Category: Chairman’s Desk

The prime minister’s governing style assumes one crucial thing — voters are willing to overlook large deficits. But for voters to happily stomach deficits, they must see results.

According to the Polimeter, an online application created by political scientists at Laval University, Prime Minister Justin Trudeau’s government has kept 24 per cent of the 353 campaign promises the Liberal Party made during the 2015 federal election campaign. He has broken five promises, which is about one per cent.

The Liberals pledged they would run short-term deficits of less than $10 billion in each of the next two fiscal years to fund investments in infrastructure and the middle class.

This week, in Finance Minister Bill Morneau’s fiscal update, the government doubled down. In its first year in office, the Trudeau government has racked up a deficit of nearly $31.8 billion.

The Laval analysis has highlighted that the number of promises kept entirely or in part (56 per cent) by this government far outweighs its predecessors’ average after one year (33 per cent).

The conscious decision to break the promise of ‘modest’ deficits has allowed the Trudeau government to remain on track with its other foundational promises. Simply put, the Trudeau government has broken one foundational promise to facilitate the progress of 348 others.

In the 2015 election, a plurality of voters was willing to accept that the new government would increase the debt.

On Tuesday, Morneau talked about the long term, announcing his plans for attracting foreign investment and creating an independent infrastructure bank. Strategically, the government eliminated the $6 billion annual contingency fund, making the government’s figures appear less overwhelming.

It is too early to tell if Canadians will remain as comfortable with this approach as they have been in the past. For now, the Liberals are still riding high in polls.

According to Nanos Research, one in two Canadians say they prefer Trudeau as Prime Minister, 16 per cent prefer interim Conservative Leader Rona Ambrose, and eight per cent prefer lame-duck NDP Leader Thomas Mulcair.

Political wisdom holds that to govern effectively, prime ministers have to make hard decisions, including ones that divide voters, shift governing philosophies and diminish voter goodwill.

Trudeau’s governing style may challenge this model.

Trudeau has positioned himself as a consensus-building, fiscally liberal politician who employs fact-based policy-making. As opposed to picking winners and losers, Trudeau tends avoid decisions that upset or let down large swaths of the population. Instead, he spends money to solve his policy problems and fulfil campaign promises.

This governing style assumes one crucial thing — that voters are willing to overlook large deficits. But for voters to happily stomach deficits, they must see results.

In its first year in office, the Trudeau government has approved a pipeline, increased funding for the Canadian Broadcasting Corporation, created 40,000 jobs for youth, taken in more than 30,000 refugees and cut the rate for the middle income tax bracket to 20.5 per cent from 22 per cent, addressing issues that spoke to the urban, young and educated voters who swung the election in the Liberals’ favour in 2015.

Moreover, people who cite the deficit as a determining factor when they vote are firmly within the Conservative Party tent and will likely never consider voting for Justin Trudeau.

The current government in Ontario is a case study in how deficits don’t necessarily affect a party’s electoral fortunes. The provincial Liberals have accumulated a significant amount of debt, leaving Ontario, astoundingly, as the world’s most indebted subnational government.

Yet, it’s not Ontario’s fiscal situation that is hurting the Liberal government. It is issues like high hydro prices — which seem to be a conversation topic around every dinner table these days — that seem to be threatening the Ontario Liberals’ long reign.

Ontario’s sky-high debt has been around for decades; it has yet to facilitate a changing of the guard.

Prime Minister Trudeau will continue to spend, and to give Canadians what they want and what he promised them. It would not be surprising to learn that his team has a comprehensive plan to execute, at least partially, on the remaining 152 promises before election 2019.

Stephen Harper’s government constantly warned voters that deficits would have dire consequences. The message fell on deaf ears.

Everything we’ve learned in Canadian politics in the last two decades has demonstrated voters do not care about the deficit, and our prime minister knows this better than anyone.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist.

Too many middle class workers have been left behind in the free trade sweepstakes and its time for politicians to find solutions for them or they risk destabilizing the global trading system

On Nov. 21, 1988, after a rigorous debate over free trade with the United States, Prime Minister Brian Mulroney’s government was re-elected with a solid majority mandate. Canadians had declared themselves free-traders.

The notion that free trade would kick-start job creation and economic growth gained currency in the late 1980s. Since then trade pacts signed by nations across the world have proliferated. Canada itself — under both Liberal and Conservative governments — has expanded its trade opportunities.

There are compelling reasons to believe free trade is a force for good in our world. History has demonstrated that open trade and investment lead to more growth, the creation of good jobs and greater prosperity around the world. Countries that engage in free trade are more likely to adopt secularist, democratic principles, allowing persecuted citizens a path to attain and expand their rights.

Furthermore, as nations such as China, India, and Egypt began to seize the benefits of free trade, their middle class burgeoned. In Canada, since NAFTA came into force, 4.7 million jobs have been created, and our trade in goods with the United States and Mexico has more than tripled.

Yet, despite these positives, the public’s belief in free trade is wavering.

Ten days ago, International Trade Minister Chrystia Freeland emerged from negotiations in Brussels to lament that the European Union was on the brink of sinking the heralded Canada-EU Comprehensive Economic and Trade Agreement.

Though the CETA crisis appears to have passed, the incident was not an isolated one. The United Kingdom’s vote to leave the EU was in large part a rejection of the economic integration that had been accelerating to the discomfort of many Britons. There are similar, burgeoning leave movements in the Netherlands, France and Italy.

The World Trade Organization recently slashed its forecasts for global trade, predicting the pace of trade to dip to its slowest since the 2009 global recession. This would set the growth of global trade below the growth of global GDP for the first time in 15 years.

WTO director general Roberto Azevedo acknowledged the growing antiglobalization sentiment around the world, and he pressed policy-makers to resist making decisions that run counter to free and open trade.

It is an unfortunate reality that the Great Recession of 2009 shook the economic underpinnings of the world economy to its core. Governments have been slow to recognize that this represents an enormous challenge to global growth.

It is also not a phenomenon limited to a handful of countries across the ocean.

Closer to home, Bernie Sanders, by railing against the Trans-Pacific Partnership, threatened what was supposed to be a virtual coronation for Hillary Clinton as the Democratic nominee for the U.S. presidency. Donald Trump rose to prominence in the Republican nomination contest using a similar anti-free trade message.

We now have both major presidential nominees promising to not sign the TPP, a move that may effectively stop the erstwhile deal dead in its tracks.

Freer global trade has produced winners and losers. For the winners, incomes and opportunities have skyrocketed. Global poverty has decreased sharply. A functional middle class has emerged in many of the world’s most deprived regions. Here in the West, the richest people are, by all accounts, growing richer.

But for middle-class workers in the West, incomes have stagnated. Those who were once the most-advantaged in the world now see themselves as treading water, at best, while the rest of the world advances. Blue-collar workers in places like Akron, Ohio, and Stratford, Ont., have seen jobs dry up and opportunities disappear.

Our politicians have signed these deals fully aware that along with acquiring benefits they were signing away tens of thousands of well-paying manufacturing jobs.

Yet, those politicians have not provided a solution. There is no plan to increase opportunity, or to help find a solution. The frustration of the middle class has been met with political promises, but little in the way of real action.

The stark truth is that global economic prosperity lies in increasing economic transactions between developed and developing nations. Trade deals are an important part of that relationship.

But middle-class workers in the developed world must consent to these deals — and that consent has grown increasingly uncertain. For politicians to earn it back, they must offer concrete solutions on bridging the gap between those who have so far benefited from free trade and those who haven’t. Nothing less than the stability of the global trading system is at stake.

Jaime Watt is executive chairman of Navigator Ltd. and a Conservative strategist.

Our research has found Canadians are not afraid of talking about having a private component in our health-care system — so long as the universality and equality of access remained blockquote place

During the second presidential debate, Canada got name-checked for the first time. Donald Trump decried our health-care system, as only he could so elegantly put it, as ‘so flawed’ and downright ‘catastrophic.’

Not surprisingly, the comments gave rise to the usual hue and cry that appears any time our health-care system is criticized as anything less than first-in-class. Canada’s health-care system has become its political third rail — an issue so potent and explosive that it can be fatal to a political career to be perceived as even pondering the concept of making adjustments to it.

That our health-care system is untouchable is the received wisdom of politicians of every stripe. Candidates have long avoided anything other than bland praise or minor tinkering around the edges.

But on rare occasions, politicians acknowledge, with caveats of course, what Canadians know — that our system is not first-in-class. Last week saw one of those rare moments. Federal Health Minister Jane Philpott acknowledged that: ‘We know our health-care system is not doing as well as it could ﾅ We’re paying some of the highest costs in the world for health-care and we’ve got a middle-of-the-road health-care system.’

Provincial health ministers reacted predictably, insisting the system was perfect. But Philpott not only got it right, her comments ring true to many patients and their families who have experienced the system first-hand.

But while she discussed innovation and the need to challenge delivery methods, the minister tiptoed around the role of private delivery, promising only to uphold the universality of Canada’s health-care system.

It has been more than a decade since any component of our system was challenged or questioned in any meaningful way. And yet all indications are that Canadians are clamouring for that very conversation.

Polls have consistently shown Canadians are ready to have a tough discussion about whether Canada’s current health-care delivery model still makes sense.

Public opinion research has shown Canadians have reservations about the way the system performs, its sustainability and, most importantly, its ability to meet their needs.

What’s more, they have indicated an openness to exploring many kinds of change, including different methods of delivery.

Global rankings, such as the World Health Organization’s ranking of health-care systems, have had an effect on the way Canadians perceive their system. Once the envy of the world, our system ranks a middling 30th in WHO’s estimation. Other rankings have reached similarly uninspiring conclusions about the competitiveness of our system compared to countries like France or Germany.

Those findings, widely covered in the media, reflect Canadians’ experiences with the health-care system, and this is largely why latent concern about the system has grown more tangible in the last several years.

Baby boomers don’t believe the system is sustainable. In a poll by the Canadian Medical Association, more than four-in-five seniors fret about the quality of health care they will receive in the future.

My firm has conducted a significant amount of research on this issue. It underlined what other research firms had found: the political discourse surrounding the health-care system simply does not reflect what Canadians across the country think about it.

Philpott and her provincial counterparts met in Toronto last week to discuss the state of health care in Canada. Rather than discussing transforming delivery options or other sweeping changes, provincial ministers called for more federal dollars to be fed into the same inflexible system framework.

This lack of innovation is simply not what Canadians are looking for.

Our research has found Canadians are not afraid of talking about having a private component in our health-care system. Instead, they feel such a move is inevitable and makes sense, so long as the universality and equality of access remained in place.

More importantly for the country’s health ministers, Canadians do not care about the constitutional division of responsibility, or about the ins-and-outs of marginal change. They simply want to see change occur so that, for once, the system delivers on their terms — a straightforward concept that seems to elude policy-makers the country over.

How often have we seen the sacred cows of political discourse remain that way until they arrive at the slaughterhouse door?

Canadians have begun to make it crystal clear to our politicians they are ready — in fact, beginning to demand — real change to our health-care system.

The rewards will go to the astute leader who takes up this challenge.

Jaime Watt is executive chairman of Navigator Ltd. and a Conservative strategist.

Conservatives and NDP must attract more dynamic candidates and policies if they hope to challenge Trudeau

 

You could be forgiven for forgetting that two of Canada’s federal political parties are in the heat of leadership campaigns.

Exciting, competitive, closely fought leadership races can help bring opposition parties into the limelight, but this certainly is not happening for either the Conservative or New Democrats.

Eric Grenier’s popular poll aggregator blog, ThreeHundredEight.com, has the Liberal Party of Canada at 49.8 per cent in national polls. He forecasts this would translate into 275 seats in an election, or 81 per cent of the total seats in the House of Commons, leaving the Conservatives and New Democrats to battle it out for the remaining 19 per cent.

Of course, much of this can be attributed to Justin Trudeau’s fresh-faced leadership, the Liberal Party’s post-election honeymoon, and a forgiving electorate enjoying the government’s self-promoted ‘sunny ways.’ Moreover, much of the Canadian public’s attention is firmly focused on the clown show south of the 49th parallel.

Notwithstanding these distractions, the opposition parties are failing to capture the attention of Canadians. This failure has significantly weakened Canada’s political opposition.

With its poll numbers the way they are, the NDP could be lucky to win a handful of seats if an election were to be held today.

Both leadership contests are struggling from similar deficiencies — a dearth of well-known talent, a closed and exclusive electoral process, and a lack of substantive policy alternatives that challenge the status quo.

Much of the problem lies in the extended runway on which each leadership race is operating. The Conservative race is an 18-month slog, while the NDP’s is a 17-month marathon.

It is not easy to keep the attention of already distracted Canadian voters. They are likely recovering from political fatigue after the longest federal campaign in Canadian history. Further, it’s hard to draw attention to campaigns from which most Canadians are barred from participating.

So far, the race to replace Stephen Harper has failed to attract the star talent a leadership race of this magnitude would traditionally warrant. While six candidates have officially registered, none is a household name, and only one is fluent in both official languages. With Peter MacKay, Caroline Mulroney, and Brad Wall deciding to stay out of the race, it’s doubtful whether the campaign will come close to attracting the attention the Liberal Party and Trudeau had in 2013.

Meanwhile, the NDP, which will elect a new leader in October 2017, has not only failed to attract a single leadership hopeful but seen its best and brightest stars already rule out running, including Nathan Cullen, Megan Leslie, Rachel Notley and Avi Lewis.

In 2013, the Liberal Party of Canada took a risk and opened up its leadership race to what it called a ‘supporter’ class. This move to broaden its base allowed more than just card-carrying, fee-paying members to participate in the leadership contest. Nearly 300,000 Canadians signed up to choose the next Liberal Party leader. This not only drew attention to the race, it also helped add thousands of names to the party’s database, which were then used in 2015 to recruit volunteers and identify sympathetic voters.

The Conservatives and New Democrats have not opted to go this route. If attracting the interest of Canadians — and enough Canadians to win the next general election, as well as mining data, are central objectives in a leadership race, both the Conservative Party and NDP are failing.

Leadership races allow parties to benefit from big ideas and transformational policy alternatives. Suggestions, such as fully adopting the Leap Manifesto, instituting a national flat tax, or advocating for a Maritime Union — the proposed political union of the three Maritime provinces — are proposals that captivate audiences, draw attention, spur debate and lure supporters.

If neither the Conservative Party nor the NDP can use their leadership campaigns to drive the kind of attention that in turn drives a bump in the public opinion polls, Prime Minister Justin Trudeau will be even better positioned for a victory in the 2019 federal election.

There is, however, another side to the elongated timeline the parties have imposed on themselves: there is still time for party brass to re-evaluate and inject a shot of adrenalin into their leadership contests.

To the party that is best able to captivate Canadians, activate sympathetic voters outside its base, encourage well-known leadership aspirants, and successfully challenge candidates to propose concrete policy alternatives voters can rally behind, will go the prize. The poll position in the lead-up to 2019.

Jaime Watt is the executive chairman of Navigator Ltd. and a Conservative strategist.

This article appeared in Lexpert on October 12, 2016.

Today, a PR disaster can sink a company faster than a lawsuit. That requires cross-disciplinary teamwork

 

WHEN AN ORGANIZATION FACES a crisis, it nearly always faces two kinds of jeopardy: legal and reputational. In the crisis-management field, these two jeopardies have long been dealt with consecutively. The legal issues would take precedence, and once those were sorted, we’d move on to fix the reputational problems.

Times have changed. Today, with the prevalence of Google and social media, reputation is not something that exists only on a newspaper’s front page for a few days. A quick online search can dredge up hundreds of articles detailing every minor aspect of an organization’s activities for years. Because of this unending flow of information, we now live in a world where both jeopardies must be dealt with contemporaneously. We now have to think about jeopardy in a different way. Instead of silos of risk, where one comes before the other, we must think of a crisis situation as an enterprise-wide threat.

One of the best ways of thinking about competing jeopardies is the way we think about competing rights. You don’t need to be a constitutional lawyer to understand that tensions exist between competing rights. The right to free speech occasionally comes into conflict with the right to security of a person being maligned. The right against unreasonable search and seizure often abuts the need for national security.

We have come to expect that, when it comes to rights, we balance them, or we reconcile them. We assess proportionality of effect. In Western democracies, top courts often repeat the maxim that no right is absolute — that they must be balanced and reconciled.

Similarly, the pressure clients face in times of crisis requires us to weigh and balance their competing priorities. This new approach to risk is not to convince lawyers to put aside legal risk. Rather, consider this example: our firm often advises international companies hoping to invest in Canada or the United Kingdom. And, as in most countries, these multinationals are subject to rules and procedures governing foreign ownership. Many parties will weigh in: courts, regulators, politicians, investors, customers and competitors. The transactions can take months to complete.

In the past, the financial team would put together the deal, and then lawyers would worry about getting approvals, managing claims, and so on. Then, when everything was completed, the corporate-reputation firms like ours would ensure that investors, shareholders and customers saw the advantages of the new company.

But today, these events happen at once. If media report that legal processes are going badly, investors get nervous. Loss of investor confidence drives down share prices, and this gives licence to politicians and competitors to criticize the deal, making it seem less likely to succeed. This, in turn, makes regulators nervous and makes it more difficult for the legal team to obtain approvals. A vicious cycle of failure can ensue if these steps aren’t handled effectively. But a well handled transaction can generate positive financial coverage and support an easier road to the legal and regulatory objectives.

The problem is that the legal team fears legal risk, and the communications team fears a reputational risk that will lead to loss of market capitalization and future investment. But it comes down to this: if organizations wait for pleadings and discovery before addressing the reputational issues, there may be nothing left to fight over in court. As Mark Twain once remarked, ‘A lie can make it half way around the world before the truth can put its pants on.’

It is difficult to strike the right balance between the two jeopardies. The old days were easier, to be sure. But we don’t live in those days anymore. Lawyers and communications professionals no longer have the choice of separately handling each type of risk. We must work together and find the cross-disciplinary solution that balances the realities and jeopardies our clients face.

Jaime Watt is the Executive Chairman of Navigator Ltd. He specializes in complex public-strategy issues, serving both domestic and international clients.