August 10, 2020

The Morneau Doctrine: To be continued or not (Cardozo)

By Andrew Cardozo

The HILL TIMES August 10, 2020
OTTAWA—Bill Morneau has been one of the longer serving federal finance ministers and probably the most revolutionary when it comes to doing big things. He has a record of big measures in normal times and extraordinary measures in the recent times of crisis.
I’m calling it the Morneau Doctrine. Here is a list some of the things Morneau has put into place over the last five years and you can read it either as the legacy of a finance minister who is about to exit because of his lapses in judgment, or as a list of achievements which justifies why he must stay because his work is so important at this time. His ability to install programs that help the little people fortunately are at odds with his considerable personal wealth and his habitual forgetfulness of what he owned and what expenses he needed to pay.
Let’s take the Morneau Doctrine in three parts.
Part One is before COVID-19, and Part Two is during COVID. Part Three is about after COVID—the rebuilding and recovery. For the former successful businessperson and one-time chair of the conservative C.D. Howe Institute, Morneau has been a big investor not a big saver.
With continuous low interest rates he has systematically focused on making various investments with economic and social goals in mind. Keeping the debt-to-GDP ratio being a core guideline, not just keeping the deficit and debt low, the promised modest deficit of $10-billion was surpassed in months of taking office.
Morneau Doctrine Part 1: Jobs: starting at the macro level, in the Part One period, the economy grew consistently to the extent that more than one million jobs were created, some 75 per cent of which were full-time and Morneau’s suite of policies created the climate that gets some of the credit.
2. Taxes: remember back to 2015, days after that glorious swearing-in at Rideau Hall, Morneau introduced legislation to raise taxes on the wealthiest one per cent and cut taxes on the famed middle class and those working hard to join them, which is a fairly progressive step to begin with. (Interestingly though, economists further to the left said the tax cut could have been better used to fund programs to help those further down the income scale or for a national childcare program.) Here’s part of the problem in politics, if no one is vociferously opposed to a government measure, it gets little media attention. If it actually helps certain citizens, those citizens know about it. If it’s a bit esoteric few know about it.
3. Child poverty: the Canada Child Benefit, which gave money to every family with young kids, lifted 300,000 kids out of poverty. Families who received it liked it a lot. And it was one of the most significant new social policies in a decade.
4. Gender analysis: Morneau introduced gender based analysis for all budgetary items. It’s a longer term thing so few people know about it.
5. Morneau increased the Canada Pension Plan, in cooperation with the provinces, by a considerable 50 per cent. Introduced 50 years earlier by the Lester B. Pearson government, the enhanced CPP will go a long way to combat seniors’ poverty.
6. GIS: Morneau also increased the Guaranteed Income Supplement earnings exemption, helping some 300,000 seniors.
7. Business taxes: in response to the reduction of business taxes by the Trump administration in the U.S., Morneau reduced business taxes from 11 per cent to nine per cent in 2019, among other measures.
8. Home buyers: Morneau created the First-Time Buyer Incentive to increase the number of home owners.
Morneau Doctrine Part 2: Disaster strikes Canada and the world and the economy has to shut down like never before. Governments order workplaces to close and people to stay at home. When you order them to stay home someone has to give them money to survive, and so began the biggest suite of government programs—being conjured up in days (instead of the usual months and years), and mostly delivered by government and sometimes through partners. Here is an interesting fact: the federal government put into place a whopping 75 measures between March and July; that’s 75. It was like the biggest federal budget every released over five months, and the federal government introduced several new programs and made significant changes to others. Here are some of the highlights:
9. CERB: the Canada Emergency Benefit is one of the bestknown programs that helps workers who were laid off, or earning significantly less than last year, costing some $83-billion.
10. CEWS: the Canada Emergency Wage Subsidy provides a subsidy to employers to keep their employees in place, with an $80-billion tab. This was, philosophically, a significant development. Rather than bailing out the companies, that are “too big to fail,” the Morneau doctrine follows the money to workers. Wow, what if the Americans had thought of that back in the crash of 2008?
11. Indigenous peoples: more than $1.1-billion was offered in a range of programs specifically for Indigenous peoples—community support, on-reserve assistance, women’s shelters and Indigenous businesses, in addition to the larger programs that would benefit Indigenous peoples across the country.
12. Morneau offered deferral of income tax and sale tax payments for businesses.
13. The government offered support for various sectors, including air transportation, culture, broadcasting, Canadian museums, farmers, food supply, seafood industry, colleges, and universities.
14. The government offered support to the oil and gas sector to clean up the orphan wells and offered an emissions reduction fund at a cost of $2.4-billion.
15. The Business Credit Availability Program helped businesses through loan guarantees and there was liquidity support through the Bank of Canada and the CMHC.
16. The Canada Emergency Commercial Rent Assistance for small businesses was a life-saver for many entrepreneurs.
17. The list goes on with other programs for seniors, Canadians with disabilities, charities, and the Canadian Red Cross. Morneau Doctrine Part 3 began with the federal government’s $19-billion Safe Restart Agreement arranged with the provinces and announced on July 16. With an eye to looking to rebuilding and recovery, it is likely the first such program for the future, while, sadly, the federal government deals with the present crisis, which is not over.
Seventy five specific measures.
The total is not clear; perhaps closing in on a trillion dollars.
Did Morneau do some things to wrong? Almost certainly. Many programs were being pushed out the door to get to Canadians and getting fixed and tweaked along the way.
Unless the federal cabinet—in its numerous Zoom and conference calls—for some reason spent many hours and days obsessing over the WE Charity as a partner, it is possible that it, along with the 74 other programs, received scant in-depth analysis. Whether that was right or wrong of cabinet, looked at in the midst of 75 programs and during an international pandemic, is a matter of opinion.
That $41,000 for the travel expenses that Morneau forgot to repay or that villa in France that he perhaps thought was not relevant because it was somewhere else, speaks to a very rich Member of Parliament, who was born into money and who has made a lot of money, but whose unstated defence was that he was pre-occupied with his job.
And here’s the thing: his huge wealth does not seem to have obscured his ability to understand the plight of the many little people who are hurting in this pandemic and who needed the big programs like CERB and CEWS, or the more boutique life rafts that he threw out to gig workers, single mothers, students, and stage hands.
Andrew Cardozo is president of the Pearson Centre. (This column was also put together, thanks to a young enthusiastic politico and tweeter, William Stiles who tracked Morneau’s pre-COVID measures.)