Chrystia Freeland is talking to former finance ministers about the economic crisis. Here’s their advice

Christel Deskins

It’s fun to spend money while in office. That’s what former Liberal finance minister John Manley says, but in the same breath he sends a warning about the path ahead for Ottawa and the looming economic recovery process. “It’s way more fun to announce a program than it is to […]

It’s fun to spend money while in office.

That’s what former Liberal finance minister John Manley says, but in the same breath he sends a warning about the path ahead for Ottawa and the looming economic recovery process.

“It’s way more fun to announce a program than it is to announce that you’re shutting something down,” he told the Star.

“So, is there a bit of euphoria setting in that, ‘We’ve spent $350 billion and the roof hasn’t fallen in, so maybe we can keep doing that and fund everything in sight?’

“I think that will result in a very unhappy outcome over time.”

Manley is one of the Liberal old guard that Chrystia Freeland, Canada’s new finance minister, has reached out to for advice on how to deal with the COVID-19 pandemic and the ensuing economic fallout.

Former veteran Liberal MP Ralph Goodale, who spent several years in the early 2000s as a finance minister who oversaw balanced budgets, has also been in touch with Freeland, although he wouldn’t share the details of the conversation.

“She is very consultative,” he said. “We’ve had some opportunities to have some really good conversations.”

The hotly anticipated throne speech next week will be the first official peak at the steps Ottawa will take to kick-start the economic recovery as the pandemic continues.

Goodale, who is serving as a special adviser to the government on the Tehran plane crash which killed 57 Canadians earlier this year, provided some insight into how he would assess a spending program as a finance minister in the time of COVID-19.

There’s four questions he would ask: Is it necessary? Will it be effective? Is it fair? Will it contribute more to growth than it will to debt?

Childcare spending, for example, would be “a great economic contributor as much as it is a social contributor,” he said. Goodale said coming out of the COVID-19 pandemic, it’s proven to be necessary as many families have juggled working from home and caring for kids.

Especially in the case of women, child-care initiatives have “clearly” been effective, he said, and that it’s fair in terms of “gender equality and gender fairness.” And finally, Goodale said it adds to economic growth, not debt.

“Women joining the workforce has been the single biggest contributor to productivity in Canada since the Second World War,” he said.

“Because of COVID, we’ve lost a chunk of that, and women have been put at a disadvantageous position.”

Prime Minister Justin Trudeau’s throne speech will include a child care plan, the Star’s Tonda MacCharles reported this week. It’s a policy the NDP has been advocating for and party leader Jagmeet Singh said this week he’d be watching the throne speech closely, signalling he hasn’t ruled out voting it down. That could trigger an election.

Freeland has also been talking to former finance minister Paul Martin.



Martin served as finance minister in the 1990s under prime minister Jean Chrétien, leaving a legacy as a fiscal hawk who cut government spending and oversaw the first balanced budget in years during the late 1990s. He wasn’t available for an interview this week.

Manley followed in Martin’s footsteps when he was appointed to the finance portfolio in 2002.

Manley wouldn’t say exactly what advice he gave Freeland, but generally, he said that the “role of government in a situation like this is to try to give Canadians confidence” and show that you won’t be “sloppy about how you support people.”

“If they try to micromanage,” like bringing in long-lasting new programs beyond emergency relief and which could benefit from pilot-testing or debate, he said, “I think that might end in tears.”

While little is known about what will be in the throne speech, plenty of ideas have been put forward, including calls for investments in a green energy economy, a universal basic income and a plan for reigning in spending.

Manley is one of those recommending a spending plan, specifically a “fiscal anchor,” or something that ensures Canada’s federal debt doesn’t get out of hand. The Liberals had one when they promised to keep debt as it relates to GDP on a downward trend, he said. In essence, if you can hold the debt level steady and grow the economy, over time the debt becomes smaller and smaller relative to a rising GDP.

What, exactly, a government uses as a fiscal anchor is up for debate, Manley noted, but having one shouldn’t be. “Without one, it’s going to be very hard to maintain the confidence of investors,” he said.

With so much spending and debt being piled on while dealing with the pandemic emergency, the country could be left in dire straits when it deals with the next unforeseen event, like a global pandemic, he said.

“The rule is, when we come out of this, let’s start to make sure that we pay things down, get things back in order, be ready for the next time,” he said.

“You never know what the next crisis is going to be about.”

Kieran Leavitt

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