Page 14 - Newcom

DECEMBER 2020
PAGE 14
EDITORIAL
We ignore experts at our peril
If we learn nothing else from the annus horribilis that is 2020, let it be that expertise is precious.
When the Covid-19 outbreak first hit, society was forced to cancel
anything fun and behave as if everything was infectious. Some consum- ers began hoarding, and widespread anxiety prevailed.
As medical professionals learned more about the virus, public health experts developed procedures to allow many activities to resume while also guarding against rampant infections. Businesses and schools reopened — successfully, for the most part.
Most critically, production of several promising vaccines now is under- way, thanks to an unprecedented convergence of scientific expertise to combat the virus and its devastating economic effects.
At the same time, the consequences of disregarding expertise have become evident. The U.S. has suffered hundreds of thousands of deaths amid an inept, politicized response to the pandemic. Meanwhile, the Ontario government’s meddling with its own health experts’ advice
OTTAWA
impaired efforts to suppress the virus — contributing to another wave of economically destructive lockdown measures.
The lesson: cultivate expertise and trust it.
In the financial world, investors must believe in the proficiency and integrity of those they depend on for advice. Efforts to regulate industry titles must inspire public confidence in the quality of advice, not rubber- stamp the status quo in a hollow simulation of consumer protection.
More important, legislators must resist the temptation to enable pol- itical interference with regulatory policy. The Ontario government man- gled the regulators’ approach to funds’ fee structures by prioritizing politics over expertise. Future efforts to give politicians greater control of regulation should be resisted. The short-term desires of the govern- ment of the day should not be given preference over hard-won expertise that’s devoted to the long-term public interest.
If our pandemic-racked year has taught us nothing else, it’s that degrading and ignoring expertise comes at our peril.
INVESTMENT EXECUTIVE
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Freeland’s economic statement a political winner
The opposition parties didn’t know what to make of the Liberal spending plan
BY GORD McINTOSH
federal finance minister
Chrystia Freeland’s debut economic state- ment, with its gargantuan deficit, was a political winner before it was even tabled in the House of Commons.
Freeland received some flak inside the Ottawa bubble regarding the size of the defi- cit, the lack of a fiscal anchor and a federal debt that’s half the size of Canada’s econ- omy. But in the real world, the initial reac- tion to the long-delayed economic statement seemed to be a resounding “meh.”
A day after the statement’s publication, it was no longer the lead story on the news channels, having been bumped aside by Covid-19 vaccines.
No government wants to be the centre of a deficit controversy, so voter indifference is a success as far as political strategists are concerned. The quicker an economic state- ment or budget becomes history, the better.
The Trudeau government probably fol- lowed the advice of Sun Tzu in The Art of War: the wise general does not fight the battle until he knows it is already won.
Covid-19 may be a good part of the rea- son, as the Liberals claim, we had to wait until Nov. 30 for the annual fall economic statement. But before releasing the state- ment, the Liberals were probably making
sure voters would accept a deficit that will be at least $381 billion.
Since the speech from the throne, some polls indicate more than half of Canadians think the deficit is too large. However, when asked if Ottawa should continue providing aid to get Canadians through the pandemic, virtually the same number of Canadians said yes.
A Bloomberg/Nanos poll in October showed Canadians were almost 60% in favour of Ottawa doing whatever it takes to get them through the pandemic.
Overall, the government is back to where it was in the polls when the WE scandal broke in the summer and ahead of where voter support was after the October 2019 election. In fact, the Liberals are near major- ity territory.
In other words, most Canadians think a balanced budget is a “nice to have,” but propping up the economy with massive aid and stimulus is essential throughout the pandemic, however long it lasts. Large deficits have been politically normalized.
The spending could easily continue; in mid-October, Bank of Canada Governor Tiff Macklem left the door open to negative interest rates (as if Justin Trudeau needed encouragement to spend).
On Nov. 19, when Moody’s Investor Services reaffirmed Canada’s triple-A credit rating — indicating we have the economic strength and policy expertise to get through the pandemic with high spending — the Liberals received the final signal they needed that their economic statement would be a victory.
Moody’s cautioned that the level of spending has to drop once the pandemic
is over, but the government has kicked that and other fiscal policy concerns well down the road.
So, what do we have in this 237-page economic statement that is part mini- budget, part manifesto, part campaign platform and — certainly — part test marketing for the 2021 federal budget? Something for everybody — or, at least, for every strategic demographic.
The opposition parties didn’t know what to make of the statement. The NDP called it an austerity document. (Hilarious, aren’t they?) Conservative leader Erin O’Toole, meanwhile, used most of his speaking time to deal with the logistics of how Canadians will receive a Covid vaccine.
Mission accomplished for the Liberals: O’Toole has thrown in the towel on fiscal anchors and deficits, and now is posi- tioning himself for the government’s next crisis.
Should the opposition parties be stu- pid enough to force an election over the economic statement, they probably would be doing the Liberals a favour. Given the Liberals’ rising political capital, going to voters now may make sense while the opposition gets blamed for forcing an election during the pandemic.
As for unfinished fiscal business, it’s important to remember that when Liberals hold majority control in Parliament, they talk left and govern right.
With just about every government in the world borrowing to get through the pandemic, interest rates won’t stay low forever. The Liberals know that — just as they know a fiscal anchor will eventually be needed as a hedge. IE