The West Block — Episode 27, Season 9

THE WEST BLOCK

Episode 27, Season 9

Sunday, March 8, 2020

Host: Mercedes Stephenson

Guests: Minister Bill Morneau, Brian DePratto, Rudy Husny

Location: Ottawa

Patty Hajdu, Health Minister: “We have already seen global economic and supply chain disruption.”

Bill Morneau, Finance Minister: “There are very real potential challenges.”

Stephen Poloz, Bank of Canada Governor: “By being clear, we’ve got a behavioural response that cushions the economy before the coronavirus effect arrives.”

Patty Hajdu, Health Minister: “And it’s important that Canada be prepared for the effects beyond those of health.”

Frederick Kagan, Critical Threats Expert: “We are currently engaged in a grey zone conflict with Russia that they are marginally winning. The war is on.”

Peter MacKay, Conservative Leadership Candidate: “We must work to ensure all Canadians feel that they’re getting a fair deal.”

Jason Kenney, Alberta Premier: “I’ve endorsed Erin as the best candidate in my view.”

Mercedes Stephenson: Welcome to The West Block for Sunday, March 8^th. I’m Mercedes Stephenson.

As the coronavirus outbreaks spreads globally, stock markets here in North America are taking a hit. The financial uncertainty led the Bank of Canada and its U.S. counterpart, to cut interest rates last week. But with questions about supply chain interruptions, trades slowing down and productivity dropping if people can’t come to work. What does the virus mean for the Canadian economy and the pending budget?

Joining me now from Toronto is Finance Minister Bill Morneau. Minister, on Friday you announced that there was going to be action by the federal government to help those businesses and people affected by coronavirus, to try to help the economy. What can you tell us about those measures?

Bill Morneau, Finance Minister: Well, thank you, Mercedes, and it’s good to be talking with you this morning. I think what I talked about Friday, and first and most importantly, is we’re focused on how we ensure that we are prepared for a challenge around coronavirus, and that starts with thinking about people. So it starts thinking about the health of people, worried that we are taking the appropriate precautions, that we are finding a way to contain this issue as best we can. But of course, as you point out, we also need to think a little bit ahead and be concerned around people’s situation with their employment, be concerned with businesses that may be facing challenges as a result of what may or may not happen. So we are taking active precautions to think about the measures that we can use, to help people if they find themselves without their continuation of their ability to go to work, or to help businesses in a situation where they’re impacted by supply issues because they can’t get the materials they need for their business, or they’re impacted by demand issues because people aren’t buying things that they’re selling. So, we’re thinking about those measures right now. Really what we’re looking for on that front is to make sure that we’re addressing the places where we know there’s going to be issues. And so we know that there are some challenges in the tourism and the transportation sector, that’s clear. We know that the lower price of oil and medals presents some challenges for that sector. So we’re thinking about those sectors and frankly, coming up with measures that would be appropriate in the face of challenges and of being prepared in case those challenges get bigger.

Mercedes Stephenson: Do you have a scope in terms of a number of what you expect the economic impact of coronavirus to be and how much the federal government is planning to spend, to try to mitigate some of these financial impacts?

Bill Morneau, Finance Minister: No, Mercedes, I really can’t give you a scope. The challenge, really, very much depends on the depth and the duration of this challenge around the coronavirus. It also depends on the geographic spread and so we will only know that as the facts become available. I think what people need to know is that we have a strong fiscal position. So we’re prepared in terms of the actual health risk, but we have a strong position fiscally so that we can actually take measures, as needed, as the facts come out. And that’s what I want Canadians to be confident in, that the Canadian situation, are better fiscal situation than any other G7 country. That puts us in a strong position and of course, our health system is also strong. So those two things together mean that we recognize this is a challenge, but we’re confident we have the tools to deal with the challenge, to protect people, to protect businesses and protect the long term health of economy.

Mercedes Stephenson: Minister, a lot of that strength of the Canadian economy comes from being a trading nation, though. If you start to look at the interruption of supply chains, the chances that ports or borders start to shut down, already a 100 Canadians not allowed to enter the United States across the border because of the concerns there. How do you mitigate for something like that, that the Canadian government doesn’t really have control over?

Mercedes Stephenson: How quickly do you think that those measures might be announced and more importantly that that money might actually start to flow?

Bill Morneau, Finance Minister: Well, I think you’ve heard that Patty Hajdu—Minister Hajdu’s already announced some funding for financing things that we need to do in terms of responding to the coronavirus. So you’re going to see us, as we get our plans more prepared, making announcements. That’s what we want Canadians to see is that we are actively engaged in precautions that we are taking the appropriate amount of time, but also acting quickly because we know that people want to have assurances and having things ready if the situation does become more difficult. But we’re not there now. We do have a strong position. We are preparing ourselves and that’s what I want people to take away.

Mercedes Stephenson: You did have the strong jobs report on Friday, as you mentioned, but it predated some of the coronavirus fears that have been driving the market. You’re looking a double whammy with the blockades that we’ve seen across the country affecting the economy, a shrinking growth report in the last quarters, this one and also the one that’s projected going forward. A lot of the big bank economists are saying look, there’s a potential for a global recession. There’s a potential for a Canadian recession. How concerned are you that coronavirus and the blockades combined, could push Canada into recession?

Bill Morneau, Finance Minister: Well, Mercedes, my job is to be looking at all these things and to make sure we’re prepared. We cannot deal with global risks like the coronavirus in any way other than acknowledging them, figuring out how we deal with them and getting on with it very rapidly. That’s what we’re doing. We’re concerned most about, of course, the people issues, the real issues for individuals and families who are anxious and who in some situations are actually facing immediate health risks. So that’s the first step. But the economic issues, yes they’re real. We do need to be prepared and we are preparing, and you’re going to hear us acting because that’s what we should be doing when those challenges present themselves. So I’m not going to tell you that we’re going to have a whole host of measures that are going to be announced in advance of having a problem, but we’re going to be prepared to announce them when and if that comes. Good news, again, is that we have the capacity to do that. Our continued work over the last four years has been to drive down our debt as a function of the economy, and it means that compared to the G7, and that’s the United States, Germany, U.K., France, Italy, Japan, we’re in a better situation than any one of those countries, to respond to this. And of course, some of those countries are in a much more difficult position so far with the coronavirus. We’re preparing, we’re ready to move when and if required.

Mercedes Stephenson: Okay. Not a lot of fiscal room, potentially, to manoeuvre, but I’m sure that we will be hearing more from you on that, on the budget and on your planned measures. Minister, thank you for joining us.

Now for a fact check on the Canadian economy, let’s go to Brian DePratto. He’s the senior economist for TD Bank in Toronto. Brian, you had a chance to listen to Minister Morneau. Do you agree with his assessment that the economy is strong and in a good place?

Brian DePratto, TD Bank Senior Economist: I think he’s taking a relatively narrow view of the economy. You know, he focused on the labour market where we have seen some pretty good numbers, but those are backwards looking. And if you take a broader picture, we had a very soft end to last year, business investments sort of struggling to gain traction for a number of years now. Looking at recent developments, you know rail blockades, weather, other factors, already starting a soft start to the year before we even talk about coronavirus. So, I think, we don’t really have a lot of growth buffer to work with here in Canada.

Mercedes Stephenson: With that limited buffer, because the government already has spent into deficit, they’re planning to do that again. Is there sort of a danger that they don’t have enough cushion here, to absorb shock events like the blockade or like coronavirus?

Brian DePratto, TD Bank Senior Economist: You know we do have a little bit of room here. You know, you compare us to countries like the United States, for instance, some European economies. We’re in a much better fiscal position here. I think the conversation really needs to be about if you’re going to spend more money, are you spending it intelligently? Are you spending it in the areas that matter? And are you also spending it in areas looking beyond the very near term shocks that are going to have longer term benefits for the economy and increased productivity. I think those are the real benchmarks of government spending.

Mercedes Stephenson: Do you think that they have to make a decision about cutting certain things they plan to out of the budget or do you expect that the government will proceed on status quo?

Brian DePratto, TD Bank Senior Economist:  I think it’s a little bit of a balancing act. Certainly, you know, trying to read into the minister’s comments this morning, he does seem reticent to really spend a whole lot more. You know, looking at the growth outlet here, they’re probably going to have a little less revenue to work with on the planning side there. So I definitely think they’re going to be doing a pros and cons kind of analysis and we may see some reshuffling of the cards.

Mercedes Stephenson: We couldn’t get an exact number from the minister on what they’re expecting in terms of a potential economic shock for coronavirus, of course, this is one of the areas you work in is predicting what could happen. What do you foresee?

Brian DePratto, TD Bank Senior Economist: This is a moving target, to be clear. But looking at what we’ve seen today. It’s in the announcements, you know, travel tourism, things like that. We would expect to see growth in the first half of the year, you know, below 1 per cent. So well below trend, you know, not talking about recession quite yet but really a bit of a grind, I think. You know, we’re marking down our forecasts this year, probably three or four tenths. Again, it doesn’t sound that big, but we don’t have that much to work with. So it’s a pretty sizable impact.

Mercedes Stephenson: Okay. Brian DePratto, thank you so much for joining us.

Up next, Canada at war: a warning on the greatest threat to our security.

Mercedes Stephenson: Welcome back. 2020 has been a remarkable year for global events, unfolding at breakneck speed, from the targeted killing of Iran’s General Soleimani and the tragic shoot down of a plane filled with Canadians, to fears of a global pandemic.

Joining me now is Fred Kagan of the American Enterprise Institute. TThank you for joining us, Fred.

Frederick Kagan, American Enterprise Institute Critical Threats Expert: It’s great to be with you.

Mercedes Stephenson: You know we’ve been talking about a lot of global issues: Russia, Iran, China, all in the headlines, people looking at COVID-19 right now. You’re an expert in critical threats. What do you believe the single biggest global threat is right now that keeps you awake at night?

Frederick Kagan, American Enterprise Institute Critical Threats Expert: The single biggest global threat is the erosion and possible collapse of the rules based international order that is being fuelled by a lot of different malign actors, but that poses incredible danger to countries like the United States and Canada that benefit from that order more than any others.

Mercedes Stephenson: You were just here in Ottawa late last week. We shared a stage together and we were talking about Russia. And during that, you said that essentially we are at war as the West, including Canada with Russia, whether we know it or not. I think that’s a statement that would surprise a lot of our viewers at home. So what do you mean by we’re at war with Russia?

Frederick Kagan, American Enterprise Institute Critical Threats Expert: The Russians are pursuing a set of deliberate operations in Ukraine, throughout Europe, in the Middle East, in North Africa and elsewhere, to advance Putin’s desires, Putin’s goals, which are antithetical to our security requirements. And he’s using military force to do that, he’s using diplomatic force, and financial pressure and other things. And we are not really recognizing how cohesive is his plan, how cohesive are these operations and how they are actually all moving toward a single objective. And we tend to be a bit too focused, in my opinion, on the risk of conventional conflict with Russia and how we need to prepare for war with Russia. And we do, but we are not really seeing that he’s actually achieving his objectives without having to use conventional warfare in the current environment.

Mercedes Stephenson: So, how is that threat manifesting then? Is it in terms of fake news? Is it information operations? Is it a tax on elections? How is this sort of existential war playing out?

Frederick Kagan, American Enterprise Institute Critical Threats Expert: Well, it’s all of those things, but it is also military operations. He invaded Georgia in 2008. He invaded and ceased and annexed Crimea in 2014. He invaded Donbass in eastern Ukraine in 2014. He has put forces in Syria. He’s not got forces in Libya. So there’s a military component of this, which is significant, but then of course, it’s also those military undertakings are primarily aiming to support a general information operation that is designed to distract the West, disrupt the West, disrupt our democracies, persuade us that we’re wrong, that he’s right and just get us fighting amongst ourselves so that he can achieve his objectives without us resisting them.

Mercedes Stephenson: So if you were able to sit down at a table with Canadian Prime Minister Justin Trudeau and give him advice on how Canada should respond and what our role should be in all of this, what would you say to him?

Frederick Kagan, American Enterprise Institute Critical Threats Expert: I think Canada can play a really important role. This is not right now a conflict in which you can only play if you’ve got big conventional forces. There’s a place for that. There are places where that’s important. But this is a conflict where soft power really does matter. It matters to Putin how his information operations are perceived. It matters to him how the legality of his undertakings is perceived. And these are things that Canada can challenge as well or better than the United States or other countries. There’s a big diplomatic effort here: calling things out, calling the Russians out. Not giving in to their narratives. As an example, if I may, in Ukraine, the Russians are simultaneously a belligerent. They are fighting on the ground and they are posing as a mediator as well in the Minsk talks, in the Minsk Agreement and the Normandy Format talks. We should not be allowing them to get away with that. That’s something that Canada can help with because that’s about Canada saying hey, you Russia, you can’t both be a belligerent and a mediator. So either stop fighting or get out of this mediator role. And that would be very valuable coming from Canada.

Mercedes Stephenson: We don’t have much time left, but I want to ask you about Iran because it’s something that you’ve also written about extensively in the wake of the targeted killing of General Soleimani of, of course, what happened after that, to the Canadians who were innocent on a plane shot down by the Iranians. That’s all kind of gone quiet in the wake of COVID-19, but there are still many Canadian families who are hurting. What do you think Canada should be doing in terms of navigating that relationship with Iran?

Frederick Kagan, American Enterprise Institute Critical Threats Expert: Look, I think Canada and the rest of the West need to understand that Iran is a threat to them. It is a threat to the West in general. It is a proliferation threat. Both of nuclear proliferation, but also of terrorism, which it has conducted globally and attempting to disrupt and achieve hegemony in the Middle East, which is not in Canada’s interest or anyone else’s. So, we all need to craft together, a way of keeping sustainable pressure on the Iranian regime, in order to prevent it from pursuing its objectives and force it further and further down the road, where it has to make a choice about whether it’s going to keep being an oppressive regime seeking regional hegemony or whether it is going to choose another path. And Canada needs to be involved in that discussion, and we need to find a way to reform a consensus policy that works for us and works for Canada and works for Europe.

Mercedes Stephenson: Fred, thank you so much for joining us.

Frederick Kagan, American Enterprise Institute Critical Threats Expert: Pleasure to be with you.

Mercedes Stephenson: Coming up, he failed twice to win a seat in the House of Commons for the Conservatives, but now he wants to be the party’s leader: A conversation with Rudy Husny.

Mercedes Stephenson: Welcome back. The race is heating up for who will be the next leader of the Conservative Party, with a surprise endorsement for Erin O’Toole from Jason Kenney late last week. O’Toole and Peter MacKay are the two frontrunners battling it out, but only one of the eight candidates vying for victory in the race is from Quebec and says he is the only fully bilingual candidate.

Joining me now is Conservative leadership candidate Rudy Husny. Welcome to the show.

Rudy Husny, Conservative Leadership Candidate: Thank you very much.

Mercedes Stephenson: I don’t want to start this off on a negative note, but you’ve run twice.

Rudy Husny, Conservative Leadership Candidate: Yes, against whom?

Mercedes Stephenson: In general elections, against Tom Mulcair. Let’s be fair.

Rudy Husny, Conservative Leadership Candidate: Yes.

Mercedes Stephenson: You didn’t win either time against Tom Mulcair. But you’re also polling at about 1 per cent support and a lot of people are saying who is this guy and why is he running? Because he can’t really think he has a chance of winning this contest, much less a federal election.

Rudy Husny, Conservative Leadership Candidate: Look, as you said, I’ve been in the party for more than 12 years. I’ve run twice because I wanted to make sure that we had a strong Conservative candidate from Quebec and in Montreal. And I was actually able to debate Thomas Mulcair in both French and English during those elections and that’s why I’m running, because I do believe that we need a generational change in our party, but we also need to make sure there’s a strong bilingual candidate from Quebec that can speak to all Canadians. And that’s what I want to bring in this race. But most importantly, I want to bring a positive Conservative vision in this race because I do believe that we are not talking to Canadians and bringing the ideas that Canadians are expecting, especially when it comes to make their life easier.

Mercedes Stephenson: So what are some of your ideas? What’s your vision for Canada?

Rudy Husny, Conservative Leadership Candidate: My vision for Canada is a government that works for you. Look, we are not doing all the improvements that we need in terms of e-government, the way the delivery of service is. We’re not talking about innovation. We are not talking about digital identity. We are also not talking about things that they are worried about like cyber security. Look, I come from Quebec. We had a very large identity theft. We have to take action on it. Look, as you know, also, we have Phoenix. We still have the Government of Canada still cannot pay its employees. How can it service properly, Canadians? If you call right now, CRA, Canadian Revenue Agency, there’s a 75 per cent chance they will give you the wrong information. The Government of Canada should work for you and make your life easier and not the other way around. So, those are kind of the vision and the positive things that I want to bring in this campaign, to make sure Canadians get behind us in the next election.

Mercedes Stephenson: What about a pipeline? You’re from Quebec. A lot of Quebecers have been hard set against it. You say you could make a pipeline happen from Alberta to Quebec. How do you do that?

Rudy Husny, Conservative Leadership Candidate: Because I believe that as a Quebecer, I can reach out directly to Quebecers by saying we need to have a fact base conversation about a pipeline. You know, some people are saying I’m for LNG and I’m not for oil. At the end of the day, it’s all energy. And if you are for LNG, which it’s a nice acronym, you should also be able to be behind a pipeline because we are facing shortages of propane in Quebec, many times, two times in the last six months. But also, at the end of the day, we need to make sure that we have Canadian resources. Yes, we need transition, and I’m 100 per cent for transition, and I’ve been on the record saying that, but at the same time, until Quebecers and Canadians still put gas in their car, I want it to be Canadian energy. And I’ve just come back—I’ve done two trips to Alberta already and I’ve obviously been very public about the fact that I’m going to champion our natural resources sector because we need that and we need to have a conversation.

Mercedes Stephenson: Now, you were in Alberta and the Alberta Premier Jason Kenney late last week basically came out and wrote a very strong endorsement of Erin O’Toole. Not subtle at all shots across the board at Peter MacKay. Have you thought about which of the two frontrunners you would back?

Rudy Husny, Conservative Leadership Candidate: I’m sure that if you would have asked Jason Kenney, who is the bilingual candidate and he would have based this endorsement, he would have endorsed me. But obviously it’s a larger race.

Mercedes Stephenson: He didn’t get that message in time?

Rudy Husny, Conservative Leadership Candidate: It’s a larger race. But again, I was very well received in Alberta and people—

Mercedes Stephenson: But who would you back between Peter MacKay and Erin O’Toole?

Rudy Husny, Conservative Leadership Candidate: For the moment, I am running in this race. I want to get, obviously to the 3,000 signatures and to respect the requirement. I’m all the way in. I invite Canadians to go visit my website, learn more about me, to make sure that there’s a strong Quebec voice in this race.

Mercedes Stephenson: We just have a few moments left, but does that make you the Quebec king maker? Is that your role in this?

Rudy Husny, Conservative Leadership Candidate: Look, at the end of the day, it will be the members to decide. But I’m running a full campaign. I’m going to Saskatchewan next week. I’ve travelled to Atlantic Canada already and will be in the GTA. And what I want is that members have told us, told me especially; let’s have a candidate that can really focus on bringing ideas. And as I said, also, I will not attack—

Mercedes Stephenson: And those aren’t socially Conservative ideas because you’ve said you’ll march in a Gay Pride Parade, no problem with same-sex marriage. You will not allow MPs to bring forward independent members bills on abortion.

Rudy Husny, Conservative Leadership Candidate: I’ve said that it’s not the priority, but most importantly, people have told us, give us ideas that we can get behind. Stop attacking Justin Trudeau. This is not what we want. Let’s say what we want to do for Canadians.

Mercedes Stephenson: We have to wrap it there, we’re out of time. But thank you so much for joining us.

Rudy Husny, Conservative Leadership Candidate: Thank you very much, Mercedes.

Mercedes Stephenson: That’s all the time we have for today. Thanks for joining us. For The West Block, I’m Mercedes Stephenson. Have a great week.