The part of Finance Minister Chrystia Freeland’s resignation letter that most resonated with me was her declaration about the importance of “keeping our fiscal powder dry today, so we have the reserves we may need for a coming tariff war. That means eschewing costly political gimmicks we can ill afford, and which make Canadians doubt that we recognize the gravity of the moment.” Several weeks I made the same criticism of the Ford Government’s latest “costly political gimmick” of a $200 per person handout that will cost $3 billion. Right now, the federal and Ontario governments are collaborating on another costly political gimmick – a selective HST holiday between mid-December and mid-February.

No Daylight

Freeland’s letter reminded me of what I taught about the Minister of Finance in my public administration course. It is the least popular job in Cabinet because every other minister is arguing for more resources for their worthwhile departmental initiatives, while the finance minister is attempting to uphold a fiscal framework that will inevitably disappoint the rest of Cabinet. The only way the finance minister can do their job is with the support of the first minister. Metaphorically, there must be no daylight between the two. To explain this football metaphor, I would ask a (male) member of class to come up and stand shoulder-to-shoulder with me.

I think the job of finance minister has become more difficult because of the current economic and ideological context. The burning issue of “affordability” is a reaction to the impact of the post-pandemic inflation on real wages. People are comparing current prices to prices before the pandemic and invariably finding them to be at least 20 percent higher. Wages have risen as well, but for some people they haven’t risen as fast as prices, or some people haven’t perceived them to have risen as fast as prices. People want the government to help them maintain their real income.

In a recession, it is well-understood that public policy is intended to focus on the unemployed. Those who continue to have jobs usually do not begrudge the support for those who are less fortunate. In a period of inflation, the economy may remain at close to full employment, but most people feel worse off. The answer governments have come up with is broad-based and usually temporary reductions in taxes or fees. Finance ministers don’t like these policies because maintaining everyone’s real income is impossible, so the policies are tokenistic solutions that are nonetheless expensive, increase public debt, and don’t target those who are worst off.

Economists are Also Experts

Finance ministries are staffed by economists and finance ministers, if not themselves economists, generally have a background close enough to economists to understand their advice. (Chrystia Freeland, while not trained as an economist, had a background as a journalist writing about economic issues.) Economists are experts, like physicists, climate scientists, virologists, and epidemiologists. Many of the people who call themselves populists are skeptical of experts, and “prefer to do their own research.” Policies that the vast majority of economists advocate, such as trade liberalization and maintaining fiscal balance, have much less public support than in the past. Though some commentators interpret Freeland’s letter as criticism of Justin Trudeau’s focus on political expediency and tone-deaf management style, I also see it as an understandable expression of exasperation by a professional economist.

Budget Consultation as Public Education

In addition to ascertaining voter preferences, budget consultations can serve as an exercise in educating citizens to understand the global constraints and internal tradeoffs necessary in establishing a government budget. In a previous post, I criticized the Ford Government’s online budget survey as only an attempt to build support for its preferred policies. The federal government also conducts budget surveys, and I was hoping that its survey for the 2025 budget would be available, so I could contrast the two. Unfortunately, it isn’t.

Nonetheless, I did find a budget survey that is being conducted by my MP, Rob Oliphant, who represents Don Valley West. Oliphant’s is much shorter, but also much less biased than the Ontario government. The survey starts by asking what is the most important issue for the federal government to address in the budget, with a comprehensive set of ten choices that include cost of living, environment and climate change, health care, housing, immigration, and the deficit and debt. The survey then asks if the federal government should spend more or less in each of eight major areas it is responsible for, which at least introduces the idea of tradeoffs. It asks how people feel about the upcoming trade negotiations with the US and Mexico (on a five-point scale from very positive to very worried). Finally, it asks about two major federal initiatives: how important the Canada Child Benefit is to them, and whether they received the Canada Carbon Rebate. I like this questionnaire because it is short, isn’t attempted to lead respondents to a predetermined answer, and because it provides useful information for an MP. I hope Rob Oliphant will make the results public.

The federal and provincial governments will be introducing budgets in a few months that will have to react to a new US Administration that is mercantilist, militaristic, and xenophobic. Serious public discussion is essential in the context of what Chrystia Freeland rightly calls “the gravity of the moment.”