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Finance Minister Jim Flaherty listens to a question during an interview in Ottawa Dec. 21, 2009.

CHRIS WATTIE/Chris Wattie/Reuters

In 2010, I wrote a long profile of Jim Flaherty on the theme of whether he was one of Canada's greatest finance ministers. When it came time to draw conclusions, I equivocated. Maybe, I summarized in more words than that; time will tell.

Time told. He was.

Back then, one could start asking about Mr. Flaherty's place in the pantheon because he just had stared down an economic calamity of the like that few of his predecessors ever had faced. He died Thursday.

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Ottawa was ill-prepared for the financial crisis. It had been a long time since the Finance Department had been asked to think about spending money. Mr. Flaherty, who, until three weeks ago, was Prime Minister Stephen Harper's only finance minister, inherited a budget surplus in 2006. He promptly narrowed it by cutting taxes, including the Goods and Services Tax, a fiscal sin for which few in the economics academy will ever forgive him. Besides trimming taxes, Mr. Flaherty had made clear the only other thing that mattered was paying down debt.

It is fine to be guided by your intellectual instincts when the economy is strong: The creation of jobs and wealth tends to cover up policy mistakes. The test comes when the good times end. Mr. Flaherty in 2008 confronted a situation that only could be reversed by heavy government spending.

This was a difficult moment for him. His economic philosophy was based on a rejection of the stagnation that marked Pierre Trudeau's tenure as prime minister. The last thing he wanted to do was run up the debt by paving roads, refurbishing hockey rinks and building gazebos. But he did it because after considering all the evidence, he knew it was the right thing to do. Not only did he sign off on the spending, but he made clear that he didn't mind if some of the money was wasted. The point was to flush the economy with cash, not worry about an embarrassing report someday by the auditor-general.

"His leadership helped Canada overcome the most serious financial crisis since the 1930s," John Manley, president of the Canadian Council of Chief Executives and a former political enemy of Mr. Flaherty's, said Thursday in a statement. "His astute judgment, thoughtful pragmatism and strength of character inspired confidence during a period of profound uncertainty and economic risk."

Ending the crisis was the easy part. Put bluntly, once the water is flowing, all you have to do is hold the hose until the flames are extinguished. It is the rebuilding that is difficult, which was why it would have been presumptuous in 2010 to conclude definitively that Mr. Flaherty had earned the same level of respect accorded to former finance ministers such as Paul Martin and Michael Wilson.

The budget Mr. Flaherty introduced in February answered one of the questions that lingered over his legacy. For an unabashed, if occasionally flexible, fiscal conservative, Mr. Flaherty's tenure only could have been considered a complete success if he returned Canada's books to balance. With a little creative accounting, his last budget probably could have been written in black ink rather than red. There is little doubt that Mr. Flaherty's restraint since the crisis will leave Canada with a budget surplus next year, if not sooner.

Economists will argue over how to score that achievement. Just this week, the International Monetary Fund indicated that Mr. Harper's government could stand to be a little less austere. With borrowing costs at record-low levels, there is a strong case that countries such as Canada should be taking advantage of this once-in-a-lifetime opportunity to rebuild crumbling infrastructure. Lacklustre economic growth and shaky business confidence would benefit from the spending. Mr. Flaherty did a bit of this, but not a lot. It's fair to argue that Mr. Flaherty's quest to balance the budget needn't have been so intense. He would argue otherwise, probably with the example of middle-class Canadians who dropped their keys at his law office in the 1980s, unable to pay double-digit mortgage rates.

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If Mr. Flaherty hadn't reduced the GST, he might have accomplished his goal much sooner. The GST hurts his legacy as a policy maker because it's the most efficient, fair way to raise revenue. A relatively small levy on most of the population tends not to distort economic decision making. But a consumption tax also is highly visible, which is why Mr. Harper and Mr. Flaherty chose to target it.

"Middle-class people don't believe that governments reduce their taxes," Mr. Flaherty told me in 2010. "But if you do it on a consumption tax, people see it. That, in part, restores faith in government."

That confidence showed itself in a greater achievement than balancing the budget. He took the lessons of the U.S. subprime mortgage crisis seriously. In an interview in October, Mr. Flaherty said he started looking hard at Canada's housing market in 2007, sooner than most of us who followed him had realized. He would tighten mortgage rules four times in as many years, making it harder for Canadians to buy homes, but dramatically reducing the odds that the U.S. experience would be repeated north of the border.

These decisions met with resistance; voters like buying houses. But decades of sloppy policy had made a mess of housing markets. Mr. Flaherty knew this, and, as he did more often than not, he used his stubborn streak to do the right thing.

"There was pushback," he told me. "I knew what I was doing, especially the last time, and I knew it would have a negative effect on employment. But one must look at the longer term and that's what I did."

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