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Canada's Minister of Finance Bill Morneau looks at Prime Minister Justin Trudeau during a press conference in Ottawa on March 11, 2020.Blair Gable/Reuters

Bill Morneau walked into Justin Trudeau’s home Monday to resign as finance minister, after a recent direct appeal to the Prime Minister to stop leaks about him failed to end the stream of negative stories he believed were orchestrated by top officials in the Prime Minister’s Office.

According to this account by a senior government official who is close to Mr. Morneau, Mr. Trudeau did not ask his finance minister to stay in the job during the Monday meeting and Mr. Morneau ultimately submitted his resignation. The brief meeting took place at the Prime Minister’s temporary residence in Ottawa near Rideau Hall.

The Globe and Mail is not identifying the official so that they could speak freely about private discussions.

Although both men spoke only positively of each other in public this week, it is clear the high-profile political breakup in the middle of a pandemic exposed a simmering tension at the centre of the Liberal government.

The differences between Mr. Trudeau and the only finance minister he has had were slow-burning at first. There were repeated disagreements between the PMO and the minister’s office throughout the pandemic over the size of emergency measures and their policy rationale.

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The government official pointed to the May announcement of $2.5-billion for seniors as one of several points of contention. The official claimed PMO staff were more focused on announcing policies based on political motivations rather than genuine policy need. In the case of seniors, for instance, most are on fixed incomes that would not be affected by the pandemic.

The PMO and Mr. Morneau’s team also disagreed over the size of Canada Emergency Response Benefit payments, with the PMO’s push for larger payments winning out over Mr. Morneau’s concern that higher amounts could create disincentives for people to return to work, the official said.

Mr. Morneau’s standing with the PMO was not helped by his surprise announcement last month, at a parliamentary hearing into the WE Charity controversy, that he had reimbursed $41,366 to WE Charity for travel expenses that the group covered for personal trips his family took to Kenya and Ecuador in 2017.

Both Mr. Morneau and Mr. Trudeau are under investigation by the Ethics Commissioner related to a now-cancelled contract with WE Charity to administer a pandemic-related student volunteer program.

The official said the WE issue likely contributed to the fact that Mr. Morneau is no longer finance minister, but expressed the opinion that the main reason is that he would not quickly approve the spending plans of the PMO’s senior staff without thorough analysis.

This tension broke into public view on the evening of Monday, Aug. 10, when The Globe reported that Mr. Morneau’s job could be in jeopardy after clashes with the Prime Minister.

The story said sources told The Globe that Mr. Trudeau was planning a cabinet shuffle that could lead to Mr. Morneau’s departure.

The story also quoted Mr. Morneau’s communications director, Pierre-Olivier Herbert, who said the finance minister had no plans to leave.

“Minister Morneau fully intends to keep working on the Prime Minister’s team and getting Canadians through the pandemic,” Mr. Herbert told The Globe last week.

Mr. Morneau called Mr. Trudeau the following morning to complain about the story, according to the official. During that call, the minister described the situation as unacceptable and urged Mr. Trudeau to ensure his staff are not leaking private matters. That afternoon, the PMO released a statement in support of Mr. Morneau.

“Of course the Prime Minister has full confidence in Minister Morneau, and any statement to the contrary is false,” the PMO said on Aug. 11.

Yet the stories continued. On Saturday, Aug. 15, Bloomberg published a report about policy disagreements between the finance minister and the Prime Minister’s Office and that Mr. Morneau could be shuffled. The next day, Reuters published a similar report.

That led to Monday’s meeting at Rideau Cottage. That evening at a hastily called news conference, Mr. Morneau announced that he planned to resign as finance minister and as an MP and would be seeking the leadership of the Organization for Economic Co-operation and Development. The source said the OECD position was something Mr. Morneau had mentioned in the past.

Mr. Morneau said during his news conference that he never intended to run in more than two elections and that the next phase of Canada’s economic recovery requires a finance minister who can oversee the plan over the next several years.

“That’s why I’ll be stepping down as finance minister and as member of Parliament for Toronto Centre,” he said.

On Tuesday, Mr. Trudeau was asked how the resignation came about.

“We came to an agreement as we have done many times over the course of the past five years working with Bill,” Mr. Trudeau told reporters in French. “We came to the same conclusions at about the same time. Which is, for the economic recovery, for the next phase, since he wouldn’t be running in the next election, it was better to have someone who could manage the file over the longer term.”

Mr. Morneau’s parliamentary office did not respond to a request for comment. Cameron Ahmad, a spokesperson for the Prime Minister, strongly dismissed the source’s version of events as “all wrong” but did not respond to specific details.

“Mr. Morneau was clear about why he made his decision, and the PM was clear [Tuesday],” he said in an e-mail.

The Reuters story, combined with Mr. Trudeau’s comments that a new minister was needed to oversee an ambitious new long-term economic plan with a strong environmental focus, hinted that the Prime Minister and Mr. Morneau did not see eye to eye on environmental policy. The official said there were no disagreements over the environment.

At a news conference Tuesday with Mr. Trudeau, new Finance Minister Chrystia Freeland was asked whether she’s prepared to say no when it comes to the spending requests of her colleagues, including the Prime Minister.

“It’s actually something we talked about [Monday],” Ms. Freeland said, adding that they went over areas where they have disagreed in the past. “I think both of us felt that having those different points of view and having an ability to have an open, respectful, candid conversation about those different points of view collectively brought our government to a better decision.”

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