Finance

Businesses are offering economic solutions, so why isn’t Team Trudeau listening?

Kevin Carmichael: Impulse is to fix problems by spending, rather than embrace ideas that would boost economy for free

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Canada’s business elite has little good to say about the state of politics, but, given the country has been in crisis, it has worked hard over the past year to keep its frustrations to itself.

A group that has been conditioned to prefer balanced budgets has stayed open-minded about Prime Minister Justin Trudeau’s fabulously large deficits. Like Trudeau, the leaders of bigger companies consider themselves climate crusaders, even if (also like the PM) their actions don’t always support their rhetoric. Business leaders have even become champions of affordable child care and diversity, government priorities that were little discussed in C-suites before the Liberals were elected in 2015.

But the federal government’s stubborn refusal to loosen travel restrictions at the Canada-United States border has become too much for a growing number of business owners, who see parochial political interests taking priority over their livelihoods, which, frankly, correlate with the pace at which the economy will emerge from the COVID-19 recession.

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“The border closure with the U.S. makes no sense,” said Paul Desmarais III, chief executive of Sagard Holdings, an alternative-asset manager owned by Power Corp. of Canada, in a post on LinkedIn last week. “Canada cannot be like Cuba despite some affinities in our leadership for that country.” Canada and Cuba don’t belong in the same sentence, of course, but let’s hope that bit of hyperbole doesn’t keep Desmarais’ comments from penetrating in Ottawa.

Paul Desmarais III, chief executive of Sagard Holdings, an alternative-asset manager owned by Power Corp. of Canada.
Paul Desmarais III, chief executive of Sagard Holdings, an alternative-asset manager owned by Power Corp. of Canada. Photo by Tyler Anderson/National Post files

Some, of course, think it’s fashionable to dismiss the concerns of rich and successful people. For example, the Conservatives appear to be engaged in an organized campaign to discredit Mark Carney, the former investment banker who left Wall Street to run the central banks of Canada and the United Kingdom.

Trudeau and his ministers say nice things about the Harvard- and Oxford-trained economist who quit an extremely lucrative career to become a public servant, but have a tendency to treat Carney’s peers in business with a certain amount of disdain.

“When you hear that an employee is expecting a child, congratulate her, don’t make her question whether or not she’ll have a job to come back to,” Trudeau said in remarks directed at corporate executives in 2017. Finance Minister Chrystia Freeland’s political brand is built around her 2012 book, Plutocrats: The Rise of the New Global Super-Rich and the Fall of Everyone Else.

The current government’s COVID-19 response saved many companies from certain bankruptcy, but the emergency benefits have been a constant negotiation for businesses, while unemployed workers receive cheques without having to do much to prove they need the money.

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“The U.S. success at developing vaccines should also be an amazing endorsement of the private sector,” Desmarais wrote. “It seems our government only feels comfortable highlighting the private sector for its shortcomings and dividing Canadians. The fact that our government cannot seem to comprehend the effectiveness of the private sector is a real issue that will hurt all Canadian citizens in the long run.”

The fact that our government cannot seem to comprehend the effectiveness of the private sector is a real issue that will hurt all Canadian citizens

Paul Desmarais III

Hopefully, those comments penetrate in Ottawa. Consider the source. Desmarais is an heir to one of the country’s most important business empires and scion of a family that has incubated Conservative and Liberal power brokers since the 1960s, when his grandfather, Paul Desmarais Sr., established himself in Montreal as one of the greatest entrepreneurs in Canadian history. The family has a long-running interest in politics and policy, but its tendency has been to discreetly exert its influence. The younger Desmarais’ decision to vent his frustrations on a social-media platform represents a break from the norm.

To his credit, Desmarais didn’t backtrack when I let him know, through his spokesperson, that I intended to write about his LinkedIn post. That makes him bolder than a typical member of the Canadian establishment, a group that tends to hide behind a thicket of public-relations companies and trade associations. All that Desmarais added via email on June 8 was that he was “hoping we can open our borders again as soon as possible.”

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The next day, the federal government loosened travel restrictions, saying that fully vaccinated Canadians returning from the U.S. by plane could skip the quarantine hotels and wait for the results of COVID-19 tests at home. To be clear, I’m not implying Desmarais’ outburst had anything to do with that. A group of business groups on both sides of the border, including the Canadian Chamber of Commerce, U.S. Chamber of Commerce, and Canadian Council for Aboriginal Business, combined on June 8 to call on Ottawa and Washington to accelerate the reopening, as more than 60 per cent of Canadians have received at least one dose of vaccine, and more than 40 per cent of Americans are now fully vaccinated.

The shift will be of only marginal help to Canadian companies that rely on American tourists, or exporters that remain cut off from the majority of their clients. Mike Wessinger, chief executive of Mississauga, Ont.-based software maker PointClickCare Technologies Inc., was so frustrated with the situation earlier this spring that he said he wondered if he should move his headquarters to the United States, or at least decamp to the U.S. himself, to protect the company’s market position.

“People are moving and we’re still locked down here,” he said in an interview in April. “We have no plan for opening the border.”

To be sure, Canada’s business elite is guilty of losing touch at times. For example, the Chamber of Commerce had nothing to say about climate change ahead of the 2019 election. But it has picked up its game lately, emerging as a supporter of putting a price on carbon and neutralizing emissions.

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It isn’t as obvious that Team Trudeau has done much to get over its anti-business streak. The government’s impulse remains to fix problems by spending money, rather than embracing ideas from the corporate world that would boost the economy for free, such as doing something about excessive regulation.

Bill Morneau, the former finance minister, promised a deregulation push in 2018, but progress has been underwhelming, reinforcing the Trudeau cabinet’s reputation for being good at ideas and poor at execution.

You know who is good at execution? Businesses. Maybe someone of Desmarais’ stature will be able to get that message through in Ottawa before it’s too late.

Financial Post

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