BLUESKY BRIEF - Morneau resigns - August 17, 2020

From the desk of Raphael Brass, Senior Consultant

After weeks of speculation of a growing rift between Prime Minister Justin Trudeau and Finance Minister Bill Morneau regarding his involvement in the WE scandal and a split on how to spend COVID-19 recovery funding, it became increasingly clear that Morneau’s time in charge of Canada’s purse strings was at an end. While there will be much focus on what led to Morneau’s resignation, it is important to remember that until COVID-19 hit, the finance minister oversaw a period of sustained economic growth, the lowest unemployment in Canadian history with millions of Canadians lifted out of poverty.

Morneau was known to represent the “business wing” of the Liberal Party and he was well connected to the heavyweights on Bay Street. He reportedly tried to reel in COVID-19 recovery spending and was uncomfortable with large swaths of economic recovery funding going to environmental initiatives. It will be interesting to see how the finance minister’s resignation impacts the government’s stimulus spending, but one can suspect that the prime minister will be inclined to replace Morneau with someone who will support his ambitious plans to reduce Canada’s carbon footprint.

There is never a good time to lose a finance minister, no less during the midst of a pandemic and economic turmoil, and Morneau leaves massive shoes to fill. Trudeau has a strong bench from which to pull a new finance minister and it is likely the replacement is already a member of Cabinet. There has never been a female Finance Minister. Deputy Prime Minister, Minister of Intergovernmental Affairs, and overall Ms. Fix-It Chrystia Freeland certainly has the credentials to be the first. President of the Treasury Board and former economist Jean-Yves Duclos would also certainly be up to the task. Morneau’s resignation also opens up a safe Liberal seat in Toronto Centre so it will be interesting to see who will be tossing their hat into the ring to run for the reds whenever they call a by-election.

Following Morneau’s announcement, Trudeau issued a statement thanking him “for everything he has done to improve the quality of life of Canadians and make our country a better and fairer place to live. I have counted on his leadership, advice, and close friendship over the years and I look forward to that continuing well into the future. Bill, you have my deepest gratitude and I know you will continue making great contributions to our country and for Canadians in the years to come.”

An announcement on who will become the next finance minister is expected to come as early as tomorrow.

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