Category: Chairman’s Desk

The Bank of Canada must stay the course on high interest rates in the face of a frenzied appetite for them to come back down.

 

After being shelled with political fire for the past year, one might think the Bank of Canada would avoid differentiated forecasts until the noise around inflation began to abate. Instead, last week Canada’s central bank deviated from all others in G10 economies by explicitly signalling that a pause to interest rate hikes might be on the horizon.

While the Federal Reserve, Bank of England and European Central Bank were reluctant to make similar prognostications as they hiked rates this week, Gov. Tiff Macklem has boldly chosen to stick his head above the parapet.

In doing so, he has taken a significant risk; distinguishing himself from his counterparts gives his critics more fodder to misconstrue Macklem’s intentions.

Like its counterparts, the Bank of Canada was slow in acknowledging the deeply structural nature of inflation. Since then, it has remained steadfast in tightening monetary policy but now may have decided to move more quickly to a much hoped for endgame.

While Macklem was clear a pause doesn’t mean a pivot, his conditional commitment feeds an increasingly persistent notion that we are turning the corner on inflation. Speculative assets are up with markets champing at the bit for a return to cheaper money while the public, goaded by political criticisms that central banks are hell-bent on causing a recession, are ready to call it a day.

But people need to be reminded what the reality is rather than what they want it to be. While inflation has declined, it still sits at 6.3 per cent in Canada — a far cry from the target 2 per cent rate. Behaviour has a powerful effect on economics and promise of a pause risks playing into a yearning for sunnier alternatives.

Many underlying price pressures, such as wages, are proving persistent in the face of rate hikes. Meanwhile, uncertainty over the state of our federal finances is growing. Former Bank of Canada Gov. David Dodge recently issued a report concluding federal deficits are unsustainable for the decade ahead.

The Bank of Canada is a sophisticated and historically patient institution and its latest announcement certainly poured cold water on the idea that it is a blind follower of the Fed. Without further comprehensive employment and consumer price reports for a while, the central bank is probably just trying to temper expectations — but markets and the public are never that rational.

Einstein once famously defined insanity as doing the same thing over and over and expecting different results. In the 1970s, after a temporary ease, inflation bit back more harshly than ever, with prices dropping then soaring — graphically looking like a McDonald’s M — with drastic quantitative tightening eventually bringing them under control. Former Fed Chairman Paul Volcker is remembered as the man who saved the global economy, but was seen far less favourably at the time.

Having found the nerve to raise interest rates to battle inflation, the Bank of Canada must now hold it in the face of frenzied appetite for them to come back down. Should Macklem end up reneging on his conditional commitment, I am confident he will do so firmly and without fear of reprisal with monetary and historic responsibilities as his north star.

We have seen the Conservatives and the NDP quite willing to target the Bank of Canada. Although Macklem was clear this was a conditional commitment that fact will inevitably get lost as more Canadians struggle to make their mortgage payments.

Before their next rate announcement in March, it would be best if the bank worked to drown out the noise that will precede it and aggressively assert that a pause will only come if specific criteria are met, and that more hikes may have to follow if they are not.

Failure to do so will put Canada in a very difficult position to tackle inflation and failure to do that will result in pain for generations to come.

This article first appeared in the Toronto Star on February 6, 2023.

READ MORE >

A crumbling health care system cracks at the very foundation of not only this country but who we are as a people.

Saints, it has been said, are the sinners who kept on trying.

For first ministers across Canada, their road to redemption may well run through Feb. 7. That’s when Prime Minister Justin Trudeau and premiers will gather to start negotiating a new deal on the federal government’s funding for health services.

Hope, for this reason, is in the air as a sense that previously insurmountable differences will — at last — be cast aside for the greater good. And yet, many can only muster the most cautious sense of optimism. Because, let’s face it, Canadians have been let down on this issue countless times before. Politics has interfered; talking points have prevailed.

As a result, our health care system is now beyond the breaking point. Patients are suffering. Doctors and nurses are exhausted and burnt-out. Wait-lists are surging. Innovation is stalling and investment is falling to dangerous levels.

What most of us feel, at best, is hope of a kind: like the branch you cling to before the current carries you over the falls. The reality is this: none of the significant problems in our health care system will fully get fixed until the federal government returns to its role and pays its share. Point finale.

While there are few reference points for the kind of selfless political leadership required to solve the health care crisis, one does come to mind: the efforts to patriate the Constitution and entrench the Charter of Rights and Freedoms in the early 1980s.

Memorably, Bill Davis played a leading role in negotiations between the provinces and federal government, helping to bring his fellow premiers into the fold through skilful diplomacy and good old fashioned Canadian compromise. This struggle would cost Davis politically. His support for Pierre Trudeau’s ambitions upset not only his federal cousins but his own caucus. And yet, today, his contributions are universally celebrated. Why? Because he put the good of his country ahead of partisanship.

In negotiating the future of health care in Canada, Davis’s successors should replicate his example. And there are signs this just might happen. When The Star’s Susan Delacourt recently asked the prime minister about Premier Doug Ford’s plans to clear Ontario’s surgery backlog by delivering more operations through private clinics, he chose to call it “innovation.”

Make no mistake, Trudeau’s answer was a momentous break with decades of orthodoxy. But the cliché that politics makes strange bedfellows is a cliché for a reason. The PM well understands that there is no deal if the lines of distinction are drawn too sharply before formal negotiations even begin. Crucially, he recognizes that Ford will be a vital partner in this upcoming negotiation and, that with Ontario’s support, he has a powerful ally in bringing other provinces along.

Some opposition parties will, predictably, try to upset progress. NDP leader Jagmeet Singh, desperate for oxygen, has said he’ll consider pulling support for the Liberals if they do not insist on no-privatization conditions for health care funding. While that might be in his narrow political interests, this is not the time for such considerations.

All of which is not to deny that getting this right will be a win for those who do, which raises the question of legacy, specifically the prime minister’s. Achieving this deal will produce very close to immediate results.

A crumbling health care system cracks at the very foundation of not only this country but who we are as a people. So the point is this: It won’t matter if Trudeau puts a Canadian on the moon. His accomplishments will count for nothing if he misses this once-in-his-premiership shot to repair our national foundation. If he does miss, his legacy is in deep trouble. But if he makes this crucial fix, his legacy will have a new cornerstone.

Make no mistake, Trudeau’s answer was a momentous break with decades of orthodoxy. But the cliché that politics makes strange bedfellows is a cliché for a reason. The PM well understands that there is no deal if the lines of distinction are drawn too sharply before formal negotiations even begin. Crucially, he recognizes that Ford will be a vital partner in this upcoming negotiation and, that with Ontario’s support, he has a powerful ally in bringing other provinces along.

Some opposition parties will, predictably, try to upset progress. NDP leader Jagmeet Singh, desperate for oxygen, has said he’ll consider pulling support for the Liberals if they do not insist on no-privatization conditions for health care funding. While that might be in his narrow political interests, this is not the time for such considerations.

All of which is not to deny that getting this right will be a win for those who do, which raises the question of legacy, specifically the prime minister’s. Achieving this deal will produce very close to immediate results.

A crumbling health care system cracks at the very foundation of not only this country but who we are as a people. So the point is this: It won’t matter if Trudeau puts a Canadian on the moon. His accomplishments will count for nothing if he misses this once-in-his-premiership shot to repair our national foundation. If he does miss, his legacy is in deep trouble. But if he makes this crucial fix, his legacy will have a new cornerstone.

This article first appeared in the Toronto Star on January 30, 2023.

READ MORE >

Politicians and other policymakers have figured out that private participation in a public health care system is no longer the bogeyman.

A fearlessly pragmatic intervention or a desecration of our national fabric and everything we hold dear?

A slippery slope certain to trigger a mass exodus of public health care workers or an innovative plan to boost collaboration and ease the burden across a strained-to-the-breaking point sector?

Or, finally, rerouting water away from the dam (to steal Premier Doug Ford’s metaphor), or a short-sighted stopgap that will only delay a greater flood? The spin lines are drawn in predictably binary and deeply unenlightening ways.

The truth is that, however you slice it, last week’s announcement by the Ford government of a multi-phased plan to fund for-profit clinics will fundamentally reshape Ontario’s health care landscape.

We are now firmly on the road toward significantly greater private participation in our health care system. The questions are: will it work and will Ontarians and Canadians support it? The Ford government is banking that the answers will be yes and yes.

Facing an avalanche of criticism, the government has decided the best way to reduce wait times is to expand the role of private clinics to provide a series of diagnostic and surgical procedures paid for by OHIP.

Ontario is not alone in taking this approach. Confronting its own dire challenges, Quebec, too, has started to make this pivot. In September, the Coalition Avenir Québec announced plans to open one-stop-shop medical facilities in Montreal and Quebec City, privately owned and built, but publicly funded. Meanwhile, British Columbia, Alberta and Saskatchewan have made progress in reducing their surgical backlogs by implementing community-based models for procedures.

Some will say that this turn to privatization carries with it significant risk. These critics imagine the Ford government’s plan might lead to labour shortages in the public sector. Of course, introducing substantial change into a bureaucratic system as dense and complex as health care will be no easy challenge. But the risk of being perceived to do nothing — that is, to accept the status quo — is much, much greater.

On this front, Navigator’s most recent research on the views Canadians hold about the health care landscape is extremely revealing. For decades, conventional wisdom has held that changing the status quo in health care has been the third rail of Canadian politics.

But our data indicates this is simply no longer true. Indeed, more than half of Canadians (58 per cent) believe that the sector’s backlog is so urgent that change is necessary, even if this means allowing the private sector to play a more significant role.

Politicians and other policymakers are finally figuring out that private participation in a public health care system is no longer the great bogeyman it was once held to be; rather, many Canadians now see it as a vital tool in the delivery of services that will meet their needs.

It speaks volumes that, to this day, many politicians still run for their lives from this subject. Or worse, still think that airing blanket criticisms will fare better than proposing concrete solutions. But, as the events of recent months have shown, governments are waking up to the crucial and increasingly unavoidable point that many Canadians see privatization measures as realistic and even promising.

So here’s how I see it: Health care in Canada is at a tipping point and an expanded role for private health care providers, universally covered, has been the logical solution staring us in the face for the better part of a generation.

(While my opinions are my own, readers should know my colleagues have lobbied on behalf of organizations in the health care sector including medical professionals, hospitals and companies).

With more people suffering as a result of our overburdened system each passing day, with delays piled on delays as a result of COVID, governments can no longer afford to simply avoid or ignore this solution.

The reverse of what was so long held as unthinkable in Canadian political life is now true: embracing private health-care delivery, paid for by the public purse, is not only politically necessary but has become politically advantageous.

This article first appeared in the Toronto Star on January 25, 2023.

READ MORE >

It’s that sense of identity as so thoroughly mobile and the fact that it can be successfully engineered to win that is so deeply unsettling.

If you sat across the table from him on a date, you would run away before your drinks arrived.

If you were his employer, you would fire him before he had his coat off.

And yet, try as you might, you simply cannot un-elect him.

By now, you know I am talking about none other than the odious George Santos. New York’s latest, as he puts it, “embodiment of the American dream.”

Problem is: it ain’t no dream. It is somewhere between a detached-from-reality fantasy and a nightmare.

It’s one thing for literary fabulists like Gatsby, Ripley, and Draper to construct their own creations for their own purposes. It is quite another for someone who is seeking a position that has at its essence, at its core, a covenant of public trust, to try the same. Disturbingly, this creation, evidently politically calculated to secure victory in New York’s 3rd congressional district, worked.

I won’t recite the litany of Santos’s well-publicized falsehoods but suffice it to say that most revolve around the details of his identity. And let’s be clear: his lies are not minor embellishments but whole-cloth constructions.

It’s that sense of identity as so thoroughly mobile, so readily fungible, and the fact that it can be successfully engineered to win that is so deeply unsettling. The old, now demonstrably naïve, expectation was that people go into politics for honourable reasons, to fight for someone or something. Santos’s case underlines the danger of that assumption, and shows that people do, in fact, go into politics for all the wrong reasons and, what’s worse, win.

Worryingly, successful liars often inspire and embolden imitators. To be sure, Santos’s situation is, at best, a relative success, he’s been caught but not criminally charged, made tepid apologies but not resigned. Indeed, a sharper downfall might still await him. And yet, there is an emerging sense of an attention-seeking, near nihilistic, air lurking underneath, that all he ever wished for was his name to be on the front page, good or horrifically bad. And so it is.

I tell young people as often as I can that motivation is for amateurs, discipline is for professionals. That credo’s power rests in its reminder that it’s our actions over time that define us. We can be motivated to do both very good and very bad things temporarily. But it’s the discipline of what we do every day that tells us and others who we truly are.

I say this to young people because they are most frequently confronted by that temptation: to take the short view and corresponding shortcut, to tell the easy lie about who they are or what they’ve accomplished.

But, of course, that temptation does not exist for young people alone. Nor does it exist in a vacuum.

So what motivated Santos to lie so spectacularly? It’s easy to say he’s an unqualified loser. It’s harder to turn inwards and look at our own culture to ask what type of person our political climate is selecting for.

I’ll try.

Who is willing to face the culture of toxicity and harassment (especially pronounced for women and visible minorities) our leaders face? Who is willing to confront the inevitable mudslinging campaign? And who is willing to work a profoundly demanding job for only a fraction of what they could command in the private sector?

There are still many good people, I’ll go so far as to say most, who remain in politics for whom such questions are not questions at all. Their strength of character and conviction simply drowns out the concern.

Yet make no mistake, George Santos is a wake-up call. Sure, there’s been many like him and there will be more to come. But unless we meaningfully improve our political climate, the issue is his astonishing level of deceit won’t be the exception but will become the rule.

This article first appeared in the Toronto Star on January 17, 2023.

READ MORE >

Throughout our country, we must not allow our politics to continue being — as Orwell described it — “the choice between the lesser of two evils.”

 

A federal election in 2023?

Though far from a certainty, more and more, it feels like one. Federal minority governments have seldom endured more than a few years and the current Liberal-NDP agreement is unlikely to be an exception to this rule.

If the plug is pulled and the current Parliament Hill tone continues, the election will be waged on decidedly pessimistic terms. Take, for example, Conservative leader Pierre Poilievre’s and Prime Minister Justin Trudeau’s recent exchange played out over the closing weeks of 2022.

To great effect, Poilievre has repeatedly asserted that “it feels like everything is broken in this country” — a message that resonates strongly with Canadians. At a year-end Liberal holiday party, Trudeau countered that “Canada is not broken.”

While Canada is far from broken, it’s time we acknowledged that there are significant cracks in the land and the current government’s continued approach of ignoring the legitimate concerns of families battling record inflation and a housing crisis can’t continue.

As Poilievre tells it, Justin Trudeau’s excessive spending, runaway deficits and second-rate commitment to infrastructure mean that a continued Liberal reign poses no less than an existential threat to our nation.

Trudeau’s challenge is that circumstances beyond his control — namely brutal economic conditions — make defending against Poilievre’s charges harder and harder. He is left, as many long-term governments are, selling a hypothetical alternative narrative of another kind of doom and gloom.

And so, Trudeau paints a sloppy picture of a Poilievre-inspired hellscape where you pay for groceries with Ethereum and carbon costs less than an FTX token.

Put a pox on both their houses on this one. Better than cartoonish imaginings, our politics requires, now more than in a long time, great causes and long-term objectives.

Nothing places this fact into more apparent relief than immigration.

The Liberal’s target of welcoming 465,000 permanent residents in 2023, 485,000 in 2024, and 500,000 in 2025 is an important objective. Laudable for its human compassion and much needed for the future strength of our economy.

That said, we need to be ready to welcome these newcomers with, among other things, affordable housing and reliable, accessible health-care. The Trudeau government still needs to provide something close to a realistic plan. So far, its approach has been painfully insufficient.

Of course, grand visions amount to very little if they are unaccompanied by concrete plans and dedicated action. Historically, there is no better marriage of these two criteria than the revolutionary New Deal. During a rousing speech to the Democratic National Convention in 1936, the man behind it, President Franklin Roosevelt, asserted, “This generation of Americans has a rendezvous with destiny.” He spoke these words while his nation was still caught in the grasp of the world’s most significant economic collapse, five years before it entered its most crucial conflict.

As we awaken in 2023, our challenge — Canadians and our political leaders alike — will be to rally around many of the same appointments: one grand vision, concrete plans, and a dedication to action.

Backward glances into the trials of COVID-19 will do us little good. Instead, meeting such a challenge requires us to rethink and revamp our social, technological, and economic policies. It demands that we ask and answer existential questions: Should we expand our global influence or turn inward? Do we still need a monarchy? Which industries will define our future? What, as a nation, is our greatest priority?

Throughout our country, we must not allow our politics to continue being — as Orwell described it — “the choice between the lesser of two evils.” Canadians deserve a grand vision. Unfortunately, we’ve suffered without it for far too long.

This article first appeared in the Toronto Star on January 5, 2023.

READ MORE >