Give Morneau benefit of the doubt
Tossing him out should not be done lightly
The House of Commons echoed with the sound of antlers crashing Wednesday, after the Conservatives called for the head of the finance minister for “betraying the trust of Canadians.”
Conservative Leader Andrew Scheer called a news conference before question period to demand Justin Trudeau fire Bill Morneau over his refusal to answer questions on the sale of shares in his family firm, Morneau Shepell, just days before he introduced tax changes that coincided with a drop in the company’s share price.
That set the tone for a rambunctious question period during which Scheer and his front bench accused Morneau of refusing to divulge whether he sold 680,000 shares just days before he announced tax changes that encouraged many investors to sell their own shares by the end of 2015, in order to avoid paying a higher rate in the new calendar year.
“How can the prime minister blindly trust someone who has demonstrated such ethical lapses,” asked Scheer.
Trudeau has taken to answering all opposition questions in the House on Wednesdays but on this occasion, he declared his confidence in Morneau, called the whole affair a “smear campaign” and allowed the finance minister to defend himself.
“We’ve reached a new low in the House,” said Morneau, revealing his own political naiveté — behaviour has been infinitely more odious in years past.
“There are no secrets here. When I came into office, I sold some shares (and) made a $5-million donation to charity. As we know, we campaigned to 36 million Canadians that we would raise taxes on the one per cent, which we did. As everybody knows, except perhaps the opposition, nobody knows about the stock market in advance,” he said, before challenging the Conservatives to make their allegations outside the chamber, where they are not protected by parliamentary privilege.
The episode was a marked escalation of the unpleasantness that has bubbled around the finance minister for months.
Contrary to popular misconception, opposition parties do not go around demanding the resignation of ministers on a regular basis.
“We’ve been very careful,” said one senior Tory, when asked if he could recall anything as serious.
Make no mistake, the minister is in trouble. To show bad judgment once might be considered unfortunate; twice ranks as carelessness. But to have the government’s whole agenda derailed three times on account of bone-headed personal decisions is potentially career-ending.
Pierre Poilievre, the Conservatives’ parliamentary gadfly, charged that on Dec. 7, 2015, Morneau introduced tax changes that gave investors an incentive to sell, so that they could pay taxes before rates rose in the new year. Morneau Shepell’s shares dropped five per cent, he noted. Someone sold $10 million of shares in the week before the tax announcement. “Was that someone him?” he asked.
Morneau has not admitted that he sold 680,000 shares before Dec. 7, but in a story published Oct. 30 this year, it was noted in this space that Morneau sold that number of shares at $15 for proceeds of $10.1 million. My notes show the transaction was settled on Dec. 3, 2015. He subsequently liquidated another 320,000 shares on Dec. 17 at a price of $14.26 per share and donated $4.5 million to charity.
Did he do this in the knowledge that the share price would dip after his announcement? As an experienced businessman, he should have known. Poilievre claimed many investors expected the tax increase to kick in on April 1, 2016, not Jan. 1.
Regardless, the announcement prompted a sell-off that showed up in 2016 tax receipts that were nearly $1 billion lower than expected because of the tax change.
Yet, there are mitigating circumstances.
Staff in Morneau’s office showed me the trading records from the $10-million share sale, which I don’t think they would have done if they thought it might incriminate their minister.
Further, the announcement was made at 3:15 p.m. on Dec. 7, 2015 — before markets closed — which suggests it was not deemed to be price-sensitive information.
The regulator may disagree but I would give Morneau the benefit of the doubt when it comes to any suggestion that he sought to profit from his actions as finance minister.
I’m also prepared to believe that he did not try to profit from the introduction of C-27, the pension bill that, if passed, could benefit Morneau Shepell. He should not have put himself in the dual role of regulator and shareholder but he has now sold all his shares in the company and the bill remains parked at first reading.
I’m even prepared to overlook his failure to put all his assets in a blind trust, after following the advice of the ethics commissioner that he instead abide by a conflict of interest screen. It was bad advice but, as a political rookie, he was heeding the guidance of someone who should have known better.
Yet if this was baseball, he’d have struck out and be heading for the minors. He has made a series of bad calls when it came to his own financial arrangements that have tarnished his reputation and that of his government.
Does that make him a terrible finance minister? Conservatives will point to deficits many times greater than promised and say: “Absolutely.”
In addition, the smallbusiness tax reforms were an aberration wrapped in a miscalculation, inside a faux pas.
But, in truth, most of the big decisions that have driven up the deficit were made before Morneau joined the Liberal team. He has been implementing someone else’s platform.
He is not a politically astute finance minister in the mould of a Paul Martin, a Michael Wilson or a Jim Flaherty.
But he is not incompetent. For all the concerns about the Liberal party’s spending addiction, he is at the helm of an economy that is leading the G7 in growth; one in which the unemployment rate has dropped nearly a full percentage point over the past two years.
Throwing a finance minister overboard should not be done lightly and it has not yet been shown beyond doubt that he is either a fool or a rogue.
With Trudeau’s public declaration of confidence, it seems that Morneau is not going away anytime soon, which on balance is probably as it should be.
For that, the opposition parties will be secretly delighted.
“I’d like him to stick around,” said one senior New Democrat, with a wolfish grin.