Letter from Ottawa: After a winter of shocks, Canada’s Budget is the latest sign of stability

By on 11/04/2022 | Updated on 11/04/2022
A picture of the Canadian parliament buildings from a Hot Air Balloon, Ottawa, Ontario, Canada
The governing Liberal party in Canada has reached an agreement with the smaller New Democratic Party to help keep the government in power until October 2025. By tsaiproject from Canada, used under Creative Commons.

A political agreement that increased the durability of the government and a Budget that that launched a number of policy reviews indicate that the government in Ottawa is trying to think more long term, says Michael Wernick, former clerk of the Privy Council

Canadians are always glad to see the official arrival of spring and the changing of the clock to daylight savings time (although this may the last year for that), and around this time of year we begin to think about summer and better days ahead. This year we were particularly glad to see the end of a tumultuous first quarter, which brought us the Omicron wave in January and its March echo, the occupation of downtown Ottawa and the imposition of national emergency legislation, and war in Ukraine.  Each of these shocks brought fresh challenges and surges of work to our political leaders and the parts of the public service that support them, at a time when the cumulative stresses of the past two years are taking their toll. Commentators have had a field day opining on the gloomy state of things.

Strangely though, we may be entering a period of relative calm and stability where politicians and public servants can advance a broad range of initiatives that blend the new challenges and the ones that were there before.

The key development occurred right the end of March when the governing Liberal party, which does not have a majority of seats in the House of Commons, reached a political agreement with the smaller New Democratic Party that should keep the government in power until October 2025. This is a “game changer” both for partisan politics and for public service leaders. The main opposition party, the Conservatives, now has no realistic chance of making good on bluster and threats to bring down the government and will have no opportunity to put their case to voters for another three years, by which time a lot can happen. Its immediate task is to choose a new leader, having toppled the last one during the trucker protests, and to decide what it is going to offer up as an alternative agenda.

The March 2022 pact has as all of a sudden made multi-year planning and delivery of an ambitious agenda feasible. The specific initiatives at the core of the new political alliance, expansion of our national health system to cover aspects of dental care and pharmaceuticals, will be implemented in phases over several years. The finance minister now talks plausibly about a cycle of four budgets before the next election and she knows voters will be overwhelming influenced by the economic and fiscal outlook in 2025, not today’s numbers. The government was spared a harsh fiscal reckoning for the spending during the pandemic by the remarkable rebound and growth of the economy, which is now ticking along at pre-pandemic rates or better.

As unemployment falls to record lows we are back to discussing what to do about labour shortages, as we were before the pandemic, and debating the changing nature of work and workplaces, which was accelerated by the pandemic experience. The most striking feature of the last few months is the return of inflation and cost of living issues to the top of the political agenda, as it has in many countries. I say return, because we boomers have been there before, but for many Canadians it is new to worry about rising prices and supply chain driven shortages.

Read more: Canadian federal Budget announces strategic policy review amid spending restraint

The deepest worries for many younger families are whether interest rates will balloon their monthly payments for mortgages and credit lines, or whether home ownership is becoming unaffordable as prices soar. It was not surprising that the recent Budget had a clear focus on housing issues, which present a huge political vulnerability. It remains to be seen whether the federal government’s cocktail of demand and supply based measures can do much to remedy the situation given the key role of local governments and the uncertainty about future interest rates, but it had to try.

Across the public service work can now continue with some confidence in the time horizons on the dozens of initiatives laid out in the 2021 election platform and the mandate letters for ministers that followed. The political pact and last week’s Budget only reinforced the government’s focus on climate policy, reconciliation with Indigenous peoples, and a more inclusive approach to “futureproofing” the Canadian economy. The war in Europe will give new impetus to policy work around defence issues and renewed attention to our Arctic, where we are neighbours of Russia. It will rekindle divisive debates about pipelines and exporting natural gas.

Evidence of a longer time horizon is that the Budget launched a number of policy reviews and engagements to be harvested later, including one about cryptocurrency. There will also be a review of the brief use of the emergency legislation in February. A new development is a review of federal spending on two tracks – one is focused on programmes and the other on how government operates. It is too early to know how painful this exercise may turn out to be as details are still sketchy. It may stifle innovation and complicate the drive to greener and more digital government that takes on the lessons of the pandemic, or it may help accelerate positive change. Those of us who take an interest in public sector reform and have lived through many such cost cutting exercises will be attentive. For the current crop of middle managers and much of the workforce it has been a decade since the last serious restraint, it is all new to them, and they will no doubt be a bit anxious. It would be foolish to predict the future with too much confidence after the last year with the virus still out there and war raging. Both can create more turbulence. But perhaps we are now out of the choppiest of waters and better able to chart a course forward while tacking with the winds of crisis. For a weary public service, the challenges and opportunities keep coming.

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About Michael Wernick

Michael Wernick’s distinguished 38-year career as one of the key leaders of Canada’s world-class federal public service culminated in serving from 2016 to 2019 as the 23rd clerk of the Privy Council and secretary to Cabinet. With 28 years as an executive in the federal public service, including 17 years in the community of deputy ministers, and three as clerk, Wernick is one of Canada’s most experienced and influential public sector leaders. He appeared frequently at parliamentary committees, participated in dozens of intergovernmental and international meetings, and spoke at many conferences. Wernick worked closely with three prime ministers and seven ministers and attended close to 300 meetings of Cabinet and its committees. He was the key public servant at the Privy Council Office during three changes of prime minister. In October 2021, UBC Press released Wernick’s book Governing Canada: A Guide to the Tradecraft of Politics and Wernick undertook an extensive series of media interviews, podcasts and webinars to discuss this well-received practical handbook for Canada’s political leaders and those who aspire to understand them. As a senior strategic advisor to MNP Inc and a fellow and adjunct professor of the Carleton University School of Public Policy and Administration, Wernick now provides advisory services and mentorship to emerging leaders and to new generations of students.

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