'Which one of those two is going to win?': Poilievre prods Trudeau, Freeland over spending tension

Highlights from the fall economic statement CTV News' Scott Hurst says the fall economic statement shows the feds really blew past their promise to keep the deficit low.

Revived talk of tensions between Prime Minister Justin Trudeau and Deputy Prime Minister and Finance Minister Chrystia Freeland prompted new questions Tuesday, about how big the federal deficit will be in next week's economic update.

"She wants a large deficit of $40 billion. He on the other hand, wants an even larger deficit on steroids, bigger than $40 billion. We know that Canadians are going to lose from all this inflation, but which one of those two is going to win?" asked Conservative Leader Pierre Poilievre during question period.

Poilievre's prodding came amid a new report from The Globe and Mail, citing unnamed sources that suggested the two are at odds over the economics of measures such as the two-month GST/HST pause and the in-limbo $250 workers' benefit cheques.

The holiday affordability package, if fully enacted, is slated to cost an estimated $6.3 billion.

One senior government source CTV News spoke to Tuesday said that there is tension and some frustration, but not to a degree that makes the working relationship untenable.

Another senior Liberal disagreed with the characterization of the two being "at odds" and said that in their view, Trudeau and Freeland's offices have a healthy working relationship and that tough conversations are a natural part of building a policy document such as a fall economic statement.

After being accused in question period by Poilievre of losing control of his cabinet, Trudeau responded by saying that Canadians lose when Poilievre's party votes against support measures such as dental care and the school food program.

"Every single time the Leader of the Opposition gets up in this House, he stands against supports for Canadians, against growing the economy, against supporting a better future for all Canadians, because he's only in it for himself," Trudeau said.

"It's not clear that the finance minister is actually in it with him," Poilievre shot back.

This is not the first time there's been rumblings about friction between the Prime Minister's Office (PMO) and Freeland's Office. This summer, senior officials in the PMO were reportedly concerned about Freeland's economic communications chops.

At the time, Trudeau asserted he still had "full confidence" in Freeland, but noted he'd been in talks with Mark Carney about entering federal politics. A few months later, the Liberal Party announced that the former Bank of Canada governor was joining as a special adviser to serve the chair of a leader’s task force on economic growth.

On Tuesday, Freeland sought to downplay the suggestions that her and Trudeau are butting heads over spending.

She said, in French, that her job is a "great privilege” and she was not focused on "political chicanery," when asked about the reporting, and whether it affected the content or timing of the fall economic update.

The renewed look at the federal books is slated to be tabled Monday, just a day before MPs are scheduled to break for the year.

Asked about the tension and whether Canadians should be concerned, Government House Leader Karina Gould said her focus was on passing the supplementary estimates and ensuring the Liberals "deliver effectively for Canadians over the holidays and into the new year."

Freeland won't commit to meeting deficit target

Earlier in the day, Freeland faced questions from reporters about whether she would meet one of her key fiscal guardrails as set out in the spring budget – maintaining the 2023-24 deficit at or below $40.1 billion – in next week's economic update.

"I am not going to comment on anonymous rumours out in the town right now," Freeland said. "The debt to GDP ratio is our fiscal anchor."

In repeated follow-ups, Freeland said the fiscal anchor that will be maintained in the fall economic statement will be reducing the federal debt as the share of the economy.

"I chose my words with care, because it is important to be clear with Canadians. It is important to be clear with capital markets," Freeland said.

"If your debt is declining as a share of the economy, by definition your fiscal position is sustainable and that is really important."

Signalling the Liberals may be blowing through her deficit target in exchange for offering up additional affordability measures, and potentially putting up big spending for new border measures, has sparked some concern among economic observers.

Robert Asselin, a senior vice-president at the Business Council of Canada and a former budget director to former finance minister Bill Morneau, called it a sign the current government is "making it up as they go."

"This is the third time in four years that the finance minister will miss her own fiscal target," Asselin said. "They keep changing their own fiscal target. It sends a terrible message to Canadians, to investors, and to debt markets who are looking for stability in a time of instability, frankly."

He said that not keeping within targets at a time where the economy could be weakening, and U.S. president-elect Donald Trump is threatening major tariffs suggests "the rainy days are here, and we're not prepared for it."

As for whether Trudeau's latest affordability package could be seen as the kind of spending that could justify a bigger deficit, Asselin said the measures aren't the kind to have "structural effects on the economy."

"It's like sugar pops. You know it's good when you have it. It feels good, but then an hour after, you're still hungry. It's the same with our economy. We need more productivity, more innovation, and this spending will do nothing to achieve that."

With files from CTV News' Vassy Kapelos and Spencer Van Dyk