Prime Minister Justin Trudeau and former finance minister Bill Morneau in Ottawa, March 19, 2019.Chris Wattie/Reuters
Former finance minister Bill Morneau delivered a pointed critique of the federal Liberals’ economic policies, along with a series of recommendations for kickstarting growth, in his first public speech since leaving political life two years ago.
Mr. Morneau, finance minister in the Liberal government from 2015 to 2020, echoed the concerns of business leaders who have urged Prime Minister Justin Trudeau to focus on expanding the Canadian economy, rather than rolling out tax-and-spend initiatives.
“When I look at politics in Canada today – from the perspective of a former insider – I have to confess that I’m much more worried about our economic prospects today, in 2022, than I was seven years ago,” he said.
“So much time and energy was spent on finding ways to redistribute Canada’s wealth that there was little attention given to the importance of increasing our collective prosperity,” said Mr. Morneau in a speech Wednesday evening to the C.D. Howe Institute.
Mr. Morneau highlighted research by the Organization for Economic Co-operation and Development that forecast growth in Canada’s gross domestic product over the next four decades will significantly lag expansion in the U.S., Australia and comparable European economies.
“There is no real sense of urgency in Ottawa about our lack of competitiveness,” said Mr. Morneau. “It’s not that this is one of the big problems facing Canada’s economy, it’s that this is our fundamental problem. Nothing else is solvable if we don’t put this issue first.”
Ahead of April’s federal budget, senior business leaders, such as Royal Bank of Canada chief executive Dave McKay, voiced frustrations with the government’s approach, saying they saw tendencies toward short-term decision making, lavish spending and sporadic engagement with corporate Canada.
While Mr. Morneau never mentioned his successor as finance minister, Chrystia Freeland, or the Prime Minister by name, he devoted a considerable amount of his 20-minute address to problems with a partisan political process that favours style over substance. Mr. Morneau resigned from his post amid the We Charity probe.
“We have to stop thinking about policy in terms of short-term wins, and refocus our efforts on long-term solutions. I know that all of the political incentives run counter to this,” said Mr. Morneau, who ran the country’s largest employee benefits firm – Lifeworks, formerly known as Morneau Shepell – prior to entering politics in 2015.
To ensure a long-term focus on business issues at the federal level, Mr. Morneau said Canada needs a “permanent Growth Commission, drawing on expertise from the public and private sector, that reports to a federal/provincial body, with input from all parties.”
The concept picks up on recommendations from Bank of Nova Scotia chief executive Brian Porter, who recently called for a new federal commission on Canada’s economic prosperity.
Mr. Morneau said federal and provincial governments need to do more to co-ordinate policies and delivery of services such as health care.
“Even though many of the levers for our economic opportunities are shared, federal interactions with the provinces and territories are, for the most part, episodic, with no clearly identified and executed strategy,” said Mr. Morneau. He pointed out that Alberta Premier Jason Kenney’s recent resignation offers the Prime Minister a chance to reset the relationship with the resource-rich province.
Without specifically pointing to Conservative leadership candidates, Mr. Morneau also took issue with populist campaigns, such as that of Pierre Poilievre, who has repeatedly attacked the Bank of Canada, which works at arm’s length from the federal government.
“Canada is a country with political institutions that are, in many cases, the envy of the world,” said Mr. Morneau. “Yet there are politicians – who absolutely do know better – who are not only taking those institutions for granted, they’re willing to actively undermine them if it gives them the slightest political advantage.”
“When you put ‘exciting the base’ ahead of crafting good policy … when you cynically pander to conspiracy theorists … you are doing incalculable harm to the country you claim to love and to the people you seek to lead,” said Mr. Morneau.
Mr. Morneau was finance minister when Canada renegotiated trade agreements with Mexico and a U.S. administration led by president Donald Trump. He said the federal government needs to recognize that the pandemic has made protectionism a factor in every industrialized economy, and a threat to Canadian businesses that rely on exports.
“As much as Canada benefited from trade liberalization in recent years, it will suffer as countries around the world turn inward and take on more protectionist positions,” said Mr. Morneau, who has recently been teaching at Yale University.
“Disengagement with China, combined with broader de-globalization, puts countries like Canada in a challenging place. Natural resources alone won’t save us. Neither will cryptocurrencies, just so we’ve got that on the record.”
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OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
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