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Prime Minister Justin Trudeau is not committed to keeping Bill Morneau on as the key architect of the federal government’s economic revival plan after the two men clashed over the Finance Department’s policy responses to the COVID-19 crisis, sources say.
Insiders say Mr. Trudeau is uncertain whether Mr. Morneau is the right fit to navigate the country into a postpandemic economic recovery as he decides on a cabinet remake before the fall session of Parliament.
Last month, the Prime Minister’s Office also was caught off guard when Mr. Morneau revealed he recently repaid $41,000 in expenses for trips he and his family took at the expense of WE Charity. The Ethics Commissioner is investigating Mr. Morneau and Mr. Trudeau over a contract that was awarded to the charity.
During the COVID-19 lockdown, the Prime Minister came to rely on Mark Carney, former governor of the Bank of England and Bank of Canada, for informal policy advice, and now on plans to revive the economy, sources say. The Prime Minister’s Office had no comment on Mr. Carney’s advisory role.
Sources did not deny that Mr. Carney could replace Mr. Morneau if he is interested in the finance minister’s job, although he would need to win a seat in Parliament. Other contenders are Deputy Prime Minister Chrystia Freeland, Foreign Affairs Minister François-Philippe Champagne and Treasury Board President Jean-Yves Duclos, according to insiders.
The Globe and Mail is not identifying the insiders because they were not authorized to speak publicly about Mr. Trudeau’s plans for a cabinet remake that could lead to the departure of Mr. Morneau, a wealthy Toronto businessman who was named Finance Minister in 2015.
Mr. Morneau has privately said he would leave politics early if he could not keep the high-profile job, insiders say.
However, the Finance Minister’s office said Mr. Morneau has no plans to leave politics and is engaged in reviving the economy.
“Minister Morneau fully intends to keep working on the Prime Minister’s team and getting Canadians through the pandemic,” communications director Pierre-Olivier Herbert told The Globe.
Mr. Carney, who recently returned to Canada, has taken on the role of the United Nations’ special envoy on climate action and finance since leaving as governor of the Bank of England in March. He was the Bank of Canada governor from 2008-2013, helping steer the economy out of the global financial crisis.
In June, Mr. Carney announced he is writing a book that he said will outline new postpandemic economic ideas for “creating a dynamic economy that works for all and sustainably over time.”
Mr. Trudeau, who is on holiday at the Prime Minister’s Harrington Lake retreat in the Gatineau Hills, is examining new stimulus and social safety net measures. Sources say he is aware recovery from the economic effects of the pandemic could take years.
The Prime Minister and Mr. Morneau have disagreed over plans to move the Canada Emergency Response Benefit into a revamped and broader Employment Insurance Program, sources say. The Prime Minister’s Office is pushing for a two-year freeze on premiums, while Mr. Morneau insists on only a one-year freeze to save money, sources say.
In the early roll-out of tens of billions of dollars in coronavirus relief, Mr. Trudeau overruled Mr. Morneau on several important measures, including the Finance Minister’s preference for a 10-per-cent wage subsidy. The Globe reported in April that the measure was replaced under pressure from Mr. Trudeau with a 75-per-cent subsidy. Mr. Trudeau also instructed Mr. Morneau to drop legislation that would have given the Finance Department extended taxing and spending powers until the end of 2021, according to sources.
Beyond the policy disputes, sources say Mr. Morneau had failed to tell anyone in government, including his top aides, that he and his family had taken trips to Kenya and Ecuador in 2017 to see some of WE’s humanitarian work for which the charity covered some expenses.
The federal ethics watchdog is investigating the roles of the Prime Minister and Mr. Morneau in giving the WE organization a contract to run the Canada Student Service Grant, which the Liberal government presented as a way to assist students with education expenses as they faced a summer of unemployment.
Both have apologized for not recusing themselves from discussions because of their families’ ties to the organization. Mr. Trudeau’s mother, brother and wife had speaking fees or travel costs paid, while one of Mr. Morneau’s daughters worked for WE in an administrative role.
In 2017, Mr. Morneau was found in violation of rules for failing to disclose to the ethics commissioner that his private holding company owned a villa in France. He also had not put his shares in the pension management business, Morneau Shepell Inc., into a blind trust when he entered government despite promising to do so. Under pressure from opposition MPs, he later sold those shares and put all his holdings in a blind trust.
The Finance Minister is credited with making improvements to the Canada Pension Plan and job retraining initiatives.