The economic policy legacy of the Justin Trudeau Liberal Government, 2015 to 2024
I confess: I was disappointed when the Justin Trudeau Liberals won the fall 2015 election. I was hoping for an orange break-through.
So, it comes with some irony that I find myself defending the economic policy legacy of the Justin Trudeau Liberal government nine years hence.
The acute drama that unfolded in December with the Finance Minister’s resignation ahead of a Skip-the-Dishes delivery of the 2024 Fall Economic Statement has been commanded by daily obituary writing by columnists and influencers seeking to consign not only the Prime Minister and his Liberal government and party to the dustbin of history, but their policy legacy as well.
This is a scandal. This is a shame.
I contend that since taking power in 2015, the Justin Trudeau Liberal Government*, has delivered the most important progressive economic legacy for Canadians in over forty years.
*with the support of the Jagmeet Singh NDP through the confidence-and-supply agreement that began in March 2022.
There has been sunshine from Centre Block.
I demonstrate this below by citing a selection this government’s economic policy achievements.
That I have not encountered more defenders of the Trudeau government’s economic record is highly alarming.
For what is at stake is not only these institutions established by the Trudeau government but the appetite of Canadian voters for progressive economic policy. The uninterrupted “everything is broken” mantra of the Pierre Poilievre Conservatives is cultivating a willingness to allow the delay, distortion and reversal of important economic policy actions needed for a just transition to a low carbon economy.
Climate and environment
Right up front, I begin with efforts to maintain the integrity of the Canadian and global ecosystem, in which the Canadian economy is embedded.
On climate change:
- Returned Canada to the Paris Agreement on climate change
- Developed a strategy, the Emissions Reduction Plan, to decarbonize Canada’s economy, featuring targets for 2030 (40% below 2005 levels) and 2050 (net zero)
- A suite of funds, tax credits and regulations, to support the transition: a green industrial policy
- Flagship policy instrument: a price on pollution (carbon tax), giving households an incentive to reduce fossil fuel consumption.
On protecting biodversity and reducing pollution:
- Committing 25% of Canada’s land and marine space for conservation by 2025
- Oceans Protection Plan: to protect our oceans and coastlines from the potential impacts of marine shipping, and to ensure the health of our oceans.
- Ban harmful single-use plastics
Production
The Liberal Government has been chided for not begin serious about economic growth, focusing instead on distributive polices. This would ignore their important public investments as well as tax policies to enable private sector growth.
- An infrastructure investment strategy
- Established the Canada Infrastructure Bank
- Supporting over 1,300 public transit projects across the country, including in Toronto, Montreal and Calgary
- Funding road and bridge construction
- National Housing Strategy: to ensure more people living in Canada have access to safe, affordable and inclusive housing.
- Features the Housing Accelerator: helping to boost housing supply, while supporting affordable, diverse and climate-resilient communities.
- Incentives to business investment: the Accelerated Investment Initiative, allowing businesses to write off more of the cost of their depreciable property in the first year of purchase.
- Tax policy: lowered the small business tax rate from 11% to 9%.
Distribution and Participation
These are not only about transfers but also about reducing barriers to fair participation, to being a more inclusive economy.
Indigenous
- In working to advance reconciliation and renew the relationship with Indigenous Peoples, the federal government has led a national conversation on Economic Reconciliation.
- Economic reconciliation means economic self-determination, such as in:
- equitable access to opportunities for economic development
- ability to make long term revenue and govern usage
- ability to pursue and ensure economic viability of Indigenous communities
- opportunity to participate fully in Canada’s economy, both domestically and internationally.
- To meet these ends, the government pledged new support for housing and water infrastructure, and schooling.
Women
- Advanced pay-equity legislation so women get equal pay for work of equal value.
People with disabilities
- Passed the Accessible Canada Act to advance the rights of and accessibility for Canadians with disabilities.
Children
- Tax-free Canada Child Benefit for children in low-income families
- $10 a day childcare program
- EI Parental Sharing Benefit to provide 5 extra weeks of benefits when parental leave is shared.
Seniors
- Expanded the Canada Pension Plan
- Increased by 10% the Guaranteed Income Supplement (GIS)
- Restored eligibility for Old Age Security and GIS to 65, from 67.
Access to affordable health services and products
- Canadian Dental Care Plan for residents that meet a certain income threshold
- Framework for a National Pharmacare system, that will help reduce prescription drug costs for Canadians.
Low-income workers
- Introduced the Canada Workers’ Benefit, a refundable tax credit to help individuals and families who are working and earning a low income
- Launched the new Canada Training Benefit, a refundable tax credit available to help Canadians with the cost of eligible training fees.
Tax policy
A “middle class tax cut”, which reduced the personal income tax rate from 22% to 20.5% on taxable income in the second tax bracket.
Introduced a new top tax bracket, which included a tax rate of 33% on taxable income above $200,000.
Monetary Policy
The 2021 agreement with the Bank of Canada on the renewal of the monetary policy framework for the 2022-2025 period shifted away from a singular focus on inflation to include consideration of the maximum sustainable level of employment when conditions warrant, and to report to Canadians on how labour markets outcomes have factored into the Bank’s monetary policy decisions.
Budget Policy
Sidestepping a commitment to balanced budgets gave the government the flexibility to fund these policies and programs above.
International
In response to the disruptions to trade regimes by the first Trump presidency:
- Renegotiated NAFTA (now the Canada-United States-Mexico Agreement).
- It included key gains for Canadian workers, including the elimination of Chapter 11 Investor-State Dispute Settlement provisions, progress on labour rights and gains for Canada’s auto and energy sectors
- Following the US’s departure, Canada and other remaining Pacific Rim countries negotiated a new trade agreement called Comprehensive and Progressive Agreement for Trans-Pacific Partnership
Response to the COVID-19 Pandemic, 2020-2022
In less than a week after the country lock-downed for the first time, the federal government announced a $82 billion aid package on March 18, 2020. Much of the aid package was in the form of income support and financial aid programs, often in the form of taxable benefits.
Income support programs
At least six programs, including:
- Canada Emergency Response Benefit (CERB): provided a taxable benefit of CA$2,000per month for Canadian residents facing unemployment due to the COVID-19 pandemic.
- Canada Recovery Benefit (CRB): designed to support those who do not normally qualify for EI (for example, the self-employed).
Employer/business support
At least five programs, including:
- Canada Emergency Business Account (CEBA): provided emergency interest-free loans to small businesses and nonprofit organizations during the COVID-19 pandemic. The aim of this program is to ensure that these businesses have access to sufficient capital to remain solvent during the pandemic.
- Canada Emergency Wage Subsidy (CEWS): a program created to provide financial support for businesses during the COVID-19 pandemic and prevent large layoffs.
Do you agree with my list? Have I missed anything that should be included? Are these economic policies progressive?
Quite an impressive list! Among Trudeau’s other progressive achievements, you forgot to mention the legalization of cannabis, the opening of our frontiers to millions of new permanent and temporary immigrants coming from poor countries, and forcing universities and researchers to implement DEI policies by imposing rules for ordinary research grants and quotas for Canada research chairs.
Thank you for having started this excellent initiative to counter the attacks against what were definitely some progressive economic policies that I think are shared by most Canadians as positive achievements. To me, your list is excellent. However, in addition to what Marc Lavoie said, I would add one very important development that relates to the fiscal policy vision of the Trudeau government from when they came to power in 2015.
One will recall that, though initially resistant, Stephen Harper was forced to run deficits during the Global Financial Crisis because of fears of falling into a depression abyss but also because of international pressures. However, starting at the G20 summit in Toronto, he together with Angela Merkel committed their governments to reverse gear and return to balanced budgets by 2015. As you know, Harper did achieve his goal but at the cost of an official recession in 2015, which, is some way, paved the way for the Trudeau Liberals to come to power given the economic malaise. Indeed, in contrast to the Chrétien-Martin years when the they had become completely obsessed with budget balances and achieving fiscal surpluses and in contrast even with Tom Mulcair and the NDP obsession with budget balances, the Liberals completely abandoned that neoliberal ideology and moved their policy in favour of trying to stabilize in the long term, à la Domar, the debt-to-GDP ratio. This abandonment of targeting the size of the budget balance in favour of stabilizing the debt-to-GDP ratio in the long term gave the Trudeau government much greater flexibility and largesse in pursuing expansionary fiscal policy and in introducing new programs.
Although I am personally more of fan of a Lernerian-MMT perspective on this matter of fiscal policy, I strongly believe that the Trudeau Liberals took a positive step when compared to the policies of both the Harper and the Chrétien-Martin era. Kudos to the Trudeau government for having moved forward the fiscal discourse in this country! Poilièvre will surely reverse their policy and move us back to pre-2015 with an obsession over the absolute size of the federal deficit à la Harper. Progressive economists should try to educate the public on the merits of what the Trudeau government espoused and implemented. I would like to recall readers of what I wrote in 2016 on exactly this blog pertaining to Mulcair and the NDP: https://www.progressive-economics.ca/2016/12/tommy-douglas-was-a-macroeconomist-not-a-provincialist/.
Moreover, Marc was absolutely right about net immigration. While in the short-term high immigration creates problems in housing and even in health care because of short-term capacity constraints, these are solvable problems that can be addressed in part through higher public spending. We must absolutely counter the argument that the Trudeau government has been “impoverishing” Canadians because of declining GDP per capita over the last few years. If anyone knows a bit about Canadian economic history, every time we had high net immigration (as, for instance, during the Wheat Boom era of the early twentieth century), per capita GDP growth collapsed for purely tautological reasons, since the denominator (which often includes not only adults but also children) would be rising more quickly than the numerator. In the long term, immigration makes the country wealthy and NOT poor. If the Conservatives are so concerned about low productivity growth, they should perhaps worry about the nature of private investment behaviour in this country and the lack of R&D, etc.
Mario Seccareccia
Great list (and comments) to remind us of big changes over the JT years. A couple of other policies changes to add: strengthening the environmental protection legislation with the introduction of the Impact Assessment Act (C-69) – and further strengthening it to address Supreme Court of Canada constitutionality issues this year. Also, changes to Federal Student Loans – loan forgiveness for family doctors and nurses, and elimination of interest on student loans. Perhaps to add to your questions analyzing this list is: how successful these policies have been, how many will remain part of our economic landscape and which are worth reintroducing if they get axed under a new government?
So full disclosure: I have been disappointed in the libs since day 1, when they went back on their promise for electoral reform. It was my number one issue in that first Trudeau-led election. My number 2 issue was their willingness to break with orthodoxy on balanced budgets (I still remember Mulcair promising to be holier than the pope on the issue). That stood us in good stead in the Covid era. I would also call out two other accomplishments: (1) energy retrofit loans / grants; (2) their social finance investments. While the latter has been a dud in terms of rollout, the former has been oversubscribed and was a major potential (unused) wedge to move the climate dial in otherwise oil/gas provinces. Opportunities missed because of an obsession with the ‘efficient’ carbon tax versus tangible, popular, and hard-to-oppose below-the-radar interventions.
A Balanced Take on the Trudeau Government’s Economic Policy Legacy
While the Trudeau government has undeniably made significant strides in addressing economic, environmental, and social challenges, perhaps we should also temper the enthusiasm for these accomplishments. A balanced review reveals notable achievements, but also areas where execution and accountability fell short.
For example, infrastructure and housing investments have been cornerstones of the government’s growth strategy, with programs like the Canada Infrastructure Bank and the National Housing Strategy aimed at fostering long-term economic and social benefits. However, as the Auditor General has pointed out, delays in project rollouts and a lack of clear performance metrics have undermined these initiatives’ effectiveness. Similarly, while reducing the small business tax rate and introducing the Accelerated Investment Initiative have helped some businesses, questions remain about their broader economic impact and the adequacy of oversight.
On environmental policy, the government’s rejoining of the Paris Agreement and introduction of a carbon tax reflect progressive ambitions, but critics argue that implementation has not kept pace with the urgency of climate change. The Auditor General has also noted gaps in the accountability and measurement of environmental programs, such as the Oceans Protection Plan and single-use plastics ban.
The Progressive Economic Forum’s review of Trudeau’s economic legacy (2025-01-06) highlights his administration’s distributive focus and public investments. Meanwhile, The Tyee’s recent critique (2025-01-06) offers a nuanced perspective, emphasizing concerns about accountability, execution, and missed opportunities. It’s also worth noting that many of these initiatives came to fruition under the pressure and influence of the NDP during Trudeau’s minority government.
https://thetyee.ca/Opinion/2025/01/06/Justin-Trudeau-Resignation/?utm_source=national&utm_medium=email&utm_campaign=090125
Both perspectives suggest that the Trudeau government’s report card, while commendable in parts, warrants a critical appraisal.
It would be particularly interesting to revisit the Auditor General’s findings on these programs, as they provide crucial insights into the execution gaps and opportunities for improvement.
Thank you for this wonderful summary. I admit, I was a fan of Trudeau from the very beginning. He was the only one who dared talk about increasing fiscal spending in 2015, which is what led him to win that election, I am certain.
But I agree his government felt a bit tired toward the end, after 10 years.
I agree with much of what my colleagues have stated so far. My only criticism is on monetary policy. I don’t think it is much improvement from moving from an official IT to a dual mandate. The wording “when conditions warrant” is too vague to be meaningful. This said, OK, better than nothing, but I doubt it will change much.
Thank you again. A wonderful post. So why have the progressives abandoned Trudeau? That is the tragic question.