IMF’s love affair with Liberals’ policy
Standing next to Justin Trudeau in the House of Commons foyer on Tuesday, International Monetary Fund boss Christine Lagarde delivered odes to big-ticket infrastructure spending and to the embattled Canada-EU trade deal before concluding, “I very much hope Canadian economic policies could go viral.”
Hardly had Lagarde left town before Ottawa politicians started arguing over whether Trudeau should get any credit for the policies Lagarde praised. CETA, after all, was the work of nearly a decade for Trudeau’s predecessor, Stephen Harper. And if Canada is spry enough to spend big on infrastructure, it has much to do with the zeal of five consecutive prime ministers, from Brian Mulroney to Harper, for reducing Canada’s debt-to-GDP ratio.
Be that as it may, Canada is turning into an international poster child for Lagarde’s favourite bundle of policies — borrowing at historically low interest rates to fund major new investments in physical infrastructure, which she says can improve productivity and quality of life while giving a much-needed boost to anemic economic growth.
As for her hope that these policies go viral, Trudeau’s government will devote much of its fall to spreading the news of Canada’s good fortune.
Circle Nov. 14 on your calendar. That’s the day BlackRock, the world’s largest asset manager, with perhaps $5 trillion in assets under management, will convene a select group of major international investors in Toronto for a daylong summit.
On the speakers list: Trudeau, his finance minister, Bill Morneau, his infrastructure minister, Amarjeet Sohi and other federal officials.
The sessions will be private. The guests will be pension funds, portfolio managers and other large institutional investors with extraordinarily deep pockets — “Tens of trillions in investible assets,” one told me; “some of the deepest pools of capital that exist in the world,” another said.
The pitch, however, will not be far different from what Trudeau and his senior economic ministers have been saying for months: in a world where old values like the European Union are rocked by crisis, and the aggressive growth markets of the 1990s are no longer growing aggressively, Canada offers steady value for sober investors.
“What Canada offers to the world right now at a time when it is characterized by populism and antiglobalization,” Trudeau told reporters in Saguenay, Que., last month, “is an approach that offers political, financial, economic, social stability, predictability and openness to globalization.”
That’s a “very different climate than what we see elsewhere around the world,” he added. “And that is one of the things that I don’t have to push very hard when I meet with potential international investors.”
He has been meeting those investors assiduously since he came to office. In Davos, Switzerland, he met BlackRock’s Larry Fink, who is sometimes named as a potential treasury secretary in a future Hillary Clinton cabinet. BlackRock has other Canadian connections: Mark Wiseman, former head of the CPP Investment Board, is now in charge of BlackRock’s global active equity business. His spouse, Marcia Moffatt, is the company’s managing director for Canada.
Big investors aren’t normally swayed by personal connections or a nice smile when deciding where to put their investments. But that’s exactly the point Trudeau was responding to when he said Canada’s social and fiscal assets these days are “things that I don’t have to push very hard.”
What he will offer the BlackRock investors in Toronto is an overview of the government’s policy priorities, including “a more innovative and cleaner” natural resource sector, and a growing list of “opportunities” for public-private partnerships in infrastructure, one federal source said.
This, too, is consistent with a line of argument Trudeau has been making for what will seem a surprisingly long time. In an article he wrote in late 2012, at the height of public debate over the Chinese firm CNOOC’s takeover of Calgary energy firm Nexen, Trudeau said Canada has “perhaps more potential to capitalize” on Chinese outwardbound investment “than any other country.” And not only in energy markets. “What if we got our worldclass financial institutions and pension funds together with our worldclass engineering and construction industries to secure a leadership role for Canada in Asia’s growth?”
Or the other way around? Trudeau’s mandate letters to Morneau and Sohi told them to develop a “Canada Infrastructure Bank.” International Trade Minister Chrystia Freeland was tasked with providing “concierge services to promote business investment in Canada so that potential investors will have a one-window shop.”
Pending the creation of something more formal, Justin Trudeau will tell BlackRock’s guests that for now, the window opens into his office. You want to invest in Canada? Call the PMO. “That’s a signal that hasn’t been sent in a long time,” one official says. Paul Wells is a national affairs writer. His column appears Wednesday, Friday and Saturday.