August 18, 2020 | Bill & The Bus

An ominous buff-coloured envelope sat on my desk that morning. Never a good sign. Only the publisher had stationary like that. And you never wanted to hear from him.

“The prime minister has requested that you cease referring to the finance minister as ‘Mikey’”, it said. “It is the position of this newspaper that you treat the minister with respect.”

My crime? Michael Wilson, then federal minister of finance, was presiding over a scary descent in deficits. The forecast for the 1985 shortfall was clocking in far higher than expected, at $33 billion. So every chance I found as a daily newspaper columnist and middle-class crusader I took, and chipped away at the guy.

Ironically, three years later I was sitting in the Conservative caucus three feet from Wilson. Our journey together began. By the time it was over five years later Mike and I had worked together on a deficit-busting strategy which we also knew was political suicide. The GST. In fact, it helped bring the country back into the black from an eventual $42 billion hole, and cost me my seat.

Minister Wilson quit in advance of that election. He knew.

Thirteen years later, elected again, I was having breakfast in a landmark Toronto hotel on the edge of the 401 with the new minister of finance. Jim Flaherty seemed everything the towering, grey, somber and steady Wilson was not. He was short, rotund, emotional, partisan and ate his eggs with his fingers. I asked him what he wanted to do with his new job, recorded it on my phone and later published it here. None of it came true. In 2008 the economy fell apart.

The Harper deficit plumbed new depths, at $56 billion as the credit crisis swept across the world. Tax revenues dropped and spending swelled. It took F until 2014 to dig Ottawa’s way out of that mess. Then he died. Tragically. In October of 2015 Justin Trudeau became the prime minister. Once again I lost my seat, and devoted more time to my fabulously profitable free blog. The deficit had been wrestled down to about $5 billion by the Harper Cons from $18 billion the year before. Canada was on the correct path. Trudeau promised two years of modest red ink to get the economy rolling. Then the wheels came off.

Last night the finance minister, Bill Morneau, quit in disgrace or disgust. Time will tell if Trudeau fired him or he fired himself. But the legacy of this man is historic. This year’s deficit will be about $450 billion. Economists have described it as ‘eye-watering.’ The grandchildren of current taxpayers will still be paying for what happened in 2020.

The new FN is Chrystia Freeland, as forecast here last month. (Interestingly, her Wiki profile was updated as ‘Minister of Finance’ slightly before the announcement was made. Bill’s demise was apparently no accident.) She has no financial experience or business background. She’s an author, academic, former journalist and Trudeau loyalist. Freeland assumes this job at the most crucial moment in history – the country’s public finances circling the drain, double-digit unemployment, millions on government emergency benefits, hundreds of thousands of families unable to pay their mortgages, a minority government, a leader under an ethics cloud, and a new opposition boss about to be named.

What could possibly go wrong for a financial neophyte who’s learning on the job while the nation sinks $1.26 billion more each day? Weekends and stat holidays included.

So here’s the T2 plan:

• Trash Bill, all used up with deficits and misdeeds, and replace him with a shiny new thing. First woman finance minister. Media click bait.
• Suspend Parliament and effectively shutter the democratic process. (By the way MPs – a few of them – have met only three times since March. Nobody seems to care.)
• Bring in a Throne Speech, new agenda (green) and a budget in October, sucking all the attention from the new Con leader.
• UBI
• Spring election.

What new risks have emerged?

Plenty. Morneau was a complete idiot and ingénue to get tainted with Trudeau’s WE obsession. But he’s a businessman, professional money guy and corporate executive with financial prudence and boardroom skills. He and Trudeau fought over the spending. Bill lost. There is now no stopper on the bottle. If this government lasts another four or five years, the debt could double to $2 trillion, or 100% of GDP. This will bring currency devaluation, inflation, tax pressure and central bank tightening. Trust me, none of that you want.

Could Mark Carney, floating around the anterooms of the PMO, slow down the hurtling Justin-Chrystia spending bus? Or, like Morneau, end up underneath it?

Let’s see. Clearly the prime minister wanted Morneau out – to erase WE and pave the way for a universal income – so he’s unlikely to yield. In his mind he survived Lavalin, he survived India and Jody, he survived blackface and Scheer, he skated through Covid by throwing out cash, so he can certainly weather Bill. As it turned out, he is his father’s son.

‘Just watch me.’

Garth Turner August 18th, 2020

Posted In: The Greater Fool

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