Former federal finance minister Bill Morneau says he thinks Prime Minister Justin Trudeau and the Liberal government he used to be a part of "probably" spent too much on COVID-19 stimulus. Now, he's "worried" about the potential for a recession this year.
In an exclusive interview with Â鶹´«Ã½' Chief Political Correspondent Vassy Kapelos airing Sunday on her debut episode of CTV's Question Period at 11 a.m. ET, Morneau said that in hindsight, the amount of economic stimulus and COVID-19 aid the federal government poured into the Canadian economy during the worst of the global pandemic, may have been too much.
Morneau said that when you look around the world, Canada was one of the countries that "did a good job" when it came to supporting its citizens through the tumultuous time, but "was there too much? Probably."
"But getting it exactly right, that's tough. So I think now that we have the benefit of seeing what transpired, I think we need 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 report calling out eligibility verification shortcomings in the Liberals' rollout of COVID-19 financial programs, the Liberals spent an estimated $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 seeing 5.3 million employees kept on the payroll, and the Employment Insurance 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 'Where To from Here: A Path to Canadian Prosperity' which delves into both his time in one of the top political positions in the country and what led him to resign in August 2020, as well as his views about the country's future economic potential.
While Morneau left the federal cabinet six months after the Liberals started rolling out billions of dollars in financial aid to Canadians and employers—amid tension with Trudeau over what he considers a difference of opinion over tapering off COVID-19 aid— during his time in the top fiscal position, Morneau did defend the federal government's economic approach.
"I think I need 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 thinks the government has gotten right are the Canada Child Benefit and expanding the Canada Pension Plan, while he thinks programs aimed at encouraging investment such as the Canada Infrastructure Bank weren't followed through on "as well as we could have."
"One of the challenges while I was there, and now, is having a focus on a few things that are going to make a big difference, rather than dealing with everything that comes your way on a day-to-day basis," Morneau told Kapelos. "And, you know, as someone who came from business, it's not a new challenge."
'I DO WORRY Â鶹´«Ã½ THE POTENTIAL FOR A RECESSION'
The former finance minister is not the first high-profile economic voice to suggest that Canada may have rolled more economic aid than prudent out the door, for too long. In September, Bank of Canada deputy governor Paul Beaudry said governments and central banks should have withdrawn stimulus measures earlier, as doing so would have likely resulted in lower inflation, as The Canadian Press has reported.
Now, amid ongoing high inflation, Morneau says that while the Central Bank's "only appropriate response" is to raise interest rates, he is among the economic observers who is concerned about the country's current economic situation.
"I think the challenge that we're facing now is obviously significant," Morneau said. "Inflation is hugely problematic for people to deal with. And so, when you raise interest rates, inevitably there's less investment. So I do worry about the potential for a recession in 2023."
"My hope is that if we have one, it will be shallow recession, and one that we would we be able to come out of," he continued.
Morneau said this means the government's current focus on fiscal prudence is "doubly important."
"We really need to make sure that we're not adding to the challenge with government actions," he said.
DOES HE THINK TRUDEAU IS AN EFFECTIVE ECONOMIC MANAGER?
Kapelos had to ask Morneau twice to get a direct response as to whether he thinks his former boss is an effective manager of the economy.
After initially speaking about how he thinks the federal government is currently "rightly 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 economic growth, Morneau said "everyone can do better."
"Look, I think we could have done better while I was there. I think that 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 the 24/7 news cycle response is that takes your eye off the ball. And so for me, growth in the economy, long-term solutions to a health-care crisis that continues to repeat itself… and thinking about that energy transition, they all need that perspective."
With files from Â鶹´«Ã½' Chief Political Correspondent Vassy Kapelos and CTV’s Question Period associate producer Spencer Van Dyk
Tune in to Â鶹´«Ã½' Chief Political Correspondent Vassy Kapelos' debut on CTV’s Question Period this Sunday at 11 a.m.
