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Bill Morneau: The Finance Minister’s portfolio

At Finance, the rookie Toronto MP is responsible for Justin Trudeau’s high-profile campaign promise to cut middle-income taxes


 
Minister of Finance Bill Morneau leaves the foyer after speaking to reporters on Parliament Hill after being sworn in earlier in the day, on Wednesday, Nov. 4, 2015, in Ottawa. (Justin Tang/CP)

Minister of Finance Bill Morneau leaves the foyer after speaking to reporters on Parliament Hill after being sworn in earlier in the day, on Wednesday, Nov. 4, 2015, in Ottawa. (Justin Tang/CP)

If Prime Minister Justin Trudeau’s priorities can be ranked by what his new government vows to act on first, then cutting middle-income taxes is at the very top of the list. Pushing through that high-profile campaign promise when the House resumes sitting early next month is a job that falls to Finance Minister Bill Morneau, the rookie Toronto MP who only recently cut ties to his family’s business, Canada’s largest private pension-management company.

If his Bay Street credentials bring to mind a certain sort of millionaire tycoon style, those who have worked closely with Morneau say he doesn’t fit the stereotype. “Bill is exactly the opposite,” says Western University public policy professor Mike Moffatt, who served with Morneau on a Liberal economic advisory council. “He’s soft-spoken and he comes across as surprisingly humble.”

Related: The truth about Trudeau’s tax cuts

Morneau will need to make himself heard, though, to sell the tax cut. Throughout the campaign, Trudeau touted the maximum saving of $1,340 for a two-income family, resulting from the Liberal promise to trim the tax rate to 20.5 per cent, from the current 22 per cent, on income between $44,700 and $89,401 a year. But David Macdonald, senior economist at the Canadian Centre for Policy Alternatives, says a Statistics Canada model shows the average tax saving for families making $48,000 to $62,000 turns out to be only $51, while households making $62,000 to $78,000 will save, on average, just $117.

Still, Morneau said in an interview he’s confident Canadians will appreciate the tax cut, especially when the Liberals follow through later by enriching federal benefits for parents, with the introduction of a promised new Canada Child Benefit. “I think that both of [the measures] will have a material impact on Canadians,” he said. And that’s only the start of his work turning the Liberal platform into policy. Morneau must also coordinate with the provinces to quickly implement Trudeau’s promise of a deficit-financed boost in infrastructure spending, and, in a bit less of a hurry, find a way to enhance the Canada Pension Plan.

Related: Are you in the middle-class?

Some economists argue Trudeau’s vow to raise infrastructure spending by $5 billion a year won’t be enough to change the way Canadians feel about an economy that’s been hit hard by slumping commodity prices. Morneau said the short-term stimulus from the infrastructure boost, while real, will be less important than the longer-term benefits of public works projects, such as improving transit systems and roads to alleviate traffic congestion in big cities.

But finance ministers are usually judged, fairly or not, on the economy’s performance now. As a business leader making the move to that federal hot seat, one of Morneau’s first calls after Trudeau handed him the job last week was to Paul Martin, who made the transition so successfully back in the 1990s. Martin came to be admired for balancing the books as the economy grew rapidly. Morneau’s task—make deficit spending look effective even as the economy is forecast to grow frustratingly slowly—could prove even more difficult.

More on key players in Trudeau’s cabinet here.


 

Bill Morneau: The Finance Minister’s portfolio

  1. Even as I was perusing through John’s article regarding our Finance Minister Bill Morneau’s portfolio, I also had the opportunity to listen to the Minister’s economic update. Somethings came to mind: Stephen Harper was well known for his frugal estimates. But he still had his eyes set on his target and as a consequence, he always outdid himself when it came to erasing the Chretien-inspired deficits. Martin’s time in office was marked by profligate expenditure on vanity items and the attendant scandals such as the Scholarship Fund scandal, Canadian Development Bank scandal, the Canadian Flag purchase scandal, and so on. Their only clue to spurring the economy came from Preston Manning who would consistently ridicule them for trying to jumpstart the Mack Truck with a flash light. The Liberals got the clue made a lot of improvements but still wouldn’t give up on amassing deficits by wasting money such antics as repairing the church spires. At the time of his leaving his Office, Harper had practically mended all of the damages inflicted by the 30-year war waged on the economy by the Liberals.
    Now coming back to our Liberal Finance Minister’s not-so-liberal economic update, he said that even without accounting for planned Liberal measures the deficit would be C$3.0 billion ($2.3 billion) in the current fiscal year and C$3.9 billion in 2016-17, with deficits continuing through 2018-19. In a commentary that followed him in CBC, I heard that a large portion of this worse outlook is because the Liberals chose to adjust down their forecasts of economic growth to levels well below the downwardly revised levels predicted by private-sector economists. This lower growth forecast would add C$1.5 billion to the projected deficit for 2015-16 and C$3.0 billion for each of the five years from 2016-17 on.
    Now, on Nov. 16, 2015, I asked my investment advisor in my Bank to give something, anything, on the economic outlook. Among other things here is how the print-out from their economic research arm that she gave me reads: “………..The Canadian Economy has bounced back strongly, following two quarters of contraction from the start of the year. Data released in September revealed that GOP grew at a rapid pace in July, setting up third quarter growth for an annualized rate of 2.50%. All indications are that Canada has made a robust return to growth…………………N
    Now a question arises as to between the wizard of self-balancing budgets and an apolitical bank, whom should I trust. To me, the answer is obvious. In the last 15 years, the Bank has not minced words in dealing with me. The thing that reinforced my faith in them further is that when more than a year and a half ago when the Canadian $ was performing very well vis-à-vis the US, the Bank predicted in their quarterly bulletin, that in a year’s time the parity rate with US $ would hover around mid-seventies (around o.75 cents). And you know what: they were on the dot.
    Some Voodoo Accounting! Isn’t it?
    All I can add here is my best wishes to the wizard and his assistant!

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