Skip to main content

On the evening of August 17, 2020, Bill Morneau stepped down as Finance Minister and Member of Parliament for Toronto Centre. Morneau has served as Prime Minister Justin Trudeau’s Minister of Finance since 2015 and the announcement comes on the heels of a turbulent few weeks following Morneau’s shocking Finance Committee testimony regarding his relationship with WE Charity.

Morneau cited that he had only intended to serve through two election cycles and he is now “considering next steps”. He also announced his intention to run for the position of Secretary General of the Organisation for Economic Co-operation and Development (OECD).

Immediately following Morneau’s press conference, Prime Minister Trudeau released a statement in full support of Morneau’s decision. It was only on August 11, when it was revealed that Mark Carney had been advising Trudeau, that the Prime Minister released a statement that he has “full confidence” in his Finance Minister.

Trudeau made a swift decision to fill the fiscal chief’s role, selecting Deputy Prime Minister Chrystia Freeland, following her command performance with the USMCA negotiations. Dominic LeBlanc was made Minister of Intergovernmental Affairs, a post he held prior to the last election.

A dynamic environment in Ottawa

2020 has been a year of constant change, as all levels of government respond to the COVID-19 pandemic. Morneau’s resignation signals the precarious nature of a minority led government and the dynamic situation in Ottawa.

After announcing that Parliament will prorogue the day after Morneau’s resignation, a move that also ends the WE Charity investigations at parliamentary committee, the Federal Liberals have deliberately and strategically triggered a process and series of confidence votes that could result in a fall election. We can anticipate the following:

  • A throne speech on September 23: A confidence vote is required to pass the speech from the throne, and if one party does not support the Liberal Government, Parliament will dissolve and an election will be called.
  • New mandate letters: As a result of the government’s new direction and priorities delivered in the throne speech, Minister’s will likely be provided with new mandate letters clearly articulating what their focus should be going forward.
  • Truncated pre-budget consultation: The government will likely announce a shortened pre-budget consultation process.
  • A budget or economic update: The new Finance Minister and Deputy Prime Minister, Chrystia Freeland, will at this point likely produce a fiscal document that lays out the spending priorities to support the government’s throne speech and revised mandate letters.

We know that both the Conservative Party and the Bloc Québécois have vowed to defeat the government, leaving only the NDP to hold the balance of power. This is a position they relish and have already stated that Canadians elected this Parliament and expect parties to work together.

Impact on priorities and spending

The government intends to refocus their attention on simultaneously managing the long-term impact of the COVID-19 pandemic coupled with economic recovery, which the Prime Minister and new Finance Minister framed as “a Canada that is healthier and safer, greener and more competitive”. While the long-term recovery plan is built, governments and the health system are still focused on preparing for a second wave of the virus as Canadians head into the flu season and back to school.

Consistent with the last two election cycles, the Liberals believe the path to victory in the next election is through deficit spending. Investments will likely remain focused on programs that ameliorate the effects of COVID-19 and on direct funds to provinces and territories for recovery – and, clearly, climate change.

We can expect a significant economic stimulus package similar to that of 2009, but it will be influenced more by this government’s belief in what money should be spent on, versus what it shouldn’t be spent on. 

Many health care questions remain unanswered

Due to the effects of COVID-19, the government has been unable to proceed with many of their health care commitments. This includes their healthy eating strategy, the development of the Canada Drug Agency, a strategy for drugs for rare diseases, and most notably, pharmacare.

While it is unclear what policies the government will pick up again, what new priorities will come forward or what will be dropped, losing Bill Morneau from Cabinet will have a significant impact.

On pharmacare, for instance, we already know that Morneau advocated for a “closing the gap” model. His departure leaves a vacuum for a fiscally prudent voice in the pharmacare debate. Chrystia Freeland, however, is known to share Morneau’s fiscal prudence and might be more willing to work with Trudeau and others given her close relationship with the Prime Minister.

The upcoming throne speech and anticipated mandate letters will resolve questions around which health policies truly are priorities for this government.

What’s next?

There are a number of outstanding questions that this significant development leaves us with:

  • Will the resignation of Bill Morneau be an opportunity for the Liberals to put the WE scandal behind them?
  • How will this significant development impact the timing of the next federal budget, if the government indeed lasts until that point?
  • What will it take for the NDP to prop the Liberal’s up for the foreseeable future?
  • Will there be an election this fall?

Ultimately, the opposition parties have another prime opportunity to critique the government but it is unclear what Morneau’s resignation will mean for a potential fall election. However, the timing is certainly unique as the Conservative Party of Canada will announce its new leader this Sunday. 

Interested in hearing Santis’ take on the dynamic changes in Ottawa? Sign up for our webinar on Wednesday, September 9, 2020 at 10 a.m.