Morneau resigns, after pushing back on expensive green initiatives
Finance Minister Bill Morneau announced his resignation, coming only a few hours after a head-to-head meeting with Prime Minister Trudeau that morning.
Throughout the day, communications staff at the prime minister’s office (PMO) and at Morneau’s office did not answer repeated questions regarding the outcome of the meeting purportedly regarding their rift regarding economic policy decisions during the pandemic.
A deepening rift between Trudeau and his finance minister about coronavirus spending also fuelled disagreements over the scope and scale of proposed green initiatives, three sources familiar with the matter Reuters.
Trudeau and Morneau met in a bid to sort out their differences; evidently those differences couldn’t be resolved.
Morneau and his team have pushed back against other Cabinet ministers about how much funding was needed, including to what extent the recovery could be helped by investing in environmental projects, the people added.
Trudeau, who campaigned on a platform to tackle climate change, believes the 2021 budget should have an ambitious environmental element to start weaning the heavily oil-dependent economy off fossil fuels and he recently hired former Bank of England Governor Mark Carney as an informal adviser, aides say.
The appointment, coupled with a Globe and Mail report that Trudeau and Morneau had clashed over the amount of money Ottawa is spending to combat the coronavirus, led to speculation about the future of the finance minister. Morneau, 57, had been in the job since the Liberals took power in late 2015.
An official working for Morneau said the finance minister had been in constant touch with the Trudeau team on policy files.
“There are always discussions, but that’s typical,” said the official, adding that Morneau had been clear “that we would need to invest for recovery.”
Environment Minister Jonathan Wilkinson along with Infrastructure Minister Catherine McKenna, a former environment minister, have met with top civil servants to discuss options that could involve billions of dollars in extra spending, said one of the three sources. Heritage Minister Steven Guilbeault also attended the meetings.
Morneau’s resistance to expensive environmental initiatives reflects his roots in Bay Street, Toronto’s financial centre, and a view held among right-leaning Liberals that deficits are out of control.
“The idea of greening the economy just by spending money on every project you have in front of you is not really serious,” said a fifth source sympathetic to Morneau’s position.
Possible budget measures range from investments to help provinces reduce their carbon footprints, boosting research into clean technology and encouraging the construction of efficient buildings.
“Morneau has been saying: ‘We need to get a grip.’ And that isn’t always popular,” said one of the three sources familiar with the matter.
Canada’s budget deficit is forecast to hit $343.2 billion, the largest shortfall since World War Two, this fiscal year. Total coronavirus support is nearly 14 per cent of gross domestic product.
“He was not very keen on a huge deficit; that’s not what he wanted as his legacy,” said a sixth source familiar with Morneau’s thinking.
Problems between a finance minister and colleagues with ambitious proposals are not unusual. “Every single department in government that spends money ends up butting heads with Finance,” said the fifth source.
Morneau was feeling increasingly isolated at the Cabinet table, with no close allies, according to the source.
Several Cabinet members were upset when Morneau disclosed he had forgotten to repay travel expenses covered for him by a charity at the heart of an ethics probe, one of the three sources said. Morneau and Trudeau are facing ethics inquiries related to the charity.