Bill Morneau, Canada's very expensive finance minister - Macleans.ca
 

Bill Morneau, Canada’s very expensive finance minister

Stephen Maher on how Bill Morneau is squandering opportunities and causing blowback that Trudeau can no longer afford


 
Finance Minister Bill Morneau makes an announcement on housing in Toronto Monday, October 3, 2016. (Nathan Denette/CP)

Finance Minister Bill Morneau makes an announcement on housing in Toronto Monday, Oct. 3, 2016. (Nathan Denette/CP)

When Bill Morneau stands in the House of Commons on Tuesday to deliver the fall fiscal update, he will be hoping desperately that what he announces will be splendid enough that Canadians take note.

For weeks, stories about Morneau and his bungled files have been preventing his boss, Justin Trudeau, from getting the feel-good coverage that he prefers. When’s the last time you saw a story about his socks, for example?

Morneau, who is supposed to present an image of bland competence as Trudeau’s Bay Street lieutenant, instead looks, at best, like a bumbler, at worst like someone with multiple undeclared conflicts of interest and a secret villa in the south of France.

READ MORE: Throw another minister on the bonfire: the ballad of Bill Morneau

The problem—the very serious, career-threatening problem—is that whatever the nature of Morneau’s errors, no matter how innocent they are, he is under brutal pressure to change the headlines. And that should make us worry, since he’s in charge of our money, and you don’t want the person in charge of your money to be desperate for attention.

Trudeau can’t be pleased.

Morneau can be forgiven, I suppose, for failing to inform the ethics commissioner about the shell company that owns his French villa. That’s the kind of thing that Trudeau, who spent his Christmas holidays on a private island in the Bahamas, likely understands.

WATCH: Morneau takes heat in the House over conflict of interest claims

But Trudeau can’t afford to ignore the blowback from the proposed small business tax reforms, or stories about numbered companies and conflicts of interest, not necessarily because of wrongdoing, but because they raise questions about the minister’s competence and keep Canadians from focusing on the marvelous things the Liberals are doing.

Trudeau’s political future depends on successfully convincing Canadians that he is acting in the interest of the middle class and those working hard to join it, which is why he repeats that phrase whenever he is anywhere near a microphone.

Morneau, as finance minister, has a key role to play in that sales job, but he can’t do that when he is talking fast about his French villa or his numbered companies, or worse, refusing to talk about them. At that point, the messenger becomes the message, and the message is arrogance.

Morneau didn’t help himself, at all, on Friday, when he brushed off reporters’ questions about his numbered companies by telling them he reports to the ethics commissioner, not them. Oh yeah, buddy? How’s that working out for you?

But that wasn’t even the worst Morneau news conference of the week. That was Monday, when Trudeau insisted on taking questions that reporters wanted to ask Morneau, the political equivalent of having your parents do your homework.

It seems increasingly clear that Morneau, whatever his strong points, isn’t great at politics. There’s no shame in that—it’s a largely superficial, silly business—but he has decided to take it up, and it imposes certain tiresome obligations, like explaining oneself to reporters, even though they are generally not the sort of people one would invite to one’s French villa.

As grim week follows grim week, you have to wonder whether Morneau regrets giving up a quiet, pleasant life as boss of Morneau Shepell for the more glamorous life of responding to nasty questions from the likes of Pierre Poilievre, the Conservatives’ nasty Finance critic.

How galling it must be to have to listen to his oily innuendo and respond with bland boilerplate about the middle class! But Morneau can’t offer substantive answers because the facts of the matter are so bad.

When Morneau was elected as an MP, he resigned from Morneau Shepell and shifted more than two million shares—worth more than $40 million today—to a numbered company directed by his wife, frozen-food heiress Nancy McCain. Although he told CBC that he would likely put his holdings in a blind trust, he didn’t do so.

Then he introduced a bill, C-27, that would make it easier for Crown corporations and federally regulated companies to shift from defined-benefit plans to shared-risk plans, a change he had sought when he was running Morneau Shepell, Canada’s “largest provider of pension administration technology and services.”

The opposition claims the firm would benefit from the bill, suggesting impropriety.

I doubt that Morneau introduced the bill to put money in his own pocket, but it’s not possible to discount the opposition allegations as baseless smears because Morneau was not forthcoming about his holdings, and the conflict-of-interest screen that is supposed to prevent him from handling any file that might affect his personal financial interests did not prevent him introducing a bill that he pushed for when he was a businessman.

Last week, he promised to establish a blind trust and sell off his remaining shares, but he has not said how he will do that. He could sell them to someone who promises to sell them back to him when he leaves politics, for example. He will no doubt clear whatever arrangement he makes with the ethics commissioner, but she is guided by a law, created by politicians for politicians, and it is full of loopholes.

The commissioner earlier advised Morneau that he didn’t need to establish a blind trust because of a loophole for numbered companies. Will he now find another loophole? Is there any point in asking him?

It’s a big mess, of Morneau’s own making, and because of that he’s under intense pressure to introduce good news on Tuesday.

After he failed to manage the public reaction to a proposal tightened rules for corporate tax shelters, the government hastily rolled out a small-business tax cut that will cost the treasury about $600 million a year, more than twice as much as he hoped to gain from closing tax shelters.

READ: Trudeau’s pandering small business tax cut will do nothing for the economy

Late Monday, CBC reported that the government will boost child benefit payments in the fall update. Goodness knows how much that will cost.

The window for doing hard things—like making politically difficult changes to the tax code—is closing as we get closer to the next election. Morneau, with his unforced errors, is squandering opportunities and forcing the government to spend money sooner than it had planned.

If he doesn’t stop blundering, it’s an open question how much longer Trudeau, or Canadians, can afford to have him in the job.

MORE ABOUT BILL MORNEAU:


 

Bill Morneau, Canada’s very expensive finance minister

  1. “Late Monday, CBC reported that the government will boost child benefit payments in the fall update. Goodness knows how much that will cost.” Who needs this sort of lame posturing? Of course the government has people who can and will work that out to a fair approximation or, for a back of the envelope estimate take the existing cost and multiply by the proportional increase. In any case, it’s hard to fathom what issue the author is raising and possibly even a little confusing since this a program initiated by the Cons; perhaps the offense is one-upmanship. In any case it’s bound to be less than the $1.2B bailout Harper paid to tar sands companies to subsidize their losses when the price for their product crashed.
    One also wonders what the issue with the proposed small business tax cut is other than it steals some of the Cons thunder; perhaps it’s simply a better idea in that it extends a benefit uniformly to all small business instead of a select few capable of exploiting loopholes and shading the facts of their business expenses; this puts the Cons in the position of supporting moderate larceny over ordinary enterprise.
    “the more glamorous life of responding to nasty questions from the likes of Pierre Poilievre, the Conservatives’ nasty Finance critic.” … at least the author got that right: this jumped up martinet presumes to be finance minister in waiting with little in the way of demonstrated business acumen. It is certainly inconvenient politically that anyone with a modicum of the expertise required to fill the financial portfolio would have the trappings of significant financial success i.e. personal wealth unless we choose an ivory tower academic instead. Poilievre’s polemics against conspicuous wealth may backfire since wealthy Canadians represent a substantial portion of CPC’s core support.

    • That’s the whole point!!! The Liberals don’t even know the costs of their boost to child benefits!!! Your ok with that?

      Your ok with Trudeau sending $5.3 billion, no strings attached, overseas in his first 100 days in office?

  2. Trudeau is now slowly realizing a number of things about governing, the foremost of which is that it is exponentially more difficult than either opposing government or campaigning. Trudeau’s decision to engage in a charm offensive instead of undertaking serious policy reforms early in his candidacy is taking his toll, as rookie ministers like Morneau, Montsef and Bennett have proven themselves ill-suited to their assigned tasks, without the support of a leader who is too busy jet-setting and posing for photo ops than dealing with the challenges of governance. And when his inexperienced ministers expectedly fail, Trudeau rejects any semblance of blame, preferring meaningless and evasive talking points to any sort of analysis as to why his policies failed miserably. Justin Trudeau is a Prime Minister who clearly believes that he can use his silver tongue to con Canadians into believing whatever narrative he chooses to spin in support of his policies, but who has no response or remorse when his misrepresentations or poorly-conceived policies are exposed for the shams that they are. And yet, through it all, Justin deigns to lecture Canadians as to why their failure to accept his machinations at face value is a betrayal of their own interests, which he painstakingly defines as his particular policy du jour. Canada, and the World, will be a better place if this manipulative, unprincipled, self-aggrandizing charlatan of a Prime Minister is unseated rather than allowing him to try to redefine Canada in his own image, denouncing those who oppose him as heretics.

    • So explain to me if Trudeau and his team are so inexperienced, how did they manage to get the economy in significantly better shape in less than 2 years than Harper did in 10 years? When oil was above $100/barrel for much of those 10 years. If you think they are lucky or magical I will take that over going “all in” on oil.

      • If you think Trudeau is in charge of either the housing boom or our unfairly depressed Canadian $ led by the Bank of Canada which is artificially keeping interest rates in Canada low and giving a boost to manufacturing, you are smoking something. Those two things are what’s driving the economy. The only GDP improvement related policy in Trudeau’s kit is infrastructure spending which hasn’t left the launch pad after 2 years.

        • Jerome, you were happy to give Trump the credit for an improving US economy. Your own words sink you here. We are running a deficit – that is fiscal stimulus whether through infrastructure or child tax benefits – and that pumps more money into the pockets of Canadians than it takes out.

          • Deficits cost us forever and should be avoided at all costs. Now that the economy is running well we dont need deficits, we are basically borrowing money to give to people to spend and then pay interest on this money forever, pretty dumb. Balance the books already, and quit giving borrowed money away.

  3. How do people lose their way? It’s like they’re these moral, upstanding citizens when in private business, but the second they hit public service (whether elected in or appointed as a Senator), they lose their morals and values and become the very thing they hated before.

    • No one lost their morals or values! That is a totally unfair comment. Morneau would be better off financially if he had stayed in the private sector. He doesn’t need to change policy to help him make money! We need skilled intelligent people in government and your criticism just convinces the best people to stay out.

      • If he’s not malevolent, he’s just plain incompetent.
        – He totally screwed up the execution of the proposed small business tax changes, and ended up watering them down to the point where they are meaningless. I.e., due to his inability to execute, needed changes did not occur.
        – He somehow forgot about his French villa, which for reasons unexplained resides in a holding company.
        – He thought retaining control of his shares in Morneau Shepell was OK as long as they were in a holding company. And, for good measure he allowed everyone, including members of his own party, to believe that his wealth had been put in a blind trust, when it had not.
        – He did not recuse himself from involvement in Bill C-27 (Pension Benefits Standards Act amendment) despite the obvious potential conflict of interest due to his interest in Morneau Shepell, thus jeopardizing this needed amendment.

        I don’t particularly care about his morals or values, I just expect him to be competent and to follow the mandate letter he received from the PM which says, among other things, “… and both the performance of your official duties and the arrangement of your private affairs should bear the closest public scrutiny. This is an obligation that is not fully discharged by simply acting within the law.”

        As Paul Wells colourfully put it in the recent CBC At Issue, Mourneau didn’t have the sense that God gave a goose to realize he needed to use a blind trust. And I’m supposed to have confidence in this guy?

        • A blind trust is pretty much meaningless, when you know what the assets are and that they won’t/can’t be transferred.
          As far as I know, MSI would not benefit from passage or implementation of C-27. It’s a concept developed for another province, very suitable for the federal programs as well, and deals with a program that is part of his current responsibility. It would be run by the feds. If MSI was to be paid for anything, THAT should be open for public scrutiny and competitive quotes (from anyone NOT connected to Phoenix, please).

          • Once the assets go into a blind trust, you have no control over or knowledge of what happens to them; so Morneau wouldn’t know whether his shares in Morneau Shepell had been sold or not, if he had placed them in a blind trust. A blind trust by itself is definitely an imperfect instrument, but it’s far, far better than retaining control over the shares as Morneau did.

            At any rate, Morneau has belatedly agreed to put his assets in a blind trust *and* sell his shares in Morneau Shepell, so even he now realizes how inadequate his initial effort was.

            As for Bill C-27, it is more far reaching (as I understand it) than suggested. It would allow federally regulated private sector and Crown Corporation employers to replace defined benefit pension plans with target benefit pension plans. And, AFAIK, the feds do NOT run the pension plans of federally regulated private sector companies, that would often be companies such as Morneau Shepell that do this. So Morneau Shepell could indeed benefit from Bill C-27. How great a benefit would Bill C-27 be to Morneau Shepell, and thus its shareholders? Got me. However, even the appearance of the finance minister possibly benefiting from legislation that he’s responsible for is unacceptable.

    • That’s a ridiculous comment, with no basis in fact (at least as far as Morneau is concerned)! He’s following the rules as they exist, as well as trying to accommodate additional public concerns. Whether the rules are or aren’t what you think or want, they are what they are.
      Selling his stock in MSI would cost $135,000/month in lost income (taxed at, maybe, 40%), maybe $6,000,000 in capital gains taxes, and who knows what else. Would you? I’d stay home – well, out of the public eye, at least :).

      Personally, I think they need to do some updating to plug apparent loop-holes, but he didn’t make them.

  4. In Trudeau Senior’s day, the PM would have asked the Finance Minister for his resignation over this and the Finance Minister would have submitted it. There’s been very little to distinguish this government from the last bunch of entitled tar-drenched neoliberals.

  5. Stephen Maher’s article is typical political reporting. It looks bad so it is bad so it is corrupt so there. Good grief. Maher spends not one paragraph, not one sentence, on whether the tax change was good policy or not. And that is because poor Stephen has no idea. We have guys and gals at Finance who advise on tax policy and it would not be hard to find out what their advice is because they give the same dam advice over and over, and journalists spend happy careers utterly ignoring their existence. If it is good policy, I would like to know that. I don’t are about Morneau Shepell. And frankly, it is ridiculous to argue that wealthy people go into politics to make money. Only political enemies and journalists could carry on with such stupid stuff and nonsense.