On what was supposed to be a day where the federal government released its Fall Economic Statement and controlled the media narrative going into the holiday season, yesterday turned out to be anything but. In a politically shocking move, Deputy Prime Minister and Minister of Finance, Chrystia Freeland, publicly announced yesterday morning she was resigning from the cabinet of Prime Minister Justin Trudeau in advance of introducing the Fall Economic Statement in the House of Commons, which was scheduled for later that afternoon.
In her publicly released letter to the Prime Minister, Ms. Freeland indicated on Friday, presumably in the lead up to an expected cabinet shuffle, that he no longer wanted her to serve as Finance Minister and offered her another portfolio. She also made mention in the letter of their disagreements over the last weeks about the direction they should steer the country. She also made clear, however, she is committed to staying on as a Member of Parliament and will run as a candidate in the next election.
This bombshell news put into question whether the Fall Economic Statement would even be tabled and further inflamed the already hyper-partisan environment in Ottawa. The debate on the continued leadership of Prime Minister Trudeau intensified throughout the day with every other party leader calling for his resignation, along with an unplanned caucus meeting held last evening that was said to be vigorous. The increasing number of Liberal MPs publicly calling for the Prime Minister’s resignation has added to the turmoil.
The House of Commons adjourned today for the holiday season and is not scheduled to come back until January 27th, which gives the Prime Minister time to reflect. However, the path forward right now is unclear. He appointed Public Safety Minister Dominic Leblanc the new Finance Minister, with a further cabinet shuffle still expected to fill the vacancies created by those ministers who are not running in the next election.
Fall Economic Statement Highlights
Given the events of the day, there was no formal speech in the House of Commons, which is generally the practice, and the Fall Economic Statement was simply tabled by Government House Leader Karina Gould. The document outlined $24 billion in new spending over the next 5 years, such as $1.3 billion in new border security measures (likely in response to comments made by incoming U.S. President Donald Trump to help avoid planned tariffs), and a number of business incentive program expansions. The deficit projection for the current fiscal year has increased to nearly $62 billion from their target of roughly $40 billion back in Budget 2024. This, however, was largely due to two one-time accounting adjustments of nearly $20 billion. Other new spending includes:
- $1.6 billion for GST Tax Break for Canadians
- $1.1 billion to increase the Scientific Research and Experimental Development tax incentive
- $17.4 billion extension of the Accelerated Investment Incentive
The Fall Economic Statement also highlighted that inflation is now well within the Bank of Canada’s target of between 1 and 3% (currently at 1.9%); the debt to GDP ratio remains at just over 40% and is projected to decrease (best in the G7) and their projected deficit is on track to drop to $18.7 billion by 2029-30.
We will continue to monitor events as they unfold.
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For more information and insights about what these developments mean for Canada’s political landscape, please contact:
Brian Gilbertson
Senior Strategy Advisor—Ottawa
brian@praireskystrategy.ca
403.471.6470
Tara Bingham
Vice President
tara@prairieskystrategy.ca
204.390.7760
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