Freeland’s last act - cold opportunism or reluctant heroism?
THE CANADIAN PRESS/Spencer Colby
History will remember Chrystia Freeland as Canada’s first woman finance minister—an achievement that secures her place as one of the most consequential figures in Canadian federal politics over the past half century.
She could also be remembered as the woman who brought down Justin Trudeau in the most dramatic of fashions—a rupture that underscores just how fine the line is between trust and betrayal in politics. The prime minister is being undone by his most loyal lieutenant.
Or perhaps this is merely the opening scene of a new story, where Freeland uses her resignation as a springboard to mount a campaign to replace Trudeau as Liberal leader and become Canada’s first woman to be elected as prime minister.
Trudeau’s bid to remove Freeland from the finance portfolio was the catalyst for this week’s events. His assumption that she would be willing to deliver the government’s budget update knowing she would be losing the job proved to be terribly naive. But their split may have been inevitable. If Freeland had greater ambitions in mind, she would have needed to distance herself from a deeply unpopular leader—a man clinging to power with increasing desperation.
The real shock came in the form of her resignation letter—a blistering critique that left no doubt about her disavowal of Trudeau’s leadership and economic legacy. She is not only breaking away from Trudeau’s political inheritance but also disowning the economic record she helped design and implement.
Sinking ship
What makes her resignation letter so cutting is its elegance. It co-opts the language of the government’s critics—her critics—on fiscal responsibility and economic preparedness. She’s trying to slip into a lifeboat of credibility while leaving Trudeau at the helm of a sinking ship.
For example, this week’s budget update was not particularly out of step for the Trudeau government under Freeland’s tenure. If anything, it was arguably more restrained and more conscious of the coming economic pitfalls.
For perspective, in her seven budgets or budget updates since the end of 2021, Freeland has added an average of $40 billion per document to the fiscal envelope. Her record reflects a willingness to tolerate slightly higher deficits than projected and to spend any revenue windfalls.
By contrast, Monday’s fiscal update included about $23 billion in net new measures—the bulk of which extended investment tax breaks set to expire. These tax write offs are a significant boost for a business community increasingly anxious about Canada’s ability to weather new waves of U.S. protectionism.
Fiscal anchors
The rest of the fiscal deterioration in this week’s budget update stemmed largely from one-off measures—still significant but arguably temporary. By her own recent standards, this was a defensible budget update, consistent with Trudeau’s fiscal approach—even down to the broken fiscal anchors.
But instead of defending it, she chose to kill its credibility and raise questions about Trudeau's seriousness as an economic manager.
The Trudeau government’s economic record, at least post-pandemic, is a mixed one—unlikely to age well as an example of sound policy. The problem wasn’t just fiscal spending; it was that economic policy levers were deployed for too many objectives: political survival, social engineering, a zeal for new entitlement programs, a tendency toward state capitalism and corporatism and a climate policy detached from economic realities. These ambitions crowded out more fundamental goals like attracting private investment and growing the economy.
Too many objectives, too much activism and not enough tools and resources. The result has been a massive expansion of the state and diminished economic dynamism—a dangerous mix as Canada enters a more volatile era. Bank of Canada Governor Tiff Macklem reminded us this week that the global economy will be increasingly shock-prone.
These issues and risks aren’t new. Freeland has been warned about them for years. Canada has faced a productivity and investment crisis throughout the Trudeau era.
And to her credit, Freeland hasn’t ignored all the criticism. While her fiscal record is far from restrained, Canada’s finances have fared better than many major economies since the pandemic.
Sea change
But now, a new risk—the looming Trump presidency— appears to have prompted a sea change in Freeland’s thinking:
“We need to take that threat extremely seriously,” she said in the letter. “That means keeping our fiscal powder dry today, so we have the reserves we need for a coming tariff war.”
Is this the sound of deep repentance for failing to fully appreciate the challenges ahead? Has Freeland redeemed herself in her final act in high office—an act of course-correction and economic pragmatism?
Or does her resignation make her the reluctant Liberal hero of this story—forced into a decision she did not want to make, torn between ambition and loyalty?
