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Mark Carney Speculates Summer Mirage for Corporate Canada
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For many in Canadian business, the federal election can’t come soon enough
Published on July 8, 2024 • Last updated 6 minutes ago • 4 minutes read
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Mark Carney speaks during the Canada 2020 Net-Zero Leadership Summit in Ottawa in 2023. Media reports say Justin Trudeau is courting the former governor of the Bank of Canada and the Bank of England for the post of finance minister. Photo by Sean Kilpatrick/THE CANADIAN PRESS
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In the whirlwind of political unrest that has characterized the last few weeks, amid dozens of stories that report Justin TrudeauGiven the country’s precarious situation, a report must have seemed like an oasis in the desert to Canada’s beleaguered business community.
Althia Raj of the Toronto Star recently reported that Trudeau has begun a dialogue with Mark Carney on at least two occasions, discussing the possibility of the first Bank of Canada governor joining the government as finance minister. Such a move would be aimed at placating disgruntled caucus members calling for drastic change and a new political direction for a Liberal Party seemingly on the brink of a historic election defeat, if polls are to be believed.
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Carney, a towering figure in Canadian public policy over the past two decades, has the distinction of having served as governor of the Bank of Canada and the Bank of England. His name has also been floated as a potential Liberal leadership candidate to succeed Trudeau.
The prospect of Carney taking charge of the nation’s economy likely provided brief solace to the anxious minds of corporate executives across the country, who are facing what they believe will be one of the most difficult political scenarios in decades.
Questions of electability and political acumen aside, Canadian businesses likely view Carney as one of the most qualified individuals alive for the job of finance minister.
Amid the uncertainty, the idea of Carney taking over as finance minister must have briefly renewed hope in the business community that a change in political outlook is possible; surpassed only by the prospect of a snap election to provide more clarity.
However, both scenarios may be as insubstantial as a mirage.
Imagine Carney agreeing to take on a job that includes pandering on economic policy to Trudeau’s aides in the prime minister’s office or the left-wing New Democratic Party, which is currently supporting Trudeau’s government. It strains credulity.
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In reality, a more likely scenario for companies in the coming months is one marked by uncertainty, conflict and continued political inconsistency until the next election.
Rather than adopt Carney’s pragmatism, the Trudeau government’s latest moves have been to double down on policies perceived by the business sector as economically damaging.
With the government in a frantic scramble to save its political standing, the question echoing in boardrooms is: will we be the next target?
The unease simmering among top executives extends beyond frustration with the Liberals. The Conservatives are also perceived as an unknown entity, increasingly positioning themselves as antagonistic to corporate interests. Yet they are not the party currently in power.
Let’s revisit the growing list of corporate grievances with the current government (in no particular order and by no means exhaustive):
Digital Services Tax on tech companies: The Liberal government’s new digital services tax risks becoming a significant point of contention with the US government, with American tech giants calling for retaliation. Robin Guy of the Canadian Chamber of Commerce has warned starkly about its potential repercussions: “It will significantly damage our relationship with the United States.”
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Emissions cap in the oil and gas sector:The Canadian business community fears that this measure will effectively limit energy production, which could cost the country’s economy hundreds of billions in export revenue and lost investment.
New capital gains taxes and early adoption of the global minimum tax: The capital gains tax is retroactive, leaving investors feeling like the government is simply making a play for their money at the expense of investment certainty. The global minimum tax, which was also recently adopted, is being imposed on our companies earlier than in many other jurisdictions, meaning that multinationals headquartered in Canada will face a higher tax burden than their global competitors.
Anti-strikebreaking legislation: Backed by conservatives, this legislation, which went into effect earlier this year, is anticipated by business groups to lead to longer and more frequent strikes. More broadly, there is growing concern that the federal government has become too deferential to organized labor.
New greenwashing legislation:The Canadian Chamber of Commerce argues that this measure will restrict the ability of companies to “openly contribute to Canada’s climate goals.”
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Second wave of amendments: The greenwashing measures represent the third change to Canada’s competition law since 2022, raising concerns about consistency. The controversial changes include a measure that streamlines the competition commissioner’s ability to challenge mergers, a move opposed by some business groups.
Canadian businesses certainly support numerous government policies, such as the widely supported carbon pricing initiative and the tens of billions in subsidies the Trudeau government is offering to encourage clean energy investment.
While challenges abound, there are also significant reasons for optimism about Canada’s economic future. A growing population, a robust resource sector, and a relatively favorable fiscal outlook compared to many other advanced economies all add up to a promising outlook. When pressed, executives will acknowledge these advantages.
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However, the reservoir of goodwill between the government and corporate Canada has been depleted. Business groups have shifted into resistance mode, and for many in the corporate world, an election can’t come soon enough.
Theo Argitis is managing director of Compass Rose Group and publishes the Means & Ways newsletter, in which this commentary first appeared.
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