FALLING STAR
HOW DID FINANCE MINISTER BILL MORNEAU GET IT SO WRONG?
It’s hard to imagine how it came to this so quickly. It was after all a humiliating scene — Bill Morneau, business leader, Bay Street man and star political recruit, blinking mutely in a pasta joint in Stouffville, Ont., his actions under attack, his morals under question, his mouth cemented shut.
Morneau, the finance minister, was in the town Monday with Prime Minister Justin Trudeau. They were there to announce a tax cut, normally an easy sell, and hopefully turn the page. After weeks of sustained fire over plans to close small business tax loopholes, the party was giving in and walking back. But the crisis — which was at first about policy, but became more about Morneau’s own money and ethics — wouldn’t die. And the minister himself looked increasingly under siege.
At one point in the press conference, Trudeau stood at a podium with Morneau behind and to his left. “My questions are actually for the minister, Morneau,” a reporter asked. Morneau moved toward the microphone. “I’ll take them,” the prime minister replied. Morneau slunk away. a once-powerful CEO reduced to a visual prop.
Once seen as a rare grownup at a Liberal cabinet table full of kids, Morneau has become a liability in recent weeks. He has sunk the Trudeau government into its worse funk since the election, two years ago, and has become increasingly untenable as a salesman for the party’s core message — that it’s fighting against the wealthy, against the Bill Morneaus of the world, some might argue — and for the middle class.
In Ottawa, where Morneau works, and Toronto, where he built his fortune, many are wondering how all of this happened. How did a man praised upon his appointment, by Conservatives and Liberals alike, for his competence, experience and judgement, blunder into such an obvious hole?
“I am always surprised that smart people who know that something is in the grey zone do not ask themselves: What is the safe answer to this question so I do not get in trouble?” said Claude Lamoureux, the former president and CEO of the Ontario Teachers’ Pension Plan, who has known Morneau professionally for years. “Maybe they should ask a friendly journalist: What will be the headline in the National Post if what I am about to do (became) public?’”
Morneau’s problems began with the aforementioned loopholes. In July he announced a proposal that would, among other things, see the government make it harder for wealthy Canadians to save money on their taxes by incorporating. The opposition quickly branded the plan a "tax grab” and an attack on small businesses and family farms. Those charges stuck, to a degree. But the real damage to Morneau only began when the Conservatives started focusing on his wealth (and, to a lesser degree, that of Trudeau).
Conservative finance critic Pierre Poilievre took to pointing out, day after day, that the proposed changes wouldn’t touch companies like Morneau Shepell, the human resources giant Morneau helped build, or the sizeable family fortune Trudeau inherited. Instead they’d go after the “risk takers”, the “entrepreneurs” and the “hard working farmers” who used the tax system to save money and create jobs.
That narrative was bad enough, if a bit of a stretch. If nothing else it kept the image of these two men as tremendously wealthy in the public eye. But things became much worse for Morneau when the villa story broke.
On Oct. 13, CBC reported that Morneau had failed to disclose his ownership of a private French corporation to ethics commissioner Mary Dawson. Morneau and his wife, Nancy McCain (of the French fry McCains), used that company to control their luxury villa in the Provence region of southern France.
The villa itself was no secret. The National Post wrote about it two years ago, when Morneau first landed the finance job. But Morneau didn’t tell Dawson about the company he used to control it until CBC started sniffing around.
Again, that alone would probably not have been fatal. It did remind Canadians, again, that their finance minister is colossally rich, but so were Paul Martin, still considered one of Canada’s great finance ministers, and Michael Wilson, who wasn’t Morneau rich necessarily, but was far from poor.
No, the tempest in the villa could well have passed were it not for the news that broke last Sunday. Late that night, the Globe and Mail revealed that Morneau’s sizeable stake in Morneau Shepell was not in fact, as most assumed, in a blind trust. Instead, it emerged over the week, Morneau had availed himself, irony of ironies, of a loophole that allowed him to keep his shares in the company if they were held, not directly, but through a private company, this one a numbered affair registered in Alberta.
Morneau has and continues to insist that there is nothing wrong with this arrangement. He cleared the whole thing with Dawson, he insisted this week, going so far as to furnish a letter in which her office explicitly told him a blind trust was not required. But even neutral critics have been flabbergasted by the notion that Morneau really thought this was enough.
“He may be a rookie, but he’s not 20 years old,” said Scott Clark, who served as Deputy Minister of Finance under Paul Martin between 1998 and 2001. “It didn’t really matter that he could do it, it was very clear that he shouldn’t do it, and he should have a blind trust.”
On Thursday, Morneau agreed to do just that, and more. He vowed to divest his entire stake in Morneau Shepell, which his father founded, and to place his assets in a blind trust.
Clark wonders why Morneau wasn’t forced to do that by his own party years ago. “I’m mystified that his chief of staff didn’t say: you have to set it up. You must set it up. I’m surprised the Prime Minister’s Office didn’t say: Mr. Morneau, you must set it up. The prime minister’s done it, you’ve got to do it, because we can’t take a chance on the minister of finance coming under this kind of criticism.”
The question now is whether Morneau can survive, or if he even wants to. Lamoureux certainly hopes he does. “We need more people like him,” he said, “people who do not need the job i.e. our best lawyers, professors, business people ... that are willing to work for the common good and endure criticisms that on occasion are not merited.”
Clark, however, worries that Morneau may no longer have the juice needed to push through difficult changes in Ottawa. "There’s an old saying,” he said, “Credibility’s hard to earn, easy to lose, and once lost it, you never get it back. And that’s Mr. Morneau’s problem right now.”
There’s also reason to wonder whether Morneau, after a week in the public cauldron, has learned anything at all. At a media event in Waterloo, Ont., Friday, he seemed unrepentant. He dismissed the furor of the blind trust as “noise.” When reporters pushed him, he got testy, as he sometimes will.
“The process that we have in our country isn’t that I report to journalists on my personal situation,” he said. “It’s that I report to the ethics commissioner.”
For a moment, at least, you could understand why Trudeau stood in Morneau’s way on Monday. “You have to ask a question of me first,” Trudeau said at one point, “because you get a chance to talk to the prime minister.” It was a terrible look, at once imperious and glib. But Morneau may well have done worse.
As he stood there, back to the wall, watching someone else take his heat, you had to wonder what was running through Morneau’s mind. How did it come to this, maybe. Or, what I am doing here? Or even, should I just go back to France?
It is villa season after all.