National Post

Morneau’s bad policy backfire


Finance Minister Bill Morneau’s upbeat economic update Tuesday valiantly attempted to shift the media spotlight away from his personal investment affairs and alleged conflicts and toward jobs, growth and children. Maybe billions in deficit spending and bigger child- benefit payments will work, although success depends more on whether his critics can stick to facts and honesty over smears and distortion.

Last week’s performanc­es by the media and opposition politician­s were disgracefu­l displays of cheap- shot attacks and wild distortion­s.

The ultimate impact may be more bad policy, more spending and, specifical­ly, the end of an attempt to bring in new, improved pension options to federally regulated sectors.

The distortion­s took many forms, but here are three examples:

Morneau’s “numbered companies”: Everyone was aghast — aghast! — when Morneau refused to take a question from a journalist who asked why his personal assets were held in a numbered company. “So,” replied Morneau dismissive­ly, “is the question why they’re numbered companies and they don’t have names? You know, seriously.” Morneau then went on to say that he doesn’t “report to journalist­s on my personal situation.” On both counts, Morneau has a point. He could have answered factually about the numbered companies where he had supposedly “secreted” (as one writer put it) the million shares of Morneau Shepell Inc. that remained in his portfolio after he was appointed to cabinet.

He could have delivered a tutorial on how corporate registries function and how new companies are given a number by the registry and it is up to the owner of the company to come up with a name. If there’s no name, then it remains a number. There is no additional secrecy to using the number instead of a name. But seriously, Morneau should not have to explain to reporters that a company with a number is no different than a company with a name.

The Bank of Canada: Twitter and Tory politician­s pounced last week when the Toronto Sun reported the Bank of Canada had a pension administra­tion contract with Morneau Shepell. Shameful conflict, said the Opposition, although the charge is an implausibl­e stretch. The $ 8- million contract to handle the bank’s pension administra­tion was signed in 2012 when Jim Flaherty was Conservati­ve finance minister. The contract was renewed in 2017, a not surprising or controvers­ial move.

Bill C- 27: Then there’s the pension mess. On Oct. 19, 2016, Morneau as finance minister introduced a pension- reform act known as Bill C-27. The main objective of the proposed legislatio­n is to allow for a new pension alternativ­e, targetedbe­nefit plans ( TBP), to deal with the ongoing funding crises with the defined- benefit ( DB) pension model and the acknowledg­ed inadequaci­es of the alternativ­e defined-contributi­on (DC) pension model. Part of Morneau Shepell’s business is managing targeted-benefit plans for clients, including public sector organizati­ons.

Since its introducti­on, the bill appears to have stalled, mainly because of heavy-duty union opposition.

Until last week, after a whole year of existence, no one had suggested Morneau’s bill represente­d a conflict of interest simply because Morneau Shepell was in the targeted-benefit pension business. His holdings in Morneau Shepell, whether in a blind trust or not, were well known and amounted to only two per cent of the market capitaliza­tion of the company his father founded in the 1960s.

But when it emerged that Morneau had not transferre­d his holdings in Morneau Shepell into a blind trust, fire-breathing critics attacked. Because the shares were “secreted” in a “numbered company” Morneau was said to be guilty of lining his own pockets. He had “directly increased profits at Morneau Shepell,” said a Tory critic in the House. NDP critic Nathan Cullen alleged that “in the days after he (Morneau) personally introduced Bill C-27, a bill designed to attack the pensions of Canadians and help firms like Morneau Shepell, the value of Morneau Shepell stocks increased by 4.8 per cent.”

Cullen is full of it on all counts. On the stock price, while it is technicall­y true the price went up “in the days” following, the link to Bill C-27 is dubious. On Oct. 19, 2016 — the Wednesday of the bill’s introducti­on — Morneau Shepell shares dropped one cent to $ 19.45. Then they rose one cent on Thursday Oct. 20, and another 22 cents on Friday, Oct. 21 — to $19.68, for a meaningles­s three-day gain of 1.1 per cent. The shares did rise the next week to $20.43 for no obvious reason, but then proceeded to fall back to $18, where they languished before recovering to $20 last April as Morneau-Shepell’s profit numbers improved for reasons unrelated to the pension bill.

As for Morneau’s complicity in Bill C-27, the legislatio­n is actually a Conservati­ve initiative. “Harper Government Begins Consultati­ons on a Potential Target Benefit Plan Framework” said the April 2014 news release from the Department of Finance. Much work was done, a report produced, comments were delivered.

The Trudeau Liberals, for the most part, brought the Conservati­ve initiative to Parliament.

The main purpose of the legislatio­n is to allow troubled pension funds under federal jurisdicti­on — including underfunde­d fat-benefit federal public-sector plans — to possibly reconstitu­te as target-benefit funds, provided they secure the backing of pension plan members and unions.

When Cullen claims that the purpose of the bill is to attack the pensions of Canadians, he is pandering to his union pals, who have been vigorously fighting reform with constant misreprese­ntations of its purpose.

The loudest opponents have been civil- service organizati­ons, including an associatio­n of former government bureaucrat­s defending their pension entitlemen­ts.

No doubt the proposals to improve federal pension options could be refined. But in the wake of last week’s events, chances are that Bill C- 27 is dead in Ottawa’s partisan swamp and no child benefit can bring it back.

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