A Whisper from the Line editors: Pay attention to what Freeland is saying

Maybe Freeland has clued into just how vulnerable Canada is, and is trying very hard to signal that realization to the necessary people.

Line readers, life can be funny sometimes. Not always “ha ha” funny, but you know — things happen that make you go hmmm. And gosh, did we ever go hmmm yesterday.

In recent dispatches and articles here, we have made very clear that we have real concerns about the health of the Canadian economy. These concerns are varied and diverse, and often bleed over from economic into social — to pick one example we’ve covered, if young Canadians can’t buy houses while older Canadians become multi-millionaires when they sell theirs, that’s a recipe not just for economic pain, but social unrest.

There are, alas, others.

Earlier this week, one of your Line editors was in a conversation with an associate — a successful Canadian business leader and entrepreneur. Our associate asked if we’d paid attention to Finance Minister Chrystia Freeland’s remarks last week when she announced that the Canada Response Benefit, the wage subsidy and the rent subsidies would be ending, replaced by more targeted programs to support people and businesses in areas where COVID-19 case levels remain very high and normal economic and social activity is impossible. We had to confess that we hadn’t, not closely — we’d read the coverage of the announcement of the wrapping up of the broad-based supports and the new more targeted replacements, but hadn’t looked more closely than that.

Check it out, we were told, and note what isn’t there. None of the usual Trudeauvian rhetorical flourishes about building back better or growing the economy from the heart outward and the like. This was a speech aimed not at Canadians generally or even Liberal supporters specifically. This was a signal to the business and international finance community, our associate stressed. The message is: “We get it. We’ve been pushing the limit and we’re going to pull back now.”

That’s just one person’s take, of course, but your Line editors did indeed dig up a copy of the remarks, which you can find here, and we have to say that we agree. Once you are looking for it, it’s hard to miss what’s missing: there is none of the usual Trudeau/Freeland touches that have so long typified this government’s approach to any public statement. The Trudeau government has genuinely excelled at this kind of communication and brand building, and for it to vanish so completely and suddenly out of an important statement is noteworthy. There is nothing wrong with the finance minister speaking in a businesslike manner, of course, nor do we wish to suggest otherwise. But these guys are so reflexively shameless in their branding that the absence of the usual frills can only reflect a choice.

And like we said, life is funny, because your Line editors were chatting about this on Tuesday — what our associate had told us, and what Freeland’s speech contained — when we also noticed these tweets, on the occasion of Trudeau announcing his new cabinet:

Annie Bergeron-Oliver @AnnieClaireBO

Asked whether gov will raise taxes to cover new programs, Finance Minister Chrystia Freeland says pm understood from the start that the health and financial crisis required strong action. She says gov is “very much aware” emergency support programs were emergency support.

Annie Bergeron-Oliver @AnnieClaireBO

Freeland says she hopes “we are at the final stage of support.” She says gov has to be “careful & thoughtful” about gov spending. She says Libs put forward five year spending plans, with some specific plans to raise revenue that “did not include what you alluded to” aka tax hikes

See what we mean? Again, it’s not weird for her to be talking about this — she is the finance minister, after all. But the tone has shifted. And that’s … interesting.

And this brings us to funny little coincidence number 3. While chatting with another associate — look, we have a lot of associates, OK, and they all need chatting up — a friend of The Line also noted the changing tone from Freeland, and pointed out that we might have part of our explanation already. “Go check out a report on Canadian bond sales from just before Thanksgiving,” they urged. Duly prodded, we indeed found the report — by the Canadian Press’s Jordan Press. Using documents CP obtained, Press reported that Freeland was warned earlier this year that the federal government would have to shift some of its bond sales — how we raise the money to cover off our deficit spending — away from very long-term bonds. Freeland was apparently warned that there simply is limited demand for long-term Canadian debt on international markets.

That shouldn’t be a shock — as all the major economies were forced to spend bigly during the pandemic, the world is awash with debt from developed countries, of which Canada is just one among several. Indeed, in funny little coincidence number 4, Bloomberg reported on Tuesday that, with concerns of inflation mounting, the Bank of Canada is actively trying to reduce its purchases of our own debt. (Update: It is actually suspending them.) And absolutely all of this assumes that nothing else goes wrong out there, at home or abroad. We aren’t predicting it will, but surely we’ve all learned of late that we can’t take stability for granted? Canada’s overall level of indebtedness has risen sharply during the pandemic, leaving us vulnerable to potential future emergencies. Debt outside of the government sector (excluding the banks, which are a different category) is already above 240 per cent of GDP. Canadians owe a lot.

Hey, maybe it’s all nothing. Maybe it’s all in our heads. Or maybe the Trudeau government, and Freeland in particular, has clued into just how vulnerable Canada is, and how their own spending plans were making it worse, and they are trying very hard to signal that realization to the necessary people in a way that doesn’t alarm the rest of the public.

We’ll see. Stay tuned.

Correction: This piece has been updated to clarify challenges for Canada’s sale of bonds on the international market.

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The Line is Canada’s last, best hope for irreverent commentary. We reject bullshit. We love lively writing. Please consider supporting us by subscribing. Follow us on Twitter @the_lineca. Fight with us on Facebook. Pitch us something: lineeditor@protonmail.com