The pre-Trudeau generation of Canadian politics produced two outstanding finance ministers, Paul Martin and Jim Flaherty.
Each helped navigate Canada through a rough patch; Martin slew the deficit dragon, Flaherty ably fought the Great Recession.
In a period during which power was increasingly centralized in the Prime Minister’s Office, Martin and Flaherty maintained separation. There was no guarantee they would get what they wanted, but Bay Street, Calgary and Montreal could be sure that there was at least a counterweight to the partisans and crusaders who formed the majority at cabinet.
This dynamic was good for the country because it instilled confidence with business leaders, who, love them or hate them, are necessary for making the economy run. Unfortunately, it hasn’t existed since Flaherty resigned from Stephen Harper’s government in March 2014, a few weeks before his death. I think it’s one of the reasons that Ottawa and the Canadian Establishment are so out of tune these days.
Morneau was promoted to the big leagues straight out of training camp. You’d make mistakes, too
Joe Oliver, who replaced Flaherty, was barely noticeable, even though he had one of the most important jobs in the country. And Bill Morneau has been a disappointment, if only because his background suggested that he would have a greater impact. You hear that he’s had decent moments behind the scenes. But in public, when he wasn’t attracting controversy, Morneau was parroting the Prime Minister’s made-for-social-media lines about helping the middle class. No separation, just another member of Team Trudeau.
Maybe expectations were too high? Morneau had degrees from elite universities, had run a successful company, had married into the McCain family, and had a deep interest in public policy. But he had never run for office. Martin was the son of a famous cabinet minister and had served in Parliament for almost five years before the Liberals took power in 1993. Flaherty had been an important cabinet minister during Mike Harris’s reign in Ontario. Morneau was promoted to the big leagues straight out of training camp. You’d make mistakes, too.
Morneau isn’t a rookie anymore. Assuming Trudeau re-ups him as finance minister on Nov. 20, and there is little reason to think he won’t, we’ll all be better off if a more seasoned Morneau asserts himself as a force in Ottawa.
Bank of Canada Governor Stephen Poloz’s term ends in the spring, so there could be an unfamiliar face running the central bank at about the same time that some forecasters think the global economy will start to tumble. If that were to happen, the sight of an independent finance minister would calm nerves. Morneau would do well to use his next budget, or even a speech in the near future, to show the public that he is getting ready for a downturn, just in case.
We’ll all be better off if a more seasoned Morneau asserts himself as a force in Ottawa
Poloz was clear last month that he thinks lower interest rates at this stage risk upsetting the delicate balance the Bank of Canada has achieved between stimulus and credit growth. That means that economic stability could rely on the government. Unfair or not, many of the men and women who decide when and where to invest will doubt that Prime Minister Justin Trudeau’s crew would be up for the challenge. They need to be persuaded otherwise, preferably by a finance minister they could learn to trust.
It will take more than that to rebuild the confidence of the business community, of course.
With the possible exception of the real-estate lobby, which won promises of new housing sops from all the major parties ahead of the election, there isn’t a trade association that has much good to say about the state of politics, starting with the party that has been running things for the past four years.
“We’re a country that just experienced an election that I would call one of the most disappointing elections that I’ve experienced in my 45 years here,” Goldy Hyder, head of the Business Council of Canada, said on the Financial Post’s Down to Business podcast earlier this month. “Canadians deserved a much better discussion about the future of our country.”
To be sure, Morneau doesn’t always get the credit he deserves. He cut taxes on investment at the end of 2018, which appeared to prompt a surge in business spending at the start of this year. He also initiated what he said will be a sustained effort to eliminate unnecessary regulation. The latter is one of six requests that Hyder’s outfit made of the new government earlier this month, although the Business Council said Trudeau should create an independent agency that would study the economic impact of new regulations before they take effect.
That’s not a bad idea. Neither are the other five: an agency that would help identify nationally important infrastructure projects; a review of the tax system with the goal of simplifying it; rethinking international policy for a world that includes a protectionist America and an assertive China; greater immigration; and a coherent resource-and-climate policy.
Refreshingly, the Business Council, which represents the chief executives of the country’s biggest companies, concedes that it hasn’t done enough to earn the public’s confidence, and by extension, the public’s elected representatives. The council’s report ends with six commitments of its own, including a pledge by its members to spend at least as much on workforce training as their U.S. rivals by 2025 and to ensure 30 per cent of their board members are women by the same deadline. There is a “moral imperative to promote greater opportunity and ensure that the benefits of growth are felt by all citizens,” the report said.
That sounds like something Team Trudeau might say. But instead of being snarky, let’s call it an olive branch. Morneau should take it, and remind his colleagues that creating a prosperous middle class will require more than tax cuts that carefully exclude the rich and monthly benefits for modest families with children.
Job creators need a voice at the table, too. There is a long tradition of the finance minister being that voice. Morneau allowed it to go quiet. Time to bring it back. If they don’t like it at the PMO, he need only remind them how little help they were in getting Liberals re-elected. That should shut them up.