When you look at Bill Morneau's résumé, almost everything about it trumpets a man qualified to be Canada's finance minister. He's a successful executive, he holds master's degrees in both economics and business administration, he has spent a career working on labour and pension issues, he has overseen one of the country's leading public-policy think tanks.
Only one thing is missing: Experience in government.
And while that may have been intentional on the part of his boss, new Prime Minister Justin Trudeau, it also leaves Mr. Morneau with one hell of a learning curve in Ottawa, at a pretty challenging time for the Canadian economy and for economic policy.
Mr. Trudeau certainly could have gone with an old-guard Liberal like, say, Ralph Goodale or Scott Brison, as his finance minister. By choosing a rookie in Mr. Morneau – a star candidate Mr. Trudeau recruited for the high-profile Toronto Centre riding that borders on the country's Bay Street financial epicentre – the Prime Minister sends a signal that this is a different Liberal government, committed to fresh economic thinking.
It's dangerous to infer from Bill Morneau's background where his policy priorities might lie. This is, after all, a government elected on a pretty well-enunciated economic platform; Mr. Morneau's job will be to implement those key election promises, not to take policy on his own personal voyage. It's worth noting, however, that Mr. Morneau was a key member of Mr. Trudeau's pre-election economic advisory council; as such, he certainly helped craft much of that economic platform.
For whatever it's worth, Mr. Morneau used to be chairman of the C.D. Howe Institute, the Canadian economic and policy think tank that probably most closely aligns with the kinds of values associated with the Liberal party. Socially progressive, yet relatively pro-business and trade. Fiscally conservative, with an emphasis on spending discipline, accountability and accuracy in government budgeting. A strong focus on pension issues and monetary policy. Importantly, there's a deep intellectual grounding to its public-policy approach.
He also was head of Morneau Shepell Ltd., the big pension-management and human resources consulting company. That makes him something of a labour and pensions expert, and he has put that to use in previous public-policy roles. Mr. Morneau advised Ontario Premier Kathleen Wynne on the province's decision this year to launch its own mandatory provincial pension plan, to supplement the Canada Pension Plan.
Does that mean Mr. Morneau's appointment is a signal that CPP reform is near the top of the new government's agenda? That's hard to say. The Liberal election platform talked about working with the provinces and other stakeholders to "enhance" the Canada Pension plan, and prior to the campaign Mr. Trudeau had mused about mandatory increases to CPP contributions to fund higher benefits in the future. It was nowhere near the top of the Liberals' economic promises during the campaign, but Mr. Morneau's expertise in such a senior cabinet post certainly suggests that this government won't consign pension reform to a back burner.
But there are other, more immediately pressing issues for Mr. Morneau to tackle. Let's hope he's a quick study; he doesn't have a lot of time to cram.
He'll be pressed to lay out some semblance of a budget, or at least a fiscal update, before Christmas. Half-year fiscal updates have been a standard, dating back to the Jean Chrétien Liberal governments of the 1990s, and this year there's a particularly pressing need for one: Not only do we have a change of government, but an economy that has been on a bumpy road for most of the six months since the last budget was tabled.
We do know that economic growth has been considerably slower this year than was assumed in the April budget, which implies a slower-than-expected flow of revenue into government coffers. Given that the budget projected only a small surplus for the fiscal year ending March 31, 2016, this may be enough to tip the ledgers into the red.
If Mr. Morneau's starting point is a deficit, the Liberals will have a lot less scope to launch their ambitious spending plans if they are going to stick to one of their very clear election promises: Keeping deficits short term and under $10-billion. Economically, a couple of billion here or there doesn't much matter; politically, it would be a very hard first hurdle for a new government to clear without spilling some of the voter goodwill it so recently earned in the campaign.
But some of the most difficult and high-visibility decisions that will fall on the new Finance Minister have largely flown under the radar through the election. The headline-grabbing promises – middle-class tax cuts, new child tax benefits, cancelling family income-splitting and the increase in TFSA contribution limits – have already been decided and spelled out. The infrastructure spending program is a black box; no one knows where the money will be allocated or when, but it's not like the Finance Minister will be personally selecting infrastructure projects. (If he is, we're in trouble.)
But the Liberal pledge to simplify the tax code, which became cluttered with multitudes of voter-enticing boutique tax cuts and credits under the Harper government, will require a great deal of care and attention to unwind. It absolutely needs to be done; Canada's tax code has become cumbersome, costly to navigate and economically inefficient.
But given the many interest groups among the electorate who could be affected, it's a minefield. If Mr. Morneau doesn't tread delicately, this is the one area where a rookie mistake could trip up the Liberals' chances of pursuing their economic agenda for a second term.