Bay street veteran and public-policy expert Bill Morneau is Canada's new Finance Minister, a job that will involve leading the Liberal economic team as it aims to boost growth through infrastructure spending and middle-class tax cuts.
Prime Minister Justin Trudeau's cabinet, unveiled Wednesday at Rideau Hall, presented a clear theme of change in terms of fresh faces in many key economic portfolios.
With the benefit of a majority government, the party promoted several rookie MPs to prominent economic portfolios, even though their lack of experience with Parliament and the federal bureaucracy could present challenges.
Other first-time MPs with economic portfolios include Amarjeet Sohi as Minister of Infrastructure and Communities, Jim Carr as Minister of Natural Resources, MaryAnn Mihychuk as Minister of Employment, Workforce Development and Labour, and Diane Lebouthillier as Minister of National Revenue.
Economic ministers who do have House of Commons experience include Chrystia Freeland as International Trade Minister, Navdeep Bains as Minister of Innovation, Science and Economic Development, Scott Brison as Treasury Board President and Marc Garneau as Transport Minister.
The new government inherits a Canadian economy that is continuing to deal with the fallout of last year's deep drop in the price of oil and other key commodities. This has hurt oil-exporting provinces, including Alberta, Saskatchewan and Newfoundland and Labrador.
After a technical recession in the first half of 2015, the economy is beginning to rebound, but strong growth is not expected over the coming years. There is potential that the Liberal policies in areas such as taxation and infrastructure will provide some stimulus to the economy, but there are questions as to how quickly the Liberals can implement their agenda.
While Mr. Morneau was elected for the first time last month as the MP for Toronto Centre, a keynote speech he delivered to the 2014 Liberal Party convention in Montreal outlined many of the themes that would form the foundation of the party's successful election campaign.
Speaking then of an "epidemic of worry" in the Canadian work force, Mr. Morneau called for Ottawa to invest in areas like education and innovation that will create good long-term jobs.
"As a business person, I can tell you, we can't slash our way to success," he told the partisan crowd as Mr. Trudeau watched from the front row. "We must invest in the things that matter. We must invest in our people most of all."
Mr. Morneau went on to serve as a member of Mr. Trudeau's economic advisory team that inserted many of these themes into the party platform.
The financial community reacted with high praise for the appointment.
"The new Finance Minister has excellent private-sector experience and a strong knowledge of public policy," said Toronto-Dominion Bank deputy chief economist Derek Burleton. "Hopefully that will help him move the dial on some of the bigger challenges the nation faces."
Mr. Morneau is a former chair of the C.D. Howe Institute, a public-policy think tank that focuses on economic issues.
He took the helm of his father's firm, Morneau Shepell, in 1990, growing its annual business from $20-million to $500-million a year. He severed ties with the company last month shortly after his election win.
The company is the country's largest manager of private-sector pensions. It also does business with federal departments, meaning Mr. Morneau may need to recuse himself from discussions that involve the company.
Kevin Milligan, an economics professor at UBC who sat on Mr. Trudeau's economic advisory committee with Mr. Morneau, said his policy interests go beyond pensions. "I've had several conversations with him on taxation," said Mr. Milligan. "He's certainly capable of advanced professional conversations on that … In his line of questions and the comments he made, he showed interests that were certainly broader than the financial industry."
In 2011, he donated $1,000 to his local Conservative candidate, John Carmichael. Otherwise, his past partisan involvement is scant.
But Dwight Duncan, a former finance minister of Ontario, says that when he appointed Mr. Morneau to write a report on pooling pension assets in 2012, the businessman came recommended by Liberal heavyweights like Frank McKenna and David Peterson.
"He certainly is a Liberal," Mr. Duncan said. "He's a centrist, centre-left. Obviously a believer in free-market capitalism, but [with] a deep social conscience."
Mr. Morneau and Finance Canada officials will be expected to work quickly on a fall fiscal update. The economic landscape has changed considerably since the Conservative government released its April budget based on a survey of private-sector economists that was conducted in March. The economy has underperformed expectations this year and an update will show what that means for federal revenue.
In a short exchange with reporters Wednesday, Mr. Morneau said he could not comment on his department's plans until he meets with officials for briefings on Thursday.
"I think there are going to be lots of exciting challenges ahead," he said.
The Liberal platform promised to undo several recent Conservative policies, including income splitting for families with children under the age of 18 and the near doubling of the maximum annual contributions that Canadians can make to their tax-free savings accounts. The Liberals also promised tax cuts on middle incomes and for small business, as well as a tax hike on personal income above $200,000.
Canadians will be looking for clarity as to which of these changes will take effect as of the 2016 taxation year, which starts on Jan. 1.
Mr. Morneau, the man who will be responsible for delivering on the Liberal promise to have Canada's top 1 per cent pay more in taxes, is himself a member of the 1 per cent. Corporate records show his total compensation was $1.1-million in 2014 and $1.8-million in 2013. The minister told the CBC Wednesday that he expects he will need to put his assets in a blind trust.
He will also be responsible for negotiating an enhancement to the Canada Pension Plan with the provinces. The Liberals also promised negotiations with provincial governments on the future of health-care transfer payments, which could be a major new federal expense that was not accounted for in the party's spending plan.
Mr. Morneau is well aware of the issues surrounding pension reform. He served on a technical advisory group on retirement security for the Ontario government as it prepared a proposed supplementary pension plan.
Some of his past comments on pensions may prove controversial. In a 2013 speech, he questioned the political sustainability of public-sector defined benefit pensions at a time when guaranteed pensions are on a path to "extinction" in the private sector.
"Who believes that the average Canadian, without a defined benefit plan … will, over the long term, agree to continue to fund public-sector employees' pensions at a level that they can only dream about attaining themselves?" he asked rhetorically in a 2013 speech to the Public Policy forum in Fredericton. Public-sector pension changes were not mentioned in the Liberal platform.
In a nod to the complex economic challenges facing the country, the Liberals are rebranding the sprawling Industry department and naming Toronto-area MP Navdeep Bains the first Minister of Innovation, Science and Economic Development.
The ministry's new name suggests Mr. Bains, a 38-year-old former accountant, will take another run at fixing Canada's woeful record on innovation. In spite of some of the most generous tax breaks in the world, Canadian companies still do less research and development than rivals in other major industrialized countries.
One of the first key decisions facing Mr. Morneau and Mr. Bains will be whether to join the Quebec government in propping up ailing aircraft maker Bombardier Inc. Quebec wants Ottawa to match its $1-billion (U.S.) investment in the Montreal-based company, which is struggling to get its C Series commercial jet launched.
Coming to Bombardier's rescue would come with significant political risk. Critics will accuse the new Liberal government of lavishing corporate welfare on a company which has enjoyed generous federal subsidies over the years and close ties to the Liberal Party.