Former Caisse boss is heading to Ottawa
The new head of the Department of Finance will take over the role at a crucial juncture for Canada's national finances, and could provide a steady hand to the Trudeau government as it seeks to guide the country out of the deepest economic rout in recent memory.
Industry observers and former finance officials were broadly supportive of the appointment of Michael Sabia, former head of Quebec's Caisse de dépôt pension fund and widely respected business executive, as the federal government's new deputy minister of finance on Monday. Sabia brings decades of experience both in the private sector and in senior government positions, people said, and is likely to serve as a measured and thoughtful buffer against the most unwieldy aspects of Ottawa's massive spending plans.
Sabia replaces Paul Rochon, who will become senior official at the Privy Council Office. Sabia currently serves as director at the Munk School of Global Affairs and Public Policy, and was named chairman of the Canada Infrastructure Bank just eight months ago.
Scott Clark, who served as deputy minister of finance from 1998 to 2001, said Sabia is known for a tireless work ethic that he could use to reinvigorate the Department of Finance. The office has seen diminishing influence in Ottawa in the years since Sabia left the public service, Clark said, and could look to reassert itself as more attention is trained on public spending decisions. “I think he's going to shake up the department,” he said. “I don't think they're quite ready for him yet, but he's going to make things different.”
Clark said Sabia was likely motivated by the immense undertaking that managing Canada's national finances poses at the moment, as the feds attempt to guide its way out of a spending binge totalling hundreds of billions.
Finance Minister Chrystia Freeland last week projected that Canada would run a $381-billion deficit in 2021, not including as much as $100 billion more in future stimulus spending over the next three years. The Trudeau government has repeatedly voiced its interest in building back the economy under more socially conscious terms, but provided scant details in its fiscal update over the precise way in which it would introduce such reforms.
“The prime minister has big ideas, cabinet has big ideas, everyone has big ideas,” Clark said.
“That's true not just in Canada but in the U.K. and Europe and elsewhere. But big ideas are a dime a dozen. You've got to pull it all together into something that you can deliver to Canadians.”
One senior industry official suggested that Sabia might use his standing in the business community to push back against some of the more whimsical spending proposals brought forward, either by the Prime Minister's Office or other ministers.
“He can be the bad cop with the PMO,” said the person, who spoke on the condition of anonymity because of the sensitivity of the issue.
Sabia has meanwhile voiced his own appetite to overhaul the federal government's role in the economy and in the daily lives of Canadians, saying in a Globe and Mail op-ed in March that government should “avoid the trap of incremental, piece-by-piece action that is so often the reflex of bureaucracy.”
He framed the economic downturn as a “precious opportunity” to retool education spending, infrastructure, health care, and other major government responsibilities.
Kevin Page, founder of the Institute of Fiscal Studies and Democracy and former Parliamentary Budget Officer, said Sabia should look to reinforce better transparency in coming budgets, particularly with a 2021 deficit that is roughly eight times larger than the previous record high in Canada.
Budgets under Prime Minister Justin Trudeau, as well as under the Harper government, became increasingly aspirational documents stuffed with political language but very little accounting information.
“There needs to be a shakeup,” Page said. “If you read these budgets now, they're policy statements, not fiscal documents.”
Perrin Beatty, head of the Canadian Chamber of Commerce, said he welcomes the appointment of Sabia at a time when industry will need to work closely with policymakers to figure out a forward.
“It's clear that he has the confidence of the minister and the prime minister, which will be important as we restart the economy,” he said in a written statement.
If you read these budgets now, they're policy statements, not fiscal documents.