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Editor’s letter: Harper, Carney and the tensions over the new BoC governor

Prime Minister Stephen Harper, left, shakes hands with Bank of Canada governor Mark Carney in January, 2008, as Mr. Carney was taking the position. The relationship between Mr. Harper and Mr. Carney was been fraught with tension.

CHRIS WATTIE/REUTERS

This week's bombshell, without question, was the appointment of Stephen Poloz as governor of the Bank of Canada. Most BoC watchers had expected senior deputy governor Tiff Macklem to get the job. Perhaps too many of those observers failed to factor in the way Stephen Harper's government works. Under the current regime, civil servants are not meant to be the public face of any arm of government. That was a strike against Mr. Macklem, whom departing governor Mark Carney had groomed for the job.

For months we had reported that Mr. Macklem was the odds-on favourite. But our reporting overlooked signals from the Finance Minister and Prime Minister's Office that they wanted a different kind of governor.

Tensions between Mr. Carney, Finance Minister Jim Flaherty and Mr. Harper have been evident ever since Mr. Carney let it be known in private circles that the Harper government initially failed to respond to the 2008 financial crisis. There were added concerns about the manner in which Mr. Harper used to summon Mr. Carney to his office, at times speaking to him in a lecturing manner about the economy. The relationship reached a low the day Mr. Harper summoned both the Finance Minister and Mr. Carney to his office and released this photo, which made the governor look uncomfortably like a political aide.

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Curiously, Mr. Flaherty and Mr. Carney grew closer as they became the senior statesmen in the international circuit. Mr. Carney seemed to admire the Finance Minister's Main Street economic sense as well as his charming ability to bring together personalities and interests. Mr. Flaherty, in turn, appreciated the governor's understanding of capital markets and international banking, especially as they set out to contain the financial damage emanating from Europe last year.

The good vibes waned as it became known that Mr. Carney was flirting with the idea of seeking the federal Liberal leadership. Once that was reported in The Globe – after Mr. Carney announced he would be moving to the Bank of England – his influence on succession was more limited. In fact, the more Mr. Carney nudged his deputy forward, the less likely Mr. Macklem's chances became.

That is only part of the explanation, of course. Mr. Carney seemed to know that when he cut short his seven-year term, his board might wonder whether Mr. Macklem was indeed ready for the governorship. Mr. Poloz has more experience in running an organization. He also has strong credentials of his own, including a good sense of the diverse Canadian economy, an ability to work with various arms of government and experience working with international organizations. In those respects, his appointment is no surprise, and not unusual. CEOs have a duty to groom successors. Boards have a duty to weigh that candidate against an external field.

For more on the Poloz era, read this weekend's Report on Business cover story.

Video pick

Meet NHL Answerman, the animated alter-ego of hockey columnist Eric Duhatschek, who examines which teams have the best shot at winning Lord Stanley's cup this year.

Wynne’s rookie test

One of the country's biggest infrastructure projects is well under way in the Toronto region, where the provincial agency Metrolinx is spending tens of billions of dollars on a network of transit projects known as the Big Move.

Metrolinx chairman Robert Prichard and president and CEO Bruce McCuaig visited our editorial board this week to make the case for dedicated tolls and taxes to fund the big spend. They waded into controversy from there.

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Before the Metrolinx team arrived, Ontario Transportation Minister Glen Murray had raised doubts with our transit reporter Oliver Moore about the future direction of the Big Move. He called some of the plans "placeholders." Mr. Prichard, an unflappable lawyer most for the time, did well to hold his equanimity as Mr. Moore explained the skepticism coming from a higher authority. He went so far as to refer to Mr. Murray as a "creative thinker" (i.e. that guy is out there).

Although Mr. Murray is known as a loose cannon, and Premier Kathleen Wynne is the real authority, we thought the Transportation Minister's musings were important enough to place at the top of our front page in Ontario.

The reaction was swift and sharp. When Ms. Wynne called me at midday on Thursday to discuss the budget being presented that day, she didn't shy away from questions about Mr. Murray.

She said she had spoken to Mr. Murray "first thing" (and she is an early riser) and set the record straight: her government has one policy. Her minister had been "freelancing" and reversed himself. Just to be sure, her government issued a statement to clarify that Mr. Murray's comments did not reflect the Premier's views.

It was an interesting leadership moment for the rookie Premier, dealing with perceived dissent. Ms. Wynne, who places her own phone calls and introduces herself to strangers as Kathleen, present the very opposite personalty of Mr. Harper. She is a mediator, by training and manner. But even mediators need to know when to shut someone down.

She is all for conversation, she explained, "but once the conversation is over, we speak as one."

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Al Gore takes aim

Al Gore doesn't hold back in a weekend interview with our columnist and online Comment editor, Doug Saunders. He criticizes Canada for a lack of a serious national policy on carbon and for pulling back from multilateral efforts to address not just climate change but a range of 21st century global challenges. Agree with him or not, Mr. Gore is always worth reading and listening to. He does his homework.

I will be interviewing Mr. Gore Tuesday evening in Toronto, at an event for subscribers who are part of our Globe Recognition program. I look forward to seeing many of you there and hearing your questions for Mr. Gore. We will share a video of the interview with you later next week.

Enjoy the weekend,

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