was indeed a performance worthy of high drama.

To start, the resignation of a federal finance minister is a rare event but doing so on the eve of a major economic statement or budget is unheard of.  In recent memory, there was the resignation of Freeland’s predecessor Bill Morneau. That the current prime minister might lose one finance minister can be seen as an unfortunate event, but to misplace two suggests a certain degree of inattention to detail. Going back a bit further there was the resignation of former finance minister Paul Martin given the clashes with then-prime minister Jean Chretien. Going back even further there was John Turner who resigned as finance minister from Pierre Trudeau’s cabinet.  In short, the position of finance minister is one that comes with a certain gravitas, and resignations, especially as dramatic as that of Freeland, are bound to unsettle financial markets and business interests.

Then there is the meat of the 2024 FES tabled without the usual speech. Last year’s fall statement set goals to keep the 2023-24 deficit below $40.1 billion, to lower the net debt to GDP ratio, and to keep deficits at less than 1 percent of GDP for the foreseeable future. Alas, these have gone out the window over the last year as the federal government has continued to ramp up spending on its social agenda while being sideswiped by events, the most recent being the election of Donald Trump. The increased border and defence spending is going to tax our resources even more at the same time as the economy slows. Of course, if Prime Minister Trudeau had not informed Minister Freeland last Friday that her finance minister days were drawing to a close, one wonders what gymnastics Freeland would have employed to deal with the failure to meet the goals she set last year.

The issues are simple. The numbers are stark. The key issues facing Canada are the deficit and fiscal sustainability, affordability, and the cost of living including the cost and supply of housing, slowing economic growth, and anemic productivity-boosting business investment. This year’s Fall Economic Statement clocks the 2023-24 deficit at an astounding $61.9 billion—over $20 billion dollars more than set as the goal last year. In light of this, the 2024-25 deficit coming in at a forecast of $42.8 billion is little comfort given the slowing economy and the fluidity of the government’s fiscal targets in general. Indeed, the theme of this year’s statement could be best summarized as fiscal anchors aweigh!

Expenditures in 2023-24 are up 6.4 percent and for 2024-25 are expected to grow 5 percent. Debt charges are up dramatically and expected to reach $53.7 billion in 2024-25 accounting for nearly 10 percent of federal spending. The net debt in 2023-24 is expected to come in at $1.35 trillion dollars and by 2028-29 will grow to $1.55 trillion as nearly another $180 billion in deficits accumulates. As a result, the forecast that by 2028-29 the deficit will decline to only $23 billion is probably science fiction as is the continued forecast of a declining debt-to-GDP ratio. After all, despite slowing population growth and the tariff threat, real GDP growth is still being forecast at about 2 percent annually. That too seems increasingly unlikely.