Background
December 16, 2024 may be remembered as one of the most surprising and important days in recent federal politics and in the life of the Trudeau Government. This memo summarizes what transpired and includes key updates regarding the changing dynamics of the federal government, the Fall Economic Statement (FES), the release of the 2025 Pre-Budget Consultations Report from the Standing Committee on Finance, and the Council of the Federation meeting.
Summary of the Day’s Events in Ottawa
Resignations from Liberal Party Ministers
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- Chrystia Freeland, Deputy Prime Minister and Minister of Finance resigned from cabinet hours before the Fall Economic Statement was set to be tabled in the House of Commons. Her statement confirms she will seek re-election in the next federal election and called into question the Prime Minister’s economic plans. The resignation created significant political chaos in Ottawa, and within the Liberal caucus, with great uncertainty about how the government will move forward, with several sitting Liberal MPs publicly calling on the Prime Minister to resign.
- Sean Fraser resigned from his role as Minister of Housing, Infrastructure and Communities. He will not seek re-election following his nine-year-long role as an MP, and has cited family reasons for his decision.
- With six Ministers not seeking reelection,the Prime Minister must shuffle his cabinet in the near term. As of December 16, 24 Liberal MPs have signalled their plans not to seek re-election, followed by six Conservatives, and five NDP.
New Finance Minister Appointed
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- Dominic Leblanc, previously the Public Safety Minister and Minister of Intergovernmental Affairs, was sworn in as Minister of Finance. He will now act as Finance, Intergovernmental and Public Safety Minister, until the next cabinet shuffle.
Reactions from NDP and Conservatives
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- Both Conservative and Bloc Québécois leaders are calling for an immediate election, while the leader of the NDP is calling on Prime Minister Trudeau to resign.
- The Conservatives are again calling on Jagmeet Singh to end his support of the Liberal government.
Fall Economic Statement (FES)
The FES was tabled in the House today by House Leader Karina Gould, without a formal speech.
Last year’s deficit came in at $61.9 billion, $22 billion more than forecasted when the government delivered its budget in March, a significant delta that will invite much commentary and criticism from opposition parties. The deficit is projected to be $48.3 billion for the current fiscal year.
The FES calls for more than $20 billion in new spending, including $1.3 billion for border security over six years.
As expected, the FES was light on health and instead focused on affordability, safety and border security. Below are key health care highlights.
Reproductive Health
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- Provide $90 million over six years, starting in 2024-25, with $20 million ongoing, to Health Canada to expand and make permanent the Sexual and Reproductive Health Fund.
- Provide $7.5 million over four years, starting in 2025-26, to Statistics Canada to run new surveys about sexual and reproductive health and rights.
Supporting Personal Support Workers (PSWs)
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- As provinces and territories have not agreed to bilateral deals to raise the wages of personal support workers, the federal government intends to introduce a new refundable tax credit for PSWs, potentially modelled on the design of the tax credit for volunteer firefighters. To implement this measure, the government intends to introduce legislation as soon as possible. Further details will be announced in due course.
Mental Health
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- Provide $77.9 million over two years, starting in 2025-26, to launch Canada’s Black Justice Strategy. This strategy takes a whole-of-government approach and includes:$8.8 million over two years, starting in 2025-26, for Health Canada to expand culturally appropriate mental health supports and substance use and addictions programming for Black Canadians.
Health Care Worker Credentials and Mobility
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- Further measures to create a more nimble and resilient labour market that supports newcomer integration into their chosen professions, including by removing the tax-exempt status of regulatory colleges that do not accelerate credential recognition and publishing a national credential recognition performance framework.
- Consider a similar standard-setting framework as the Red Seal Trade Program to enable the mobility of health care workers across the country.
- Remove tax-exempt status of regulatory colleges that do not accelerate credential recognition.
Health Transfer and Federal Departments
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- The Canada Health Transfer (CHT) is projected to increase from $52.1 billion in 2024-25 to $65.3 billion in 2029-30, supported by the CHT growth guarantee of at least 5% for five years.
- Red Tape Reduction Office at the Treasury Board of Canada Secretariat (TBS) to address overly burdensome or outdated requirements in several sectors including health.
- $5 million for ParticipACTION at Public Health Agency of Canada, $2 million for AIDE Canada, and $6 million for Canada Health Infoway to be funded via reallocation at Health Canada to launch a clinical adoption program for AI scribes.
Council of the Federation Meeting
Canadian Premiers came together at the annual Council of the Federation (COF) fall meeting in Toronto. Over the two-day meeting, the Premiers discussed issues impacting each jurisdiction, such as tariff threats from the upcoming Trump Administration in the United States, health care, and Northern infrastructure.
Strengthening Canada-U.S. Relations
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- Premiers reaffirmed their commitment to maintaining strong economic, trade and security partnerships with the U.S.
- Active provincial/territorial involvement in the upcoming Canada-United States-Mexico Agreement review to strengthen North American trade and competitiveness.
- Emphasis on meeting NATO’s 2% GDP defence spending target to bolster Canada’s security and economic partnership with the U.S.
- Plans for a Council of the Federation (COF) Mission to the U.S. in February 2025 to strengthen partnerships.
Health Care Improvements
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- Recognition of cost reductions achieved through the pan-Canadian Pharmaceutical Alliance (pCPA), saving $4.63 billion annually.
- Support for accelerating patient access to new and life-saving medicines through initiatives like the Temporary Access Process (pTAP).
- A new proposal by Premier Ford to speed up regulatory processes for accessing lifesaving medications:
- Development of a pilot project to cut the drug approval process to nine months.
- Focus on seven to 10 cancer drugs annually, approved by Health Canada via Project Orbis, with immediate patient access after a positive funding recommendation.
- Early negotiations with manufacturers to finalize drug pricing and establish obligations around cost and coverage.
- Success is contingent on drug manufacturers’ cooperation and good faith efforts.
- Premiers directed health ministers to finalize a plan for this proposal and provide updates in the new year.
- Continued focus on health care workforce recruitment and retention to improve health outcomes.
- Call for federal collaboration on funding and health care improvements.
Report Releases
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- On December 12, The Standing Committee on Health (HESA) presented its report on breast cancer screening. The report summarizes evidence gathered to address the concerns over the Canadian Task Force on Preventive Health Care’s draft recommendations and barriers to breast cancer screening across Canada. It includes 13 recommendations to the Government of Canada, such as rebuilding the Task Force with appropriate oversight.
- On December 13, The Standing Committee of Finance (FINA) released the Pre-Budget Consultations in Advance of the 2025 Budget. The recommendations to the Ministry of Finance capture many health care priorities, including pharmacare, health human resources, health research and chronic diseases.
What Happens Next?
In addition to all of the flurry of activities in Ottawa on December 16, a federal byelection also took place across the country in Cloverdale-Langley, British Columbia. As expected, the Conservatives won handily, and brings the total of recent by-election losses for the Liberals to four.
The Prime Minister has not addressed the media, but did tell his caucus that he will reflect on his future as leader over the holidays. It is clear that the pressure on the Prime Minister to resign will persist beyond this week and it is impossible to predict whether this most recent development will prompt the Prime Minister to step aside, but no decision is expected before the new year.