Income trusts, auto bailouts and securities regulation. Housing bubbles, tax-free savings accounts, the financial crisis.
Jim Flaherty tackled them all, even when there was no political currency.
“He took on some really tough files, not as political files, but because it had to get done,” said Rob Wright, Mr. Flaherty’s former deputy in the Finance Department. “In challenging times, you had to have someone who said, ‘Let’s deal with this.’”
The result is a legacy of tough and controversial decisions, including tightening mortgage rules and running up a massive deficit during the recession, only to dismantle it soon after.
“These are not things people jump into because they are political winners,” Mr. Wright said. “If you look out globally, you see places where there wasn’t that sort of leadership.”
Mr. Flaherty died Thursday.
Through it all, Mr. Flaherty earned the respect of those he worked with – a daunting task given the weight of the challenges he juggled – as well as a sincere appreciation for taking on issues that mattered to Canada, regardless of his political stripes.
“He was a true believer in multilateralism, leading, urging, cajoling the members around the table to pursue policies that would promote strong, sustainable and balanced growth for all,” said Mark Carney, the former governor of the Bank of Canada who is now at the helm of the Bank of England, adding that Mr. Flaherty had an “enormous influence on global policy and on me personally.”
From the get-go, Mr. Flaherty had to handle political footballs, opting to crack down on income trusts just nine months into his tenure, knowing it would irk Bay Street. Worried that some of the country’s biggest corporations would convert to income trusts, and therefore sidestep corporate taxes, Mr. Flaherty outlawed such trusts in 2006.
“He knew if we handled it badly it would be make or break for him,” said David McLaughlin, who served as Mr. Flaherty’s first chief of staff after the Conservatives came to power in 2006. “But the thing about him was that once he took a decision that he had thought about, he was comfortable with it. He got that there was going to be political flack and said we’re just going to have to manage it.”
Mr. Flaherty also proved he could earn respect from the other end of the political spectrum. Former auto union leader Ken Lewenza heaped praise on Mr. Flaherty for his role in the federal and Ontario bailout of Chrysler Group LLC and General Motors Co. in 2009 and his actions in the years, which proved he understood the importance of the auto industry to the Canadian economy.
“The $500-million auto investment fund that was in his last budget, the reality is that’s Flaherty,” Mr. Lewenza said. “That’s Flaherty’s understanding of the auto industry.”
To help make tough decisions, Mr. Flaherty preferred to pick peoples’ brains, rather than act out of personal preferences. Brian Lee Crowley met Mr. Flaherty as a visiting economist at the Finance Department from 2006-2008, and the finance minister later asked him to organize an annual summer retreat of top economic decision makers in Wakefield, Que., near Ottawa.
“He loved the two-day, closed door frank discussions,” said Mr. Crowley, now managing director of the Macdonald-Laurier Institute, an Ottawa think tank. Unlike other politicians who would hog a microphone, Mr. Flaherty preferred to keep a low profile, listening intently and taking copious notes, according to Mr. Crowley. Several ideas he heard made their way into his budgets, most notably the tax-free savings account.
Former colleagues and business associates also stressed that Mr. Flaherty was easy to deal with, despite his burdens.
“As finance minister, he was controlling the purse of the government, and yet I found him to be quite humorous, quite funny at times,” said Craig Alexander, chief economist at Toronto-Dominion Bank. “He was very engaging.”
Julie Dickson, the retiring head of Canada’s banking regulator, the Office of the Superintendent of Financial Institutions, recalled walking out of a meeting with Mr. Flaherty, who turned to her and said, “Wasn’t he a piece of work?” Ms. Dickson politely declined to reveal the identity.
Above it all, however, Mr. Flaherty’s stewardship of the finance portfolio earned him the most praise – both at home and abroad.
“Jim’s steady hand kept us floating on top of the waves while many other countries went under,” said Gerry Schwartz, chief executive officer of Onex Corp.
“You hear stories about him internationally and you would be blown away,” added Mark Wiseman, the head of the Canada Pension Plan Investment Board. “He was a truly great ambassador for the country.”
With files from Boyd Erman, Richard Blackwell and Greg KeenanReport Typo/Error