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Comparing four federal finance ministers in moments of crisis

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From the Fraser Institute

By Grady Munro, Milagros Palacios and Jason Clemens

The sudden resignation of federal finance minister (and deputy prime minister) Chrystia Freeland, hours before the government was scheduled to release itsĀ fall economic updateĀ has thrown an already badly underperforming government into crisis. In her letter ofĀ resignation, Freeland criticized the government, and indirectly the prime minister, for ā€œcostly political gimmicksā€ and irresponsible handling of the countryā€™s finances and economy during a period of great uncertainty.

But while Freelandā€™s criticism of recentĀ poorly-designedĀ federal policies is valid, her resignation, in some ways, tries to reshape her history into that of a more responsible finance minister. That is, however, ultimately an empirical question. If we contrast the performance of the last four long-serving (more than three years) federal finance ministersā€”Paul Martin (Liberal), Jim Flaherty (Conservative), Bill Morneau (Liberal) and Freeland (Liberal)ā€”itā€™s clear that neither Freeland nor her predecessor (Morneau) were successful finance ministers in terms of imposing fiscal discipline or overseeing a strong Canadian economy.

Letā€™s first consider the most basic measure of economic performance, growth in per-personĀ gross domestic productĀ (GDP), adjusted for inflation. This is a broad measure of living standards that gauges the value of all goods and services produced in the economy adjusted for the population and inflation. The chart below shows the average annual growth in inflation-adjusted per-person GDP over the course of each finance ministerā€™s term. (Adjustments are made to reflect the effects of temporary recessions or unique aspects of each ministerā€™s tenure to make it easier to compare the performances of each finance minister.)

Sources: Statistics Canada Table 17-10-0005-01, Table 36-10-0222-01; 2024 Fall Economic Statement

By far Paul Martin oversaw the strongest growth in per-person GDP, with an average annual increase of 2.4 per cent. Over his entire tenure spanning a decade, living standards rose more than 25 per cent.

The average annual increase in per-person GDP under Flaherty was 0.6 per cent, although that includes the financial recession of 2008-09. If we adjust the data for the recession, average annual growth in per-person GDP was 1.4 per cent, still below Martin but more than double the rate if the effects of the recession are included.

During Bill Morneauā€™s term, average annual growth in per-person GDP was -0.5 per cent, although this includes the effects of the COVID recession. If we adjust to exclude 2020, Morneau averaged a 0.7 per cent annual increaseā€”half the adjusted average annual growth rate under Flaherty.

Finally, Chrystia Freeland averaged annual growth in per-person GDP of -0.3 per cent during her tenure. And while the first 18 or so months of her time as finance minister, from the summer of 2020 through 2021, were affected by the COVID recession and the subsequent rebound, the average annual rate of per-person GDP growth was -0.2 per cent during her final three years. Consequently, at the time of her resignation from cabinet in 2024, Canadian living standards are projected to be 1.8 per cent lower than they were in 2019.

Letā€™s now consider some basic fiscal measures.

Martin is by far the strongest performing finance minister across almost every metric. Faced with aĀ loomingĀ fiscal crisis brought about by decades of deficits and debt accumulation, he reducedĀ spendingĀ both in nominal terms and as a share of the economy. For example, after adjusting for inflation, per-person spending on federal programs dropped by 5.9 per cent during his tenure as finance minister (see chart below). As aĀ result, the federal government balanced the budget and lowered the national debt, ultimately freeing up resources via lower interest costs for personal and business tax relief that made the country more competitive and improved incentives for entrepreneurs, businessowners, investors and workers.

*Note: Freeland’s term began in 2020, but given the influence of COVID, 2019 is utilized as the baseline for the overall change in spending. Sources: Statistics Canada Table 17-10-0005-01, Table 36-10-0130-01; Fiscal Reference Tables 2024; 2024 Fall Economic Statement

Flahertyā€™s record as finance minister is mixed, in part due to the recession of 2008-09. Per-person program spending (inflation adjusted) increased by 11.6 per cent, and there was a slight (0.6 percentage point) increase in spending as a share of the economy.Ā DebtĀ also increased as a share of the economy, although again, much of the borrowing during Flahertyā€™s tenure was linked with the 2008-09 recession. Flaherty did implement tax relief, including extending the business income tax cuts started under Martin, which made Canada more competitive in attracting investment and fostering entrepreneurship.

Both Morneau and Freeland recorded much worse financial performances than Flaherty and Martin. Morneau increased per-person spending on programs (inflation adjusted) by 37.1 per cent after removing 2020 COVID-related expenditures. Even if a more generous assessment is used, specifically comparing spending in 2019 (prior to the effects of the pandemic and recession) per-person spending still increased by 18.1 per cent compared to the beginning of his tenure.

In his five years, Morneau oversaw an increase in total federal debt of more than $575 billion, some of which was linked with COVID spending in 2020. However, as multiple analyses have concluded, the Trudeau government spent more and accumulated more debt during COVID than most comparable industrialized countries, with little or nothing to show for it in terms ofĀ economic growthĀ or betterĀ health performance. Simply put, had Morneau exercised more restraint, Canada would have accumulated less debt and likely performed better economically.

Freelandā€™s tenure as finance minister is the shortest of the four ministers examined. Itā€™s nonetheless equally as unimpressive as that of her Trudeau government predecessor (Morneau). If we use baseline spending from 2019 to adjust for the spike in spending in 2020 when she was appointed finance minister, per-person spending on programs by the federal government (inflation adjusted) during Freelandā€™s term increased by 4.1 per cent. Total federal debt is expected to increase fromĀ $1.68 trillionĀ when Freeland took over to an estimatedĀ $2.2 trillionĀ this year, despite the absence of a recession or any other event that would impair federal finances since the end of COVID in 2021. For someĀ perspective, the $470.8 billion in debt accumulated under Freeland is more than double the $220.3 billion accumulated under Morneau prior to COVID. And thereā€™s an immediate cost to that debt in the form ofĀ $53.7 billionĀ in expected federal debt interest costs this year. These are taxpayer resources unavailable for actual services such as health care.

Freelandā€™s resignation from cabinet sent shock waves throughout the country, perhaps relieving her of responsibility for the Trudeau governmentā€™s latest poorly-designed fiscal policies. However, cabinet ministers bear responsibility for the performance of their ministriesā€”meaning Freeland must be held accountable for her previous budgets and the fiscal and economic performance of the government during her tenure. Compared to previous long-serving finances ministers, itā€™s clear that Chrystia Freeland, and her Trudeau predecessor Bill Morneau, failed to shepherd a strong economy or maintain responsible and prudent finances.

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Trump announces 25% tariff on foreign automobiles as reciprocal tariffs loom

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From The Center Square

ByĀ 

President Donald Trump announced a permanent 25% tariff on automobiles made in other countries that will go into effect on April 2.

Trump made the announcement Wednesday in the Oval Office. He also hinted that the reciprocal tariffs he plans to announce on April 2 could be more lenient, suggesting the tariffs would be less than fully reciprocal.

“What weā€™re going to be doing is a 25% tariff on all cars not made in the U.S.,” the president said.

Asked if any changes could avert the auto tariffs, Trump said they would be “permanent.”

“This will continue to spur growth like you haven’t seen before,” Trump said.

Trump said the tariffs will be good news for auto companies that already build products in the U.S. He also said carmakers that don’t build in the U.S. are looking to do so.

“We’re signing an executive order today that’s going to lead to tremendous growth in the automobile industry,” Trump said.

The White House said it expects the auto tariffs on cars and light-duty trucks will generate up to $100 billion in federal revenue. Trump said eventually he hopes to bring in $600 billion to $1 trillion in tariff revenue in the next year or two.

Trump also said the tariffs would lead to a manufacturing boom in the U.S., with auto companies building new plants, expanding existing plants and adding jobs.

Trump also urged House Speaker Mike Johnson to approve a measure that would allow car buyers to deduct the interest on loans for cars that are made in America. Trump said that such a plan would make cars nearly free for buyers.

“So when you get a loan to buy a car … I think it’s going to pay for itself, I don’t think there’s any cost,” he said.

Trump also said theĀ reciprocal tariffs he plans to unveil on April 2 would be fair.

“We’re going to be very nice actually,” he said. “It’ll be, in many cases, less than the tariff they’ve been charging us for decades.”

European Commission President Ursula von der Leyen said tariffs would hurt businesses and consumers.

“I deeply regret the U.S. decision to impose tariffs on European automotive exports,” she said. “Tariffs are taxes ā€“ bad for businesses, worse for consumers, in the U.S. and the EU.”

Business groups, including the U.S. Chamber of Commerce and American Farm Bureau Federation, have urged Trump to back off tariff threats.

Trump has promised that his tariffs would shift the tax burden away from Americans and onto foreign countries, but tariffs are generally paid by the people who import the products. Those importers then have a choice: absorb the loss or pass it on to consumers through higher prices. He also promised tariffs would make America “rich as hell.” Trump has also used tariffs as a negotiating tactic to tighten border security.

Tariffs are taxes charged on imported products. The company importing the products pays the tariffs and can either try to absorb the loss or pass the additional costs on to consumers.

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While “Team Canada” attacks Trump for election points, Premier Danielle Smith advocates for future trade relations

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ā€œToday, I addressed the Legislative Assembly and spoke to the actions that the Government of Alberta has taken and will continue to take to advocate for Alberta and Canadaā€™s interests in the U.S. as we continue to face the threat and imposition of tariffs.ā€

Mr. Speaker,

When U.S. President Donald Trump first announced his threatened tariffs against Canada, and began musing about our country becoming the 51st state, many Canadians ā€“ and Albertans ā€“ feared for their futures.

Why? Because, regardless of our political stripe, we all knew the imposition of 25% tariffs on all Canadian goods to the U.S. would cost the jobs of hundreds of thousands of Canadians, would depress our economy, devastate our budget and damage the sovereignty of our country.

And in the roughly 4 months until just before last weekend’s federal election call, Premiers, party leaders and Canadians were united (other than perhaps the Alberta NDP) in working as hard as we could to convince the U.S. President and Congress to reconsider these unjustified actions against our country.

In fact, Premiers were all encouraged by each other as well as the former Prime Minister and his ministers, to visit the U.S., get on U.S. media, speak with every U.S. official and influencer we could find to convince the U.S. President to refrain from imposing these tariffs.

It was all about working as ā€˜Team Canadaā€™ for the greater good.

Enter Liberal Prime Minister Mark Carney.

Now, all of a sudden, it is treason to talk to American media personalities that we disagree with. It is disloyal to try and persuade high-profile Republicans holding influence with the President to abandon his tariff policies on Canada. Indeed, it is a high crime to try and convince U.S. officials to refrain from imposing tariffs until after our country has an elected leader with a strong mandate.

Shame on all who dare to speak with the enemy, they say!

These are the Team Carney and Nenshi NDP talking points.

Their endgame is quite obvious. Frighten and divide Canadians. Try and make Canadians forget the utter incompetence of Liberal and NDP policies inflicted upon this country over the last 10 years. Associate conservatives with President Trump. And if they play their cards just right ā€“ and sprinkle in just enough anti-Alberta rhetoric ā€“ presto ā€“ Canada can elect another Liberal majority government.

Well ā€“ the Carney Liberals and Nenshi NDP are right about one thingā€¦our country is indeed vulnerable right now.

And the reason why is as clear as a sunny Alberta day.

It is because for the last 10 years, Liberal and NDP leaders across this country ā€“ both federal and provincial – have repeatedly sold out Canada and Alberta with policies that have landlocked our immense natural resources, made nation building projects impossible to finance and build, and have made securing access to our ports an exercise in frustration and futility.

These Liberal and NDP leaders ā€“ from Trudeau to Singh and now to Prime Minister Mark Carney ā€“ have done everything in their power to sow investment uncertainty, add impossibly high costs on the development of our resources, and have disastrously weakened our security and military ā€“ and all in the name of their green extremist religion and its cult leaders named Guilbeault, Suzuki, Gore and Thunberg.

And the results are obvious ā€“ Canadians are poorer than Americans ā€“ overly-dependent on the Americans ā€“ and vulnerable to many nations including the Americans.

Canada has indeed been sold out ā€“ big time ā€“ and it’s been sold out by the utter incompetent, self-righteous and extreme policies of Liberal and NDP leadership across this country ā€“ including the Nenshi NDP here in Alberta. From C-69, to oil and gas production caps to tanker bans to a dozen other examples ā€“ the Liberals and their allies have attacked the Alberta and Saskatchewan economies mercilessly.

But despite all that ā€“ despite the 10 year attack on Alberta by our own federal government ā€“ when tariffs were threatened on our fellow Canadians and the federal Liberals realized they had no contacts or allies anywhere in the new U.S. administrationā€¦what did the Alberta Government do?

Did we cower in the corner madly texting our tweets about hating Donald Trump on X?

Did we turn into part time TikTok rage farmers to stir up as much fear and loathing of Americans as humanly possible?

Did we give up, throw our hands in the air, express righteous indignation ā€“ but do nothing to fight against the threat posed against our province and country?

No ā€“ thatā€™s what the Nenshi NDP did of course ā€“ but we, Albertaā€™s UCP government, did not.

Instead, our government did exactly what Albertans expected us to do ā€“ we decided to fight tooth and nail for Albertan and Canadian jobs and sovereignty.

My ministers, officials and I have spent hundreds of hours over the last several months talking with, lobbying, educating, and persuading every U.S. lawmaker and media influencer that was willing to listen, about how damaging and wrongheaded imposing tariffs on Canada would be for Americans, and the millions of American jobs that would be lost because of them.

Iā€™ve made this case repeatedly to the American people and their leaders ā€“ especially Republican leaders ā€“ from the President of the United States personally, to members of his Cabinet to Senators to governors to members of congress to podcasters to media personalities.

Iā€™ve lost track of how many nights I have spent in uncomfortable hotel beds and in airports ā€“ doing everything humanly possible to stand up for Canadian and Alberta workers and families.

Convincing U.S. Officials to refrain from putting tariffs on any Canadian goods. Asking that they respect the current free trade agreement and not begin renegotiations until Canadians elect a new Prime Minister with a strong mandate.

Doing all we could in Alberta to secure the U.S. border and urging the Liberals to do the same across the country so we could further delay the implementation of tariffs.

And it hasnā€™t just been Alberta ā€“ several other Premiers ā€“ particularly conservative Premiers ā€“ from Premier Scott Moe to Premier Tim Houston to Premier Doug Ford ā€“ have been doing the same thing.

And the results ā€“ it has been almost 4 months since the President first threatened tariffs on Canada, and although steel and aluminum are being wrongfully tariffed at this time ā€“ the tariffs on remaining Canadian goods sit at zero today – rather than the threatened 25%.

And what has the Nenshi NDP done to contribute to this effort? Not a single thing other than raging against this government for every effort made to protect Albertans.

Needless to say, there is not a doubt in my mind that had the Nenshi NDP been in charge during this period, we would likely have long ago been hit with across the board 25% tariffs and lost thousands of Alberta jobs already.

Because the NDP have no idea what diplomacy is as they donā€™t know how to talk constructively and effectively with anyone they disagree with.

Glad we never need to find out.

Our governmentā€™s advocacy has made a massive difference for Albertans and Canadians.

Thatā€™s a fact.

But now, we have another tariff deadline looming on April 2nd ā€“ and I am off to the U.S. yet again to try and speak to Americans this time through the 2nd largest podcaster in the world whose audience is made up of exactly the people we need to persuade to convince their president to change course on tariffs against Canada.

And what does Team Carney want me to do?

They want me to abandon my post, remain in Alberta and do absolutely nothing to defend our province.

They want me to cower in the face of eastern media pundits and politicians who favour political grandstanding to effective diplomacy.

Iā€™m fiercely criticized for going into the lionā€™s den to change the hearts and minds of the very Americans we need on Canadaā€™s side to avoid a trade war with the most powerful economy on Earth.

They want this lady and Alberta to just sit down and shut up.

Wellā€¦here is my response to that.

I will not be silent. Alberta will not be silent.

We will not be pushed around and called traitors for merely having the courage to actually do something about our nationā€™s and provinceā€™s predicament other than merely indulging in self-righteous tantrums.

And I for one will never be silenced by the party in Ottawa that has sold out our beloved province for the last 10 years with the help of their NDP collaborators.

I have and will always put Albertans first.

And until this danger to Alberta and our economy is past, theyā€™re going to have to roll me off in a stretcher before I stop fighting for this province and our people.

So call me and my caucus whatever name in the dictionary you want.

As long as Albertans know weā€™re fighting for them and their families ā€“ we could care less what the members opposite or Liberal politicians in Ottawa have to say about us.

Because Albertans expect their Premier and government to always put Albertans first and to lead them through this storm with fearless determination.

As Winston Churchill once said: ā€œFear is a reaction. Courage is a decision.ā€

We on this side of the house have made the decision to act with courageā€¦So that Alberta may remain forever strong and free.

Thank-you, Mr. Speaker.

Danielle Smith

Danielle Smith was sworn in as Premier of Alberta and Minister of Intergovernmental Relations on October 11, 2022.

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