Former federal finance minister Bill Morneau says he thinks Prime Minister Justin Trudeau and the Liberal government he was part of “probably” spent too much on COVID-19 stimulus. He is now “concerned” about the potential for a recession this year.
In an exclusive interview with CTV News Chief Political Correspondent Vassy Kapelos that aired Sunday on her debut episode of CTV’s Question Period at 11 a.m. ET, Morneau said that in retrospect, the amount of economic stimulus and COVID-19 aid that the federal government has poured into the Canadian economy during the worst part of the global pandemic may have been too much.
Morneau said that when you look around the world, Canada is one of the countries that has “done a good job” when it comes to supporting its citizens during the stormy weather, but “was there too much? Probably’.
“But getting it right, that’s hard. So I think now that we have the benefit of seeing what happened, I think we have to be very cautious given that we know that the economic environment that we’re facing is challenging,” Morneau said.
According to a recent Auditor General’s report highlighting eligibility verification flaws in the rollout of the Liberals’ COVID-19 funding programs, the Liberals have spent about $211 billion on COVID-19 aid.
The biggest ticket benefit programs were the Canada Emergency Wage Subsidy (CEWS), which paid out $100.7 billion to 460,000 businesses, keeping 5.3 million workers on the payroll, and the Employment Benefit, which evolved into the Canada Emergency Response Benefit (CERB), and saw $74.8 billion sent to 8.5 million Canadians.
Morneau’s comments build on a perspective he expresses in his forthcoming and revealing new book, From Here to Where: A Road to Canadian Prosperity, which examines both his time in one of the country’s highest political positions and what led him to resign in August 2020, as well as his views on the country’s future economic potential.
While Morneau left the federal cabinet six months after the Liberals began providing billions of dollars in financial aid to Canadians and employers — amid tensions with Trudeau over what he sees as a difference of opinion over cuts to COVID-19 aid — during During his tenure in the top fiscal position, Morneau defended the federal government’s economic approach.
“I think I have to be really clear, the response to COVID — the initial response — I think was the right response,” Morneau said in the interview. Other examples he gave of economic programs he felt the government got right were the Canada Child Benefit and the expansion of the Canada Pension Plan, while he felt programs aimed at promoting investment, such as the Canadian Infrastructure Bank, were not were followed through “as well as we might have.”
“One of the challenges while I was there and now is to focus on a few things that will make a big difference instead of dealing with everything that comes your way on a daily basis,” Morneau said Kapelos. “And you know, as someone who comes from the business, this is not a new challenge.”
“WORRIED ABOUT POTENTIAL FOR RECESSION”
The former finance minister is not the first high-profile economic voice to suggest that Canada may have been doling out more economic aid than was reasonable for too long. In September, Bank of Canada Deputy Governor Paul Beaudry said that governments and central banks should have withdrawn stimulus earlier because it would likely have led to lower inflation, as the Canadian press reported.
Now, amid continued high inflation, Morneau says that while the Central Bank’s “only appropriate response” is to raise interest rates, he is among economic observers who are concerned about the country’s current economic situation.
“I think the challenge we face now is obviously significant,” Morneau said. “Inflation is a huge problem for people to deal with. So when you raise interest rates, there is inevitably less investment. So I’m really worried about the potential for a recession in 2023.”
“I hope that if we have one, it will be a shallow recession and one that we can get out of,” he continued.
Morneau said this meant the government’s current focus on fiscal prudence was “doubly important”.
“We really need to make sure we don’t add to the challenge with government action,” he said.
DOES TRUDEAU THINK HE IS AN EFFECTIVE ECONOMIC MANAGER?
Kapellos had to ask Morneau twice to get a straight answer on whether he thought his former boss was an effective manager of the economy.
After initially talking about how he thinks the federal government is currently “correctly focused” on Canadians’ concerns about the economy and how there needs to be better long-term planning with both the provinces and the private sector when it comes to economic growth, Morneau said “everyone can do better.”
“Look, I think we could have done better while I was there. I think the government can do better now,” he said.
“And I think being an effective manager means focusing on a few things that are critically important and doing them every day. The challenge of responding to the 24/7 news cycle is that it takes your eye off the ball. And so for me, growth in the economy, long-term solutions to the health care crisis that keeps recurring … and as we think about this energy transition, they all need that perspective.”
With files from CTV News Chief Political Correspondent Vassy Kapelos and CTV Question Period Associate Producer Spencer Van Dyke
Tune into CTV News Chief Political Correspondent Vassy Kapelos’ debut on CTV’s Question Period this Sunday at 11 a.m.
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