Treasurer Jim Chalmers has praised his Canadian counterpart as an ‘absolute legend’ after she threw the government into turmoil when she quit.
Without being prompted, Dr Chalmers praised Canada’s outgoing Finance Minister Chrystia Freeland, who resigned yesterday.
The move that stunned the country and raised questions about how much longer the unpopular Prime Minister Justin Trudeau can stay in his job.
‘The last thing I want to briefly touch on is my friend Chrystia Freeland – the Finance Minister of Canada has resigned overnight,’ Dr Chalmers told reporters.
‘Chrystia has, is, such a great friend to me and to Australia and I really just wanted to wish her well.
‘Over the last two-and-a-half years, I’ve worked really closely with Chrystia Freeland – she’s an absolute legend and she’s been a great supporter of Ukraine, a big part of our efforts on the global economic stage and we have an extremely strong relationship with all of our Canadian counterparts.’
Ms Freeland, who was also deputy PM, has clashed with Mr Trudeau over how to deal with U.S. President-elect Donald Trump’s plans for 25 per cent import tariffs on goods from Canada and Mexico.
Treasurer Jim Chalmers has praised his Canadian counterpart as an ‘absolute legend’ after she undermined her boss by quitting (he is pictured right with Prime Minister Anthony Albanese)
‘We need to take that threat extremely seriously,’ she said in an open letter. ‘That means 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, which we can ill afford and which make Canadians doubt that we recognise the gravity of the moment.’
Ms Freeland disagreed with Mr Trudeau’s push for a two-month sales tax holiday and $250 ‘relief cheques’ to ‘working Canadians’ to offset the effects of inflation.
Dr Chalmers’ praise for his Canadian counterpart comes amid tensions within the Australian Labor Party caused by poor polling and high inflation.
Canada’s centre-left Liberal Party is widely expected to lose next year’s election to the Conservative Party led by Pierre Poilievre.
In Australia, Peter Dutton’s Opposition has been ahead of Labor in several opinion polls, although not with a margin big enough to secure majority government in his own right.
But unlike Australia, Canada has inflation under control and borrowers there have now had five rate cuts this year.
Australian borrowers have had no relief this year with economists and financial markets not expecting a cut until May 2025.
The Bank of Canada’s policy rate of 3.25 per cent, following another 50 basis point cut last week, is now a substantial 110 basis points below the Reserve Bank of Australia’s 4.35 per cent cash rate.
Canada’s inflation rate is also much lower than Australia’s.
Its headline inflation rate of 2 per cent is right in the middle of the Bank of Canada’s 1 to 3 per cent target.
Australia’s equivalent headline inflation rate of 2.8 per cent is based on $300 electricity rebates and is on the higher side of the Reserve Bank of Australia’s 2 to 3 per cent target.
Without being prompted, Dr Chalmers praised Canada’s outgoing Finance Minister Chrystia Freeland (right), whose resignation threatens to bring down Prime Minister Justin Trudeau’s (left) nine-year leadership of his country
Canada’s underlying inflation rate of 2.6 per cent is also significantly lower than Australia’s equivalent level of 3.5 per cent, which is still well above the RBA target.
Treasury is releasing its Mid-Year Economic and Fiscal Outlook on Wednesday, with updated figures compared with the May budget.
Dr Chalmers on Monday warned of falling iron ore revenue that could potentially mean bigger budget deficits.
‘What you’ll see in Wednesday’s figures is that we are downgrading mining exports by more than $100billion,’ he said.
‘As a consequence of that, company taxes will be down $8.5 billion in the budget update. That’s actually the first downgrade in company taxes since 2020.’
The Treasurer became defensive today when asked about the size of upcoming deficits.
‘You’ll see what the deficit is for the year that we’re in right now – I’d caution you against making assumptions based on numbers that other people make up,’ Dr Chalmers said.
Australians are still gloomy with the Westpac-Melbourne Institute’s consumer sentiment index for December producing an even weaker score of 92.8 points – further below the 100 level where optimists outnumber pessimists.
The survey of 1,200 adults showed more respondents are downbeat about how the economy will fare over the next 12 months, with an election due by May.
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