Innovative thinker to guide recovery
Is naming Michael Sabia to the position of deputy finance minister the Canadian politics version of “The Queen’s Gambit?”
We are all armchair chess aficionados these days as we take in the TV series about a very smart woman making her way with confidence through a man’s world of competitive chess, using the “queen’s gambit” opening to dominate the centre of the board.
Deputy ministers are officially named by the prime minister, but there’s no doubt Finance Minister Chrystia Freeland had a hand in Sabia’s appointment as the top fiscal policy bureaucrat — an unconventional choice that has left many on Parliament Hill either ecstatic or puzzled.
Sabia has a long list of credentials: the former head of the Quebec’s massive pension fund, director of the Munk School of Public Affairs at the University of Toronto, chair of the Canada Infrastructure Bank, chief executive of BCE, and a very senior civil servant before all that.
By all accounts, he has been on speed-dial with Prime Minister Justin Trudeau throughout the pandemic, not just in his capacity at the infrastructure bank but as a voice of reason and deep experience.
He will bring fresh thinking, energy and connections to the Department of Finance as he becomes the top civil servant designing the recovery, with up to $100 billion in hand to revitalize Canada’s economy.
He will also invite suspicion from the opposition. By convention, civil servants are nearly invisible to the public, speaking truth to power from their protected perches in the bureaucracy. Sabia has a high profile, well-known and sometimes provocative views, and he knows his way around Liberal circles. Just two months ago, he sat on a stage with Trudeau and Infrastructure Minister Catherine McKenna to roll out new environmental ambitions for the infrastructure bank — a clearly political event for someone in a position not meant to be political.
Regardless, he brings a history of bold ideas and ambition to push governments to be far more activist and experimental in their approach to policy.
“Of course, governments have to demonstrate good stewardship of public resources. But if all they do is count change, it limits their ability to effect change,” he said at a Public Policy Forum gala in 2015.
It’s an approach he took to the Caisse de depot, where he pioneered environmentally friendly institutional investing on a large scale by imposing a strict “carbon budget” on his investment team — a model that influenced his approach to the Canada Infrastructure Bank. That’s right on theme for Trudeau and Freeland as they eye a green recovery package next year.
But as tempting as it is to draw more parallels to the queen’s gambit, it’s not an opening move. It’s the fourth in a sequence of dramatic personnel upheavals among the top economic decision-makers taking place during the pandemic.
The first person in play was Stephen Poloz, who was the governor of the Bank of Canada until his seven-year term ended in June — in the midst of the biggest bond-buying program the bank has ever undertaken. He offered to stay an extra year, but the government was already in the process of replacing him.
Tiff Macklem stepped in instead, an experienced hand in central banking who comes with credentials that echo Sabia’s. He has a history of pushing innovative thinking on economic policy, especially when it comes to incorporating environmental objectives into investment.
The next player to leave was Bill Morneau, Freeland’s predecessor as finance minister, who departed abruptly in the summer after a few months of difficult policy-making with Trudeau that culminated in the WE Charity spending scandal that singed both of them.
The third key player to announce a departure was Poloz’s deputy, Carolyn Wilkins, who had been groomed to replace him but decided to move to the private sector after Macklem got the job. No replacement has been named for her yet.
And then last week, within hours of rolling out a minibudget detailing a $382-billion deficit and a massive stimulus plan, the long-time deputy minister of finance, Paul Rochon, announced he was leaving too — replaced on Monday by Sabia.
The team leading fiscal and monetary policy has had a complete overhaul in the space of just a few months, in the midst of the biggest fiscal and monetary crisis in modern times.
It would be a mistake to suggest the old team was a bunch of tight-fisted fiscal hawks chucked overboard in favour of big spenders. But the new team will bring a new perspective to how the economy is steered, with all of the new players closely in tune with Trudeau’s thinking on environment, expanding child care and big borrowing as a way to climb out of the pandemic recession. And none of them shy away from incorporating experimental ideas into their policy decisions, if they make sense.
That’s the Liberal gambit: by bringing in ambitious, wellknown leaders with ideas that are in sync with the prime minister, the recovery, they hope, will be dynamic, green, forward-looking — and also the basis for political victory.