first reading: the intensely damaging record of trudeau's departing ministers
sean fraser and chrystia freeland have directly overseen some of the trudeau government’s most conspicuous failures
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first reading is a daily newsletter keeping you posted on the travails of canadian politicos, all curated by the national post’s own tristin hopper. to get an early version sent directly to your inbox, sign up here.
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with the sudden resignations of sean fraser and chrystia freeland, in one morning the trudeau government has lost two of its most influential ministers.
and that’s not really a compliment: fraser and freeland have directly overseen some of the trudeau government’s most conspicuous failures — and the ones that are arguably most responsible for the party’s plummeting performance in national polls.
below, a cursory review of the extremely dubious legacy left behind by both ministers.
the largest-ever sustained accumulation of federal debt
freeland was first appointed finance minister in august 2020, right in the opening months of the record-breaking deficit spending sparked by the covid-19 pandemic. canada was far from alone in meeting the pandemic with unchecked public debt accumulation, but freeland still managed a level of public spending that caused canada to stand out.
first, canada would close out the covid-19 pandemic having accumulated one of the world’s highest rates of pandemic spending; the final bill came to about $360 billion.
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the mammoth amounts of fiscal waste that were able to slip through under this spending spree are still being litigated in ottawa: it ranges from $60 million in arrivecan contracts to an eye-watering $27.4 billion in covid benefit payments earmarked by the auditor general as being “suspicious.”
second, even when pandemic strictures lifted, freeland’s response was to announce even more spending: she openly promised $100 billion in stimulus spending over three years. this overt blank cheque on federal spending is a big part of the reason why almost every corner of the federal government has gotten more expensive, most notably in the form of a civil service that has grown three times faster than the population and has at times represented the only driver of job growth in the country.
the most overwhelming immigration wave in canadian history
fraser was only immigration minister for less than two years, from october 2021 to july 2023. but his 22-month tenure would oversee an immigration wave the likes of which canada has never really seen before.
it was under fraser that ottawa not only dialled up permanent-resident intake to new highs, but relaxed visa quotas on international students and temporary foreign workers — all while overseeing record-high numbers of asylum claims.
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in the only full year of fraser’s term — 2022 — canada recorded population growth of 1.05 million people, almost all of it from immigration. that year, canada would actually rank as one of the top five fastest-growing countries on earth; a distinction it shared only with high birthrate countries in asia and sub-saharan africa.
the impacts on the canadian economy were almost immediate. rental prices surged as 2,700 newcomers per day attempted to cram into the country’s already overstretched housing market. health-care shortages became noticeably more acute. any post-pandemic rise in job numbers was immediately swamped by new immigrants looking for work.
just a few months after fraser left the department of immigration, bank of nova scotia economist derek holt delivered this assessment of the file: “immigration is excessive. full stop.”
worst of all, fraser’s ministry had any number of bureaucrats who would have been happy to tell him that bringing in unprecedented numbers of newcomers would have these effects. documents obtained earlier this year by the canadian press showed that staff within fraser’s ministry were actively warning that his immigration targets would overwhelm housing, health care and other public services.
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a battery of demand-side measures exacerbating the housing crisis
fraser has spent the last year-and-a-half as housing minister. neither fraser nor freeland invented the idea of unaffordable canadian housing: the acute housing shortage driving the crisis was already well-entrenched when they took their seats as liberal mps.
however, they’ve both played a hand in shepherding through a series of measures pitched as solutions to housing unaffordability, but which almost certainly resulted in the making the crisis worse.
in the 2023 federal budget, most notably, there wasn’t a single policy designed to increase housing supply or make it easier to build homes. instead, freeland rolled out tax credits for home buyers and a one-time $500 housing benefit — both of which would have had the effect of increasing the amount of money in the real-estate market and bidding up prices further.
this approach would change somewhat in the most recent federal budget tabled in april, which did pledge to dramatically increase the housing supply. but only days before her sudden resignation, freeland was again promising new rounds of policies to subsidize housing demand, such as increasing mortgage terms, relaxing the rules on down payments and increasing loan limits.
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some conspicuously terrible tax policy
as freeland’s tenure as finance minister comes to an end, she has just finished orchestrating the two-month “gst-hst break,” which economist mike moffatt has described as the “worst tax policy of the last decade.”
its overall economic impact likely won’t be all that noticeable, but the unworkability of the policy speaks to a level of policy chaos within the finance ministry. rather than declaring a general gst amnesty, exemptions were extended to a series of vague, confusing and often contradictory products. as one example, some star wars lego kits were subject to the exemption, while other were not — and it was up to retailers to figure out which.
then, just hours before the break was set to take effect on saturday, the canada revenue agency announced that participation was effectively optional, as “we don’t intend to chase after small businesses that may struggle to implement the measure in time.”
it would be much the same story for freeland’s other signature tax policy: a hike to the capital-gains tax announced in may that will effectively make canada home to the highest capital taxes in the world.
it’s only expected to bring in an extra $19.4 billion over the next five years — freeland pitched it as a “fairness” measure — but it could easily scare away far more than that in capital flight. a back-of-the-envelope calculation by economist jack mintz, for one, estimated that it could shrink gdp by about $90 billion.
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this is part of why the capital-gains hike was explicitly criticized by freeland’s predecessor as finance minister, bill morneau. “from my perspective, this is clearly a negative to our long-term goal, which is growth in the economy, productive growth and investment,” he said at the time.
in other news
dominic leblanc has replaced freeland as finance minister. leblanc is one of the more loyal trudeau loyalists; he’s one of several cabinet ministers who knew the prime minister before he even entered politics. leblanc is the son of governor general roméo leblanc, so both he and trudeau knew each other as children.
this from the canada revenue agency guidance on what products are exempt from the gst under the new gst/hst break which began saturday. but hanukkah bushes do not exist as a retail product. what you do is purchase a christmas tree and then cover it with hanukkah-themed decorations (and the practice is controversial; there’s even a children’s book called there’s no such thing as a chanukah bush). as decorations are not subject to the exemption, the cra is referencing something that doesn’t exist – making this possibly the first time that a tax exemption has been extended to something imaginary.
canada revenue agency
there was a solid four hours on parliament hill where reporters who had gathered to be given early access to the fall economic statement weren’t allowed to see it because the government didn’t know if they’d be able to find someone to table it in the house of commons. it eventually fell to government house leader karina gould, who revealed that the deficit is now projected to be $62 billion. even in the context of how the trudeau government usually spends money, that’s really high – about $1,500 in new debt per person.
the following liberal mps have officially called on trudeau to resign. however, none of them have called for an election, and current polls have the liberals losing all of these riding when the next one is called (even housefather, who occupies a seat the liberal have held since the 1940s):
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- francis drouin (glengarry—prescott—russell)
- chad collins (hamilton east—stoney creek)
- patrick weiler (west vancouver—sunshine coast—sea to sky country)
- anthony housefather (mount royal)
- helena jaczek (markham—stouffville)
- rené arseneault (madawaska—restigouche)
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