The Denial of Justin

Freeland tries to convince voters she did not have political relations with that man

Just as the Apostle Peter said he didn’t know Jesus three times after he was arrested, so Chrystia Freeland has been distancing herself from Justin Trudeau.

The Liberal leadership candidate’s public statements are almost indistinguishable from most Conservatives - dollar for dollar retaliation against Donald Trump; the transformation of Canada into an “energy superpower”; the fast-tracking of resource projects; and a pledge to reach NATO’s defence spending target of 2 percent of GDP by 2027.

The former finance minister says as Liberal leader she would axe the planned capital gains tax increase; shrink the federal cabinet; eliminate interprovincial trade barriers; and, take foreign interference seriously.

There’s only one problem with all that. As the fictional spin-doctor Malcolm Tucker put it: “The public are stupid, they’re not dead.”

Does she really think that people will forget that she was Trudeau’s chief disciple or that she did none of those things as deputy prime minister, the second most powerful politician in the land?

As a public service, here’s a brief recap of her time as finance minister, after the ignominious departure of her predecessor Bill Morneau in the summer of 2020.

He was booted during the pandemic by Justin Trudeau for being “too orthodox” in his views on deficits and the national debt - a malady from which Freeland never suffered.

Canada was unique during COVID because after-tax incomes actually rose in 2020, even though employment income fell, thanks to over-generous benefits.

Freeland proclaimed the pandemic to be a “window of opportunity” to borrow at historic low interest rates.

Old hands like former Bank of Canada governor David Dodge warned that more social spending would leave Canada vulnerable to future increases in interest rates and inflation.

But Freeland said the “terror and triumph” of the 1990s debt crisis that was formative for a generation of Canadians (Dodge was deputy minister of finance at the time) no longer applied.

“It is a poor general who fights the last war,” she said. “Doing too little is more dangerous and potentially more costly than doing too much.”

Her first budget in April 2021 was a whopping 724 page document that was designed to crush the NDP under a deluge of inclusive spending priorities.

The budget introduced $101 billion in new measures. Not only could Canada afford such “investments”, it would be “short-sighted” not to make them, Freeland said.

She, and Trudeau, deluded themselves that global financial markets would allow massive debts to be funded at near zero interest rates without repercussions.

Measures like the $9 billion spent on enhancing the Canada Workers’ Benefit could be defended as redistributive spending but it did not make those workers more productive. Dodge subsequently argued that the budget did not invest in growing Canada’s economic capacity at all.

There may have been fiscal space at the time but it was the next generation’s fiscal space - ironically, for a government so focused on the climate crisis and its implications for the future.

Like Alice following the White Rabbit down his hole, Freeland did not seem to be overly concerned about how she would get out again.

The appointment of Steven Guilbeault as environment minister in October 2021 reinforced the idea that the Liberal Party had been captured by its activist wing, and that Canada would become an even more difficult and time-consuming place to get large capital projects off the ground. Innovation was barely mentioned and Canadian companies increasingly sent their capital out of the country.

Freeland quoted former U.S. Treasury Secretary Larry Summers as saying “focusing on redistribution made more sense than focusing on growth” in her 2012 book, Plutocrats and she was increasingly viewed as her government’s intellectual bellwether.

She appears to have been roused from her Alice-like slumber by Putin’s invasion of Ukraine in spring 2022.

She acknowledged that the geopolitical situation had shifted and an increase in defence spending would have to be looked at.

She also recognized that productivity and innovation performance were Canada’s “Achilles Heel”.

Yet little progress was made in either sphere. Defence spending remained at around 1.3 percent of GDP and output per capita has fallen consistently in recent years.

The war in Ukraine, post-pandemic global supply chain glitches and the Bank of Canada’s dismissal of rising inflation as a transitory phenomenon all played a part in creating a cost of living crisis.

But so did government overspending, and even after inflation hit, Freeland’s response was a $9 billion “affordability plan” that increased aggregate demand and, arguably, made the problem worse.

In her fiscal update in 2023, Freeland pledged to hold to new “fiscal guardrails”, including a commitment to freeze the deficit at $40 billion in 2023/24. When the numbers finally came in, the deficit increased to $62 billion and another fiscal anchor had been cut loose.

As the opinion polls continued to slide into 2024, Freeland decided desperate times required desperate measures. In addition to the usual electoral bribes of free school meals, Sikh art exhibitions and Hellenic community centres, she introduced an increase to the capital gains tax.

This tax hike was necessary, despite the concerns that it would penalize investment, because the alternative was the very richest Canadians living lives of luxury “in gated communities, behind ever higher fences”, while the public sphere degraded.

This is the tax she now says she will axe.

Freeland quit after Trudeau told her he no longer wanted her to be finance minister - hardly the principled departure that has been portrayed.

She may have belatedly fought against “costly political gimmicks” like the $250 cheques that the government announced in the fall.

But during her time in one of the great offices of state, she has hardly been the embodiment of animal spirits.

The besetting sin of the Liberal government in which she has been a senior member since 2015 is the belief that the private sector is there to be milked.

And milked, it has been.

Public debt charges this year will be $54.2 billion, which is more than the Canada Health Transfer. The national debt has more than doubled in that nine year period to $1.5 trillion.

Good politicians adapt their most dogmatic beliefs to changing political circumstances. But her de facto denial of her part in Justin Trudeau’s government is delusional.