Less than a week before Finance Minister Bill Morneau is scheduled to table his second federal budget, he’s answering questions from a car somewhere in Germany, where he’s attending a G20 meeting and touting Canadian economic policy in a speech to Frankfurt’s Institute of International Finance. The cell connection between the autobahn and Ottawa isn’t great, and the call breaks off and has to be re-established a few times.
But extended silences don’t necessarily mean service is lost. Sometimes they just indicate that Morneau is collecting his thoughts. “I’m not not answering,” he says to explain a long pause after he’s asked about his formative influences. “I’m just thinking about that.” This is, according to those who have worked closely with him in business, charities and now politics, classic Morneau—always deliberative and self-conscious, rarely instinctive or off-the-cuff.
When the answer comes, it’s telling. He credits a high school economics teacher in Toronto, who guessed that he had a future in business (the teenaged Morneau was already running a swimming pool service on the side) and urged him to aspire beyond commerce to loftier goals. Later, when he was a graduate student at the London School of Economics, Morneau says Philip Windsor, a renowned international relations professor who died in 2000, urged him to think, too, in terms of the wider world.
Such inspirations would not have seemed obvious before Morneau jumped into politics to run for the Liberals in 2015, winning a downtown Toronto seat and then being appointed by Justin Trudeau to what’s almost always seen as the top cabinet post.
Before then, he was a businessman. He assumed the presidency of the going-concern family firm, Morneau Shepell, in 1992, and expanded it into Canada’s biggest pensions and benefits company, taking it public on the TSX in 2005. When he dabbled in public policy, it was as chairman of the staunchly business-oriented C. D. Howe Institute.
At a glance, in other words, he seemed to be strictly a corner-office guy. Yet Morneau draws a straight line between his private-sector background and his public-policy preoccupations today. While he was busy growing Morneau Shepell, he learned a lot about the erosion of private-sector pensions and rising costs of employee benefits plans. “I saw a very clear increase in anxiety among Canadians, broadly based on issues around their personal, family and financial challenges,” he says.
And that’s now the central issue in Liberal economic policy, as he puts it: “I think it does come back to people feeling like there’s a higher level of vulnerability around the changing economy.”
Just about everything Morneau is trying to do as Trudeau’s most powerful minister can be seen through that lens. The big items in his 2016 budget were a modest middle-income tax cut and a more ambitious revamp of federal payments to parents, under the new Canada Child Benefit.
Morneau casts both measures in terms of signaling in no uncertain terms that the days of the high-income earners getting all the breaks are over, and “giving middle-class Canadians the confidence that the benefits of growth are there for them and their families.”
His 2017 budget, though, looks like a harder sell. Nothing as unambiguously advantageous to family finances as a tax cut and a boosted child benefit is in the works. Instead, Morneau is talking up priorities like skills training, large-scale infrastructure investments, and policies aimed at encouraging clusters of innovative companies.
If his first budget was about immediate pocket-book politics, his second is about long-term economic growth strategy. So this year’s edition is bound to feel more abstract, less immediately tangible. Is Morneau, 54, a decidedly low-key strategist who weighs his words, the best politician convey that vision to Canadians?
Even his biggest admirers don’t claim that he’s a scintillating speaker. “He’s not the smoothest member of cabinet,” said one senior federal government official, who spoke on condition he not be named. “But the reality is this guy is incredibly effective behind the scenes.”
Finance ministers occupy a special place in the federal hierarchy. Three have defined the job in recent decades, each under a long-serving prime minister: Michael Wilson under Brian Mulroney, Paul Martin under Jean Chrétien, and Jim Flaherty under Stephen Harper. In their own ways, they all seemed indispensable, although in politics that’s never really the case.
Wilson introduced the wildly unpopular Goods and Services Tax, and presided over stubborn deficits, but his stolid demeanor and Bay Street credentials never ceased to be reassuring. Martin’s stature rivaled Chrétien’s, creating the tension that energized that Liberal government, in both its productive and self-destructive modes. In Harper’s tightly wound government, Flaherty stood out for looking like he was relaxed enough to actually enjoy politics.
In different ways, they were all dominant figures of their periods on Parliament Hill, not just because they wielded serious power, but also because their personas worked to such clear political advantage. Morneau has already established himself convincingly when it comes to impressing insiders, but not, so far, in terms of making an impression on the country.
Much of his reputation among politicians and bureaucrats rests on his negotiating skills. Securing a deal with the provinces last year on Canada Pension Plan reform was a signature early achievement. His background in the pension business gave Morneau an easy grasp of CPP policy intricacies. But the way he brought reluctant provinces on side displayed more than mere expertise. “He did a masterful job in listening to the different positions and understanding why there were concerns,” says Saskatchewan Finance Minister Kevin Doherty.
As a member of Premier Brad Wall’s conservative-minded Saskatchewan Party government, Doherty isn’t an obvious Morneau ally. Indeed, they remain at odds over Ottawa’s insistence on a price on carbon, which Saskatchewan resolutely opposes. That hasn’t stopped Morneau from winning Doherty over. “The thing with Bill is that when he tells you something, you can take it to the bank,” he says. “There’s no hidden agenda. There’s no telling you one thing and telling somebody else something else to try to get a deal.”
Morneau prides himself on trying to see the other side’s limitations in negotiations. Last year, after the Trudeau government refused to agree to annual transfer-payment hikes big enough to get all the provinces to agree at once to a new health accord, Morneau went to work cutting one deal at a time with different provinces.
To get Saskatchewan to sign, for instance, Morneau had to agree to a one-year truce in Ottawa’s battle with Wall’s government over the its policy of allowing private MRI services, which Health Minister Jane Philpott had formally objected to as a violation of the Canada Health Act. Doherty said Morneau took Philpott the message that Saskatchewan needed a year to prove its MRI program can fit with public care. “I just found him to be very fair in representing our position,” Doherty said.
But, these days, Morneau is also showing that his willingness to see the other side’s point of view has limits. Manitoba’s Brian Pallister is the last holdout among the premiers when it comes to signing a health deal, and he alleges that Morneau isn’t playing fair. On that call from his car in Germany, Morneau’s tone takes on a certain edge when he shuts down questioning about Pallister’s grievance. “We successfully negotiated privately with nine provinces and three territories,” he says. “We have no intention of negotiating in public with the last province.”
Even when his temper seems on the verge of flaring, Morneau’s default position is message discipline, rather than blowing off steam. His methodically analytical quality, his characteristic unflappability, comes up in virtually every conversation about him.
One secret to his even-keeled quality might be his refusal to be frazzled by mundane pressures. Morneau says he doesn’t think of competing demands on his time as being in conflict. That even extends to making time in his workday for his wife, Nancy McCain, of the vastly wealthy McCain Foods family, and their four children.
“I’ve never really thought about work-life balance,” he explains. “I’ve tried my best to incorporate my family into every day that I work. So if there’s a day that I’m in Ottawa, invariably I will speak to three or four of my four children; I will have spoken to my wife three or five times during the course of the day.”
Back when he was running Morneau Sheppel, he donated a lot of time to Covenant House, a shelter for street youth in Toronto, and St. Michael’s Hospital, whose inner-city location also gives it a key role with the disadvantaged. Officials with both institutions talk about how Morneau brought a businesslike manner, rather than a heart-on-his-sleeve attitude. “He’s really calm, cool, and he’s a really good problem-solver,” says Alayne Metrick, president of the hospital’s fundraising arm. “He’s not looking to grandstand.”
A little grandstanding, though, has been known to work in politics. Morneau’s boss, Justin Trudeau, isn’t above it. Wilson, Martin and Flaherty weren’t exactly showboaters, but their impacts often relied on getting a message across. It didn’t have to be slick. Martin somehow made the hoary phrase “come hell or high water” the slogan for his determination to slay the deficit. Flaherty played up his smiling Irish side shamelessly.
Morneau hasn’t yet found a way to stick in the public imagination. Establishing a positive image could be made a lot easier if the economic news continues to be upbeat. Heading into Budget 2017, he was able to point to string of positive indicators, and independent economists largely see the economy in the same favourable light.
TD Bank’s latest quarterly economic forecast, released last week, trumpeted “strong momentum” in the Canadian economy, and boosted its projection for real GDP growth in 2017 by a hefty half a percentage point to 2.3 per cent, which is buoyant by the dismal standards of the past few years.
Morneau says Canadians sense the updraft, especially from falling unemployment rates. “I think people really understand their economic situation,” he says. “More jobs, people get [that].” Naturally, he is inclined to claim some of the credit for the Liberal government, suggesting the tax cuts and parental benefits from last year’s budget are helping.
In fact, economists tend to point to factors not much linked to Liberal policy. TD’s forecast points to the oil and gas sector’s rebound leading the recovery this year, along with “continued eye-popping strength” in the huge Toronto real estate market. Morneau has to hope oil and other resource prices keep firming, and that hot housing markets eventually cool, rather than collapse.
If the economy cooperates from quarter to quarter, Morneau will have more room to try to put in place a strategy that needn’t pay off immediately. “The increasing sense the economic outlook is looking somewhat stronger than even a few months ago,” Morneau says, “gives us the ability now to think about the longer term.”
That means rolling out hundreds of millions in infrastructure spending earmarked in last year’s budget, and separately launching a new infrastructure bank, proposed last fall by his blue-chip Advisory Council on Economic Growth. For individuals, the key policy thrusts will include measures to help women in the workforce, including more child care, and a push to promote skills training.
Government insiders who work closely with Morneau say he approached the full suite of policy challenges—innovation, infrastructure, training and more—with the same calculating thoroughness. “He’s a very organized kind of guy, very disciplined,” says one. He talks to policy mandarins and partisan operatives alike with a politeness that, this official says, shouldn’t be mistaken for a lack of convictions. “He likes to hear what people think, but he has his own views; he’s not agnostic.”
There is, however, a wild card in the economic deck: Donald Trump. Not even Morneau can hope to concoct a strategy that anticipates the U.S. president’s next move. The most important unknown for Canada: Is Trump only seeking to “tweak” NAFTA, as he said when Trudeau visited the White House last month? Or is his administration likely to press, when the trade pact is really on the bargaining table, for deeper concessions?
On the Canada-U.S. file, the finance minister’s vaunted negotiating knack, and his ability to nurture relationships behind closed doors, could prove vital to Trudeau. He was in Washington no less than three times in the early weeks of 2017. “We are focused on having a very deep level of engagement with the new administration,” Morneau says, adding that the unvarying message is that trade policy must be made to work to the “mutual advantage” of the Canadian and American middle classes.
Like any finance minister with a fresh budget to peddle, Morneau will be in the public eye this week. Asked a critical question about the communications skills he brings to the occasion, he says, after one of those long pauses: “It’s always good in life to have things that you can improve upon.”
It’s a disarmingly self-deprecating comeback—a hint of what they say makes Morneau so effective one-on-one. Projecting such an understated quality to Canadians who will never interact with him up close would be no small feat. If he somehow finds a way to get who he is across, Morneau just might—like those major finance ministers before him—emerge to help define his era in Canadian politics.
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