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Freeland seen as 'black box,' but Bay Street didn't get what it hoped from Morneau, either

Street hopeful given Freeland's trade record, but wary she will challenge Trudeau on costly social programs and deficits

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Bay Street thought it knew what it was getting when Bill Morneau became finance minister in 2015, one of the only members of Justin Trudeau’s freshly elected team with a strong business track record. It wound up disappointed.

His successor, Chrystia Freeland, on the other hand, is being described as something of a “black box” in the business community: though hopeful given her record on trade, they are also wary of how much she will challenge Trudeau on his established agenda of costly social programs and deficits.

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Morneau failed to take decisive action on any of the Street’s three priorities — taxes, deficits and regulation —  industry observers said Tuesday, and the collective shrug there after he announced his resignation at a hastily convened news conference Monday night was evident with the Canadian dollar and markets barely registering it.

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“I don’t think he’s going to be missed that much,” said Eugene Lang, an adjunct professor at Queen’s University’s School of Policy Studies.

“He wasn’t strong going into the pandemic … (and) he hasn’t done anything on taxes to help business.”

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Segments of the business community were also disappointed to see continuing deficits in a period of growth and intrusive regulatory policy around the environment.

Ian Russell, chief executive of the Investment Industry Association of Canada, said Morneau’s tenure was “disappointing,” especially on issues such as business taxes, competitiveness, and foreign investment.

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While the country was “better off” for his steady hand and quick response to the outbreak of COVID-19 and the impacts of the largely shuttered economy, Russell said that is likely to be his only legacy.

It’s the “one area where he made a contribution,’ he said.

Lang, who worked in the federal government himself for 12 years, including in the public service and as senior economic policy adviser to Canada’s deputy prime minister, said it is nevertheless an unusual time to “change horses” because the new finance minister is taking the reins as the country prepares to embark on an a historic recovery phase this fall following costly emergency measures put in place to help business and individuals weather the pandemic.

“Whether or not he’s the right guy (for that job) — Who is?” Lang said, dismissing Morneau’s rationale for stepping down, which was that he wasn’t in politics for the long haul required to steer Canada out of the pandemic.

He described Freeland as a “black box,” saying that despite her five years in government, most recently as Canada’s deputy prime minister and minister of intergovernmental affairs, it is unclear what her personal policy leanings are and whether she will challenge Trudeau’s agenda.

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Deputy Prime Minister and new Finance Minister Chrystia Freeland at a news conference in March.
Deputy Prime Minister and new Finance Minister Chrystia Freeland at a news conference in March. Photo by Dave Chan/AFP via Getty Images files

“She’s carried the government line” so far, he said, noting that a book she wrote also suggests she feels strongly about income equality. Furthermore, he said, as a journalist before she entered politics, she is something of an outlier in an established tradition of finance ministers with bona fides in business and high-powered legal circles, such as Paul Martin, John Manley, and John Turner.

She appeared tough on the trade file when negotiating the new free trade agreement with the United States and Mexico, Lang said, but he questioned whether the business community would be in favour of her tactics that included public rebukes of U.S. President Donald Trump’s use of tariffs.

“I doubt it,” he said.

Russell is more hopeful about Freeland’s ascension to what is arguably the second most powerful position in government. He believes she will be more receptive to business concerns raised by the IIAC than Morneau was — such as access to capital for small and medium-sized businesses, and policies that will stimulate the country’s capital markets and foreign investment.

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“She’s demonstrated … flexibility in her ideas,” he said, calling her a “pragmatic” politician who always seems to be looking for solutions.

“I’m optimistic Chrystia will be much more open to looking at ideas and willing to take them on,” Russell said.

While the Trudeau government is preparing to huddle and re-set its priorities, The Business Council of Canada, which represents some of Canada’s largest businesses including BCE Inc., Sun Life Financial Inc., and Brookfield Asset Management, is urging Freeland to move quickly to pivot to an “economic growth and prosperity” agenda and prepare for a possible second wave of the coronavirus.

I’m optimistic Chrystia will be much more open to looking at ideas and willing to take them on

Ian Russell

“As business leaders and as employers of millions of people from coast to coast, we urge you to establish clear fiscal targets that provide a frame of reference against which to judge the incessant demands for new spending,” council chief executive Goldy Hyder wrote in a letter to the new finance minister, in which he noted the federal debt-to-GDP ratio is projected to hit 49 per cent by the end of the fiscal year, up from 31 per cent a year earlier.

The letter also urged Freeland to “stay focused on the structural issues” affecting Canada’s economic competitiveness, including declining labour productivity, low levels of business investment, and regulatory obstacles.

Financial Post

• Email: bshecter@nationalpost.com | Twitter:

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