Trudeau's former finance minister Bill Morneau said the feds "probably" splurged too much during the COVID-19 pandemic. He admitted the consequence of printing hundreds of billions is a potential recession.
Morneau told CTV News Chief Political Correspondent Vassy Kapelos that, while Canada "did a good job" of aiding its citizens during economically turbulent times, in hindsight, he said, "was there too much? Probably."
The Trudeau Liberals printed close to $211 billion in COVID-19 stimulus, including $100.7 billion through the Canada Emergency Wage Subsidy (CEWS) for 460,000 businesses employing 5.3 million Canadians, and the Employment Insurance benefits, like the Canada Emergency Response Benefit (CERB) that delivered $74.8 billion to 8.5 million Canadians.
Morneau left Trudeau's cabinet unceremoniously over a difference of opinion with gradually weaning Canadians off COVID-19 aid. He described the situation as "tough" and said he hopes his former government colleagues are "very cautious ... given the economic environment we're facing is challenging."
But, overall, he defended the Trudeau Liberal's economic approach.
"I think I need to be clear, the response to COVID-19 — the initial response — I think, was the right response," said Morneau. He cited the Canada Child Benefit and the expanded Canada Pension Plan as examples of what went right. However, the former finance minister admitted a nagging inability to attract investment through the Canada Infrastructure Bank didn't go "as well as we [would] have [liked]."
Morneau is not the first prominent economic voice to admit the feds spent too much on COVID-19 aid. In September, Bank of Canada deputy governor Paul Beaudry voiced that the feds and central banks drove higher inflation, which created the affordability crisis.
Morneau countered that the Central Bank's "only appropriate response" is to raise interest rates to account for the pandemic spending. "Inflation is hugely problematic for people to deal with," he said. "And so, when you raise interest rates, inevitably, there's less investment. So I do worry about the potential for a recession in 2023."
"I hope that if we have one, it will be a shallow recession, and one that we would be able to come out of," continued Morneau, who stressed fiscal prudence moving forward as "doubly important."
"We need to ensure that we're not adding to the challenge with government actions," he said.
Reminiscing on his time in government, Morneau said the Trudeau Liberals should "focus on things that are going to make a big difference," rather than react to everything that arises daily. "As someone who came from business, it's not a new challenge."
Kapelos transitioned her questioning to whether Morneau thinks Trudeau is an effective manager of the economy. She had to ask him twice for a direct answer.
Initially, Morneau commented that the federal government is "rightly focused" on economic concerns to prepare better long-term plans with their provincial counterparts and the private sector. When it came to economic growth, he said, "everyone can do better."
"Look, we could have done better while I was there. I think that the government can do better now," continued Morneau. "And, being an effective manager means focusing on a few critically important things and doing them daily."
The former finance minister then pivoted to his views on growing the economy. He added that long-term solutions must address the "healthcare crisis" and the "energy transition."