Freeland doesn’t have the Bay Street experience of Morneau. Does it matter?

Freeland doesn't have the Bay Street experience of Morneau. Does it matter?

Chrystia Freeland covered the world of finance as a journalist, and spent some time as managing director of Thomson Reuters.

But Canada’s female finance minister lacks the Bay Street credentials of her predecessor, Bill Morneau, who was CEO of the large Canadian human resource firm Morneau Shepell.

Yet that’s not necessarily the only credential that’s important when it comes time to choose a finance minister, which is considered the crown jewel of cabinet positions. Freeland has the political and financial skills to succeed — and important credentials as a negotiator, according to several experts.

Joe Oliver, a former federal finance minister in 2014 and 2015, when the Conservatives were in power, said Bay Street experience is clearly helpful when taking on the top cabinet position in the country. But it’s not all that matters.

“I had three years before I got into finance. That was invaluable,” Oliver said. “Chrystia Freeland has political experience. That will serve her well.”

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So too will her “tremendous experience and a tremendous track record”, along with a proven ability to be able to comprehend and articulate complex ideas, said Camilla Sutton, president and CEO of Women in Capital Markets, a not-for-profit that works to improve the role of women in Canada’s finance industry.

“While it’s true [Freeland] doesn’t come from a traditional finance background, she certainly has the financial acumen from having reported on it in a very senior lever for major publications,” Sutton said. 

“She definitely reported on some stories that required a deep understanding of finance.”

Confidence of financial community

Because of its outsized role, particular onus has always been placed on the finance minister appointment, said Jonathan Malloy, a Carleton University political science professor.

However, “the background [of finance ministers] varies a fair amount,” he said. “There’s at least the narrative that the prime minister wants someone who has the confidence of Bay Street. But that’s one criteria.”

Morneau, who was CEO of the large Canadian human resource firm Morneau Shepell, announced his resignation as finance minister during a news conference on Parliament Hill on Monday. (Justin Tang/The Canadian Press)

The recent history of finance ministers includes those with impressive résumés from the finance world. Like Oliver and Morneau, Jean Chrétien’s finance minister, Paul Martin, was CEO of a large shipping company. Brian Mulroney’s finance minister, Michael Wilson, was a Bay Street investment executive. 

But others who held the position, such John Manley, and prime ministers John Turner and Chrétien, were all lawyers. Jim Flaherty was Ontario’s provincial finance minister before getting the job with Stephen Harper’s, but he too had practised law before getting into politics.

Still, Oliver said business experience, is “pretty important because you’re dealing with issues that impact companies. 

“It’s both a macro economic and micro economic impact that finance ministers can have.”

Dwight Duncan, a former Ontario provincial finance minister for the Dalton McGuinty’s Liberals, said he didn’t believe his lack of experience in the financial world was any kind of hindrance.

As a Rhodes Scholar and role as top negotiator of USMCA, the new agreement that replaced NAFTA, Freeland has got “better preparation to be finance minister than anybody would have gotten on Bay Street,” he said.

“What she has that’s incredibly important to a finance minister is good judgment, sound political skills, a global background, a lot of exposure in international financial markets and players,” Duncan said. “So I think she’s probably one of the better prepared ministers of finance we’ve seen in a long time.”

Former prime minister Paul Martin, who was Jean Chrétien’s finance minister, had experience as a CEO. Chrétien, on the other hand, had no experience in the world of finance when he was appointed that role under then prime minister Pierre Trudeau. (Fred Chartrand/Canadian Press)

Duncan said when he first became finance minister, he was on a steep learning curve. The job does not require one to be the government’s top economist but assist the leader in making decisions on the priorities of the government.

‘Tremendous track record’

“And that involves as much political skill as it does financial skill,” he said.

Rebekah Young, director of fiscal and provincial economics at Scotiabank, said in an email that the markets won’t have concerns about Freeland’s credentials. Rather, the focus will be on the policy directions she sets out. 

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Indeed, the lack of market reaction to Morneau’s resignation and Freeland’s new role indicates they are relatively reassured that he has been replaced by someone who the market is relatively familiar with, said Douglas Porter, chief economist at BMO Financial Group.

“Given her prominent stature and seniority, and as someone who can be expected to stand her ground on key issues, the lack of direct financial experience is being treated as a secondary issue,” he said.

Oliver said one of the most important qualifications for any finance minister is being in “sync” with where the prime minister wants to go in terms of broad policy. Reports suggested Prime Minister Justin Trudeau and Morneau were at odds on a series of issues.

“It doesn’t mean that on individual policy issues, you can’t have disagreements or discussions,” he said.

Malloy agreed that in this cabinet role, a good working relationship with the prime minister is significant.

“I think the more high profile the position, finance, foreign affairs, et cetera, the more it’s absolutely crucial they must have a good working relationship with the prime minister. Ms. Freeland appears to have that relationship with the prime minister.”

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