Theo Argitis: Carney speculation summer mirage for disgruntled corporate Canada

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In the maelstrom of political upheaval that has characterized the past couple of weeks, amid the dozens of stories chronicling Justin Trudeau’s precarious standing, one report must have appeared like an oasis in the desert for Canada’s beleaguered business community.

The Toronto Star’s Althia Raj reported recently that Trudeau has engaged in dialogue with Mark Carney on at least two occasions, discussing the possibility of the former Bank of Canada governor joining the government as finance minister. This move would aim to placate discontented caucus members clamouring for a drastic shakeup and a new policy direction for a Liberal Party seemingly on the brink of a historic electoral defeat, if polls are to be believed.

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Carney, a towering figure in Canadian public policy over the past two decades, has the distinction of having served as governor of both the Bank of Canada and the Bank of England. His name has also circulated as a potential Liberal leadership contender to succeed Trudeau.

The prospect of Carney holding the reins of the nation’s economy likely provided brief solace to the anguished minds of corporate executives across the country facing what they believe is one of the most difficult policy landscapes in decades.

Setting aside the questions of electability and political acumen, corporate Canada likely views Carney as one of the most qualified individuals alive for the finance minister role.

Amid the uncertainty, the notion of Carney stepping in as finance minister must have briefly renewed hope in the business community that a shift in the policy outlook is possible; surpassed only by the prospect of an immediate election to provide more clarity.

Yet, both scenarios may be as insubstantial as a mirage.

Imagine Carney agreeing to take a job that includes kowtowing on economic policy to Trudeau’s aides in the prime minister’s office or the leftist New Democratic Party, which is currently propping up Trudeau’s government. It stretches credulity.

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In reality, a likelier scenario for businesses in coming months is a landscape marked by uncertainty, strife and ongoing policy inconsistency until the next election comes.

Rather than pivoting toward Carney-esque pragmatism, the Trudeau government’s latest manoeuvres have been to double down on policies perceived by the business sector as economically damaging.

With the government in a frantic scramble to salvage its political standing, the question reverberating through boardrooms is: are we the next target?

The disquiet simmering among C-suite executives extends beyond frustration with the Liberals. The Conservatives, too, are perceived as an unknown entity, increasingly positioning themselves as antagonistic to corporate interests. However, they are not the party wielding power at present.

Let’s revisit the expanding roster of business grievances with the current government (in no particular order and by no means exhaustive):

Digital services tax on tech companies: The Liberal government’s new digital services tax risks becoming a significant point of contention with the U.S. government, with American tech giants clamouring for retaliation. Robin Guy of the Canadian Chamber of Commerce starkly warned of its potential repercussions: “It will significantly harm our relationship with the United States.”

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Emissions cap on the oil and gas sector: The Canadian business community fears this move effectively caps energy production, potentially costing the nation’s economy hundreds of billions in lost export revenue and investment.

New capital gains taxes and early adoption of global minimum tax: The capital gains levy is retroactive, leaving investors feeling the government is simply making a play for their money at the expense of investment certainty.  The global minimum tax, which was also just adopted, is being imposed on our companies earlier than in many other jurisdictions, which means Canadian-headquartered multinationals will face a  bigger tax burden than their global competitors.

Anti-scab legislation: Supported by Conservatives, this legislation, which came into effect earlier this year, is anticipated by business groups to lead to longer and more frequent strikes. More broadly, there is a growing concern that the federal government has become excessively deferential to organized labour.

New greenwashing legislation: The Canadian Chamber of Commerce argues this measure will restrict businesses’ ability to “openly contribute to Canada’s climate objectives.”

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Second wave of amendments: The greenwashing measures represent the third change to Canada’s competition legislation since 2022, raising concerns about coherence. The controversial changes include a measure simplifying the competition commissioner’s ability to challenge mergers, a move opposed by some business groups.

To be sure, corporate Canada does support numerous government policies, such as the broadly backed carbon pricing initiative and the tens of billions in subsidies the Trudeau government is offering to incentivize clean energy investments.

While challenges abound, there are also significant reasons for optimism about Canada’s economic future. A growing population, a robust resource sector, and a relatively favourable fiscal outlook compared to many other advanced economies all contribute to a promising landscape. When pressed, executives will acknowledge these advantages.

However, the reservoir of goodwill between the government and corporate Canada has been depleted. Business groups have shifted into resistance mode, and for many in the corporate world, an election cannot come soon enough.

Theo Argitis is managing director at Compass Rose Group and publishes the Means & Ways newsletter, in which this commentary first appeared.

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