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Mr. Morneau spent his government’s first term nibbling – slowly – around the edges of the problem.PATRICK DOYLE/Reuters

After a first term in the Finance Minister’s office that featured a few strong steps, some stumbles and too much foot-dragging, Bill Morneau has plenty of unfinished business to address as he returns for another term. If he wants to make the most of his second chance, the top of that to-do list should be tackling Canada’s badly eroded competitiveness.

That will require a lot more than the procrastination and piecemeal policy that proved inadequate in Mr. Morneau’s first run at the file. The elephant in the room is Canada’s antique, increasingly obsolete tax code; unless Mr. Morneau is willing to pursue a complete overhaul, his economic legacy will be one of a lost opportunity to reverse Canada’s competitive slide.

One could argue that Mr. Morneau already established a pretty impressive legacy in his first four years as the economic voice of Justin Trudeau’s Liberal government. Perhaps the government’s biggest achievement has been to move the fiscal conversation away from constraint and toward investment. Both the tone of the recent election campaign and the end result indicated that after four years of modest but persistent Liberal deficits, balanced budgets are no longer a priority for Canadian voters.

Whether you agree with this shift or not, that’s a major change in the foundation on which federal policy is built. And the result is that this government has a de facto licence to spend in its second mandate – something that may come in handy in the face of what looks to be a slower economy over the next couple of years.

Mr. Morneau can also point to the increased commitment to infrastructure spending under his watch as a major step toward raising the country’s productivity – a key to long-term economic growth. And the government has upped its investments in skills and innovation.

Yet the business community is hardly doing cartwheels today over Mr. Morneau’s return to the Finance portfolio. Investors will be reasonably satisfied with the stability provided by the status quo of Mr. Morneau – better the devil you know than the devil you don’t. But corporate leaders have been underwhelmed by Mr. Morneau’s slow and tentative approach to dealing with the competitiveness issue, which they see as the biggest long-term threat to business and economic well-being.

Canada’s tax system – the underlying design of which dates back to the 1960s, onto which decades of additions and tweaks have been cobbled – is a hopelessly out-of-date mess that increases business costs, impedes growth, and discourages innovation and investment. Experts have been saying for years that Canada needs a new government commission on the tax system – something that hasn’t happened in more than a half-century – with the aim of completely redesigning tax policy to align with the country’s 21st century economic priorities.

Instead, Mr. Morneau spent his government’s first term nibbling – slowly – around the edges of the problem. When the United States overhauled its own tax policy at the start of 2018, including a deep corporate tax cut that wiped out Canada’s advantage on corporate tax rates, Mr. Morneau delayed a response for months before introducing more modest measures, including accelerated write-offs for capital investments. It was supposed to kick-start business investment; the impact, one year since that change was implemented, looks muted at best. Meanwhile, he retreated from a small-business tax overhaul that proved to be a public-relations disaster.

Probably the biggest competitiveness gains the government produced in its first term were on the trade front; pacts signed in North America, Europe and the Pacific Rim will all serve to maintain and improve Canada’s access to export markets, a critical competitive advantage for an export-heavy economy. But trade isn’t Mr. Morneau’s file. With much of the most meaningful work on the trade front already accomplished, it’s time for Finance to address the tax system.

Of course, there are other incomplete jobs that deserve the minister’s attention. On both the infrastructure and the innovation front, the government has been quick to commit large amounts of money, but now needs to get more efficient at getting projects completed and funds fully into action. It has also made discouragingly little progress on lowering interprovincial trade barriers.

But ultimately, if our businesses can’t compete globally for market share and investment, we’ll be swimming upstream with any other economic priority this government identifies – including climate change.

Does Mr. Morneau have the leadership chops to embrace a complex tax-competitiveness challenge that many before him ducked? Based on his first term, that’s far from clear. But he’s been handed the job, and a fresh vote of confidence from his Prime Minister to do it. Let’s see whether he’s ready to raise his game.

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