Mon Dec 16 17:31:08 UTC 2024: ## Freeland and Trudeau at Odds Over Spending, Risking Deficit Target

**Ottawa, ON** – Tensions are rising between Finance Minister Chrystia Freeland and Prime Minister Justin Trudeau’s office over spending, risking Freeland’s commitment to keep the deficit below $40.1 billion, multiple sources have told The Globe and Mail.

The disagreement centers around politically driven spending measures, including a proposed GST holiday on items like toys and alcohol, and $250 benefit cheques for working Canadians earning up to $150,000. While the Prime Minister’s Office (PMO) championed these initiatives, the Finance Department reportedly deemed them fiscally unsound. The GST holiday has passed the House of Commons, but the future of the $250 rebate remains uncertain.

Sources, including senior Liberals and former Finance Department officials, described the relationship between Freeland and the PMO as strained, with tensions escalating since the summer. While such disagreements are not uncommon, the current situation reportedly mirrors the rift that led to the departure of Freeland’s predecessor, Bill Morneau, in 2020. However, unlike Morneau, Freeland has indicated her intention to remain in her position.

The PMO’s push for increased spending aims to alleviate the impact of inflation on Canadians. However, this clashes with Freeland’s commitment to fiscal prudence. While both Trudeau and Freeland reportedly aim to avoid actions that would trigger inflation or interest rate hikes, the proposed spending could exceed the deficit target. Parliamentary Budget Officer Yves Giroux predicts the deficit will reach $46.4 billion, significantly higher than Freeland’s target. The final figure will be revealed in Freeland’s fiscal update on Monday.

Recent staff changes, including the departure of Freeland’s chief of staff, Andrew Bevan, have also contributed to the tensions. Bevan’s replacement, Shannon Zimmerman, reportedly lacks the same influence within the PMO.

Freeland’s upcoming fiscal update will include new border security spending in response to potential US tariffs, but has been delayed due to parliamentary gridlock over a separate issue. The situation highlights the internal struggles within the Liberal government as it balances political priorities with fiscal responsibility.

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