As part of its Leadership Series, CGE held a special post-election panel on Federal Government Transition in a Time of Uncertainty: What does this mean for Canada’s public service? This was held on May 6th, at the Telfer School’s Executive Campus, University of Ottawa. Dr. Lori Turnbull, an editor at CGE Magazine, moderated a panel of three former senior federal public servants on this topic. Here is an edited version of that rich and deep conversation, covering everything from Prime Minister Carney’s governance style, to finding efficiencies in the public service, to Cabinet government.
Lori Turnbull
Thank you so much for coming.
We’re going to switch a bit to talking about the public service. What does what does, the election mean for the public service? What does it mean, to be in a time of transition, also in a time of a lot of uncertainty? And so I think it’s really interesting that we’re having this conversation at the same time as the Prime Minister is getting ready to meet Donald Trump.
I’m going to introduce you to our panelists who you know already. To my immediate right is Graham Flack. Obviously Graham is a former deputy minister of all kinds of things and fellow Nova Scotian. And, one of the smartest people I’ve ever met.
To his right is Marta Morgan.
Marta is a senior advisor at McMillan Vantage, and a former foreign affairs deputy minister and another one of the smartest people I’ve ever met. So you can see a panel theme here.
And finally, Kevin Page, who is, the founder of the Institute for Fiscal Studies and Democracy at the University of Ottawa and you guessed it, one of the smartest people I’ve ever met.
I’m going to ask the first. I’m going to ask the questions to everybody, but I’m going to, start with Graham on this one. So Prime Minister Carney wins a minority government. He is the incumbent in the sense that he was chosen as Liberal leader on March 9th, sworn in as prime minister, I think it was March 14th.
Came back with a cabinet that was kind of looking like Trudeau’s cabinet. And then its prime minister for nine days, does a few things, has meetings internationally, talks to the premiers and then goes to election. So one of his campaign pitches was look at what I did in nine days. Now give me a full mandate.
The public service is not used to him yet. He’s an incumbent, but not really because he wasn’t really there long enough to be able to give a sense of what governance under a Carney regime is going to be like. Can you give a sense of what’s the what is the mood? If you were there, how would you be feeling? What is the reaction to this? What is the sense of the climate around transition? What is this feeling like for the public service?
Graham Flack
So full disclosure, Mark recruited me to the Department of Finance in 2006 to do the international job. I had a young family, so I was worried about the travel. Mark promised me. It was a benign global economic environment, and it would be fine.
So he denies he ever said that, but so there’s a part of the public service, particularly at the Department of Finance, that knows Mark from the three years he was at finance, a slightly larger part that knows him from the time at the bank.
But most of the public service doesn’t, doesn’t know him.
And he’s going to be a very different PM, than the previous Prime Minister.
I’m not sure what the mood is, but I think people should expect, a different way of governing, and a different level of focus.
There’s going to be differences and there’s actually a lot of uncertainty on how he’s going to govern and, in what ways he’s going to be different.
So there’s so three things I’d watch for this. First is the speech from the throne.
Are you going to have a return to a kind of Stephen Harper focus on a few priorities, as predominant priorities that we’re going to really channel all our energies into. Or are you going to see a continuation of the 768 mandate commitments?
Because the platform is pretty expansive. So that’s going to be the first key signal. Are you going to see him really tighten things up in terms of prioritization and focus or is there going to be a continuation of everything is a priority.
The second thing I’d watch for is how he governs. Are you going to see a return to traditional Westminster cabinet governments, where ministers are the ones who make decisions?
Because when it comes to growth in the public service, the only thing that’s grown faster. and it’s grown significantly faster than the public service, is the size of political staff.
So, are you going to see, as under Jean Chretien, a significant reduction in the size of political staff? Will we see a reduction in the size of the Prime Minister’s Office and a return to ministers really driving things, or are you going to see a continuation of centralization? I
think there are real questions on that, and it’s going to be challenging for them, because in a crisis context, you do have to centralize, but what’s the governing DNA going to be?
And then the policy issue I’d watch for is the pipelines issue. If you asked the energy sector, the reason that tidewater for oil and natural gas is largely uneconomic is because of the regulatory uncertainty and environment, and the effective cap on emissions. Given it’s Canada’s number one export and the most predominant source of potential, export revenues, are you going to see a significant shift in those policies?
And the subtle version of this question would be to say, well, just let the market decide and the market will decide then not to do it. Or are you actually seeing a shift where, we’re going to double down on energy, remove the cap on emissions, at least phase of the exports, and change the fundamental structure of C 69 to facilitate it, which would be the most important thing we could do for economic development in the short medium term.
Marta Morgan
So how is the public service reacting right now? I would say energized and terrified at the same time.
You know Prime Minister Carney said during the election campaign that this was the most consequential election of our lifetime. So he’s coming in with the view that this is the most consequential transition of our lifetime.
He started off his first press conference after election, saying, build Canada build.
And I think that the message that he has sent to Canadians is that he wants to move fast and he wants to move, think, you know, and as many of you know, in the public service, sometimes that’s challenging to deliver on the speed, you know, and the ambition but that’s clearly where he is.
It’s going to be a big agenda.
There is an existential threat to Canada coming from Donald Trump and his tariff policies and his trade policies. It’s galvanizing the whole government the geopolitical which is back and, and, the economic challenges, the potential for an impending recession is very preoccupying at the Department of Finance. And there are knock-on social implications.
The issues that are really preoccupying Canadians continue to be housing cost of living. And if you layer on that, the potential of a recession, higher unemployment, high youth, youth unemployment, I think that it’s recognized within the public service and being really communicated by Prime Minister Carney that it really is an existential moment for Canada.
And that means that everybody has to be thinking big and has to be prepared to move fast. I don’t know Prime Minister Carney; I haven’t worked with him before. But, my sense is that he’s going to be willing to break some glasses to get things done. And the public service is going to have to kind of rise up to that, to rise up to that challenge.
Kevin Page
It’s getting hard to add to this!
I would say Mr. Carney is fairly well known, that he’s been this international figure for a few decades, certainly in his role when he started at Bank of Canada, I think he just he excelled really in terms of in the international financial community.
I overlapped with him. I was at the Privy Council office when he was the associate deputy minister of finance. So I got to see him with that transition with Prime Minister Harper and, you know, being inside the room with the man a few times, a number of times with the Clerk’s office in particular. Very thoughtful, very respectful.
I think he understands the public service in a way that maybe even some prime ministers that have been around for a long time. I worked for Prime Minister Chretien. Obviously, he’d been around for an eternity and understood public service in in the government. But he wasn’t a bureaucrat. Mr. Carney has bureaucratic experience.
If you wanted to learn about the man and this like there’s infinite number of podcasts like he was doing, even you doing international podcasts, even during the campaign. And he’s, he’s written a lot and, you know, his book Value and Values. I would recommend even reading that book.
Personally, I think he’s the right man for the time, if the extent that is possible to have somebody that is like ready, because the stakes are so high that Marta talked about. I’m glad we got this particular person at the helm I think for the public service, that’s a good thing.
The stakes are so high for the public service right now, as Marta and Graham said. We are in historic times. I’m trying I was trying to think if we ever had a government that takes power in the middle of a crisis. The 2008 financial crisis was probably started in the fall and we had an election then, but the government didn’t necessarily see it as a crisis. And then they had to respond very quickly to it. I think in 2021, we were coming out of COVID, we didn’t see the Ukraine crisis. Now it seems like we’re in the middle of this crisis and literally playing out today in real time with the visit of our prime minister in the White House.
I think we’re fortunate to have Prime Minister Carney and I think this would be good for the public service. It’s never been a more important time in my lifetime for the public service.
Lori Turnbull
Thank you very much. Before we totally landed in this crisis, one of the issues that had been percolating over the last couple of years, even, was the concept of review of the public service itself. Before all this Trump craziness happened, we seemed to be on a trajectory to a large Conservative majority with a much-reduced Liberal government, possibly a bloc Quebec official opposition and now, obviously that’s not what we got. We’re in a completely different world with a different set of priorities.
I wonder what you think is going to happen to the public service question. Is there going to be a public service reform exercise? Is there going to be a meaningful spending review exercise? And I might I point to some of the comments that all three of you have made around the ambition of Mr. Carney’s agenda. This is going to be hugely expensive. How are we going to pay for more defence spending, for example?
I’ll start maybe with Marta on this one. Do you have a sense of, of like, is public service reform going to fall off the table for right now? Is he going to do this in a nimble way? What do you think?
Marta Morgan
That’s a hard question to answer. He has said publicly that he’s going to cap the size of the public service. But that hasn’t really been a major focus of his campaign promises. He’s also made commitments about how he’s going to manage fiscally.
He’s obviously coming in as a person who with his international economic experience, has an understanding that Canada’s strong fiscal management over many decades is, and has been, a real asset to us in times of crisis. It has been used to our benefit in times of crisis, which we’re in now.
On the one hand, he’s going to be balancing some very major campaign commitments that will be expansive, creating new institutions like a new defense procurement agency, a new major projects management office. So he’s got some areas where he’s obviously looking to expand the government, but then he’s also wanting to be fiscally responsible.
I think experience would suggest that what happens with the public service, if there’s any kind of program review or that sort of thing, it takes a little bit of time to get those things up and running. They don’t tend to be top of mind for the electorate. I think he will look at what’s happened over the last ten years and say there’s scope to make government more efficient. There’s scope to use new technology like AI to make some of our operations more efficient. There’s scope to streamline and rationalize programing in different areas whether it’s in innovation or sustainable development or decarbonization.
In some ways a public service should welcome that because if it’s done in a very rational way, not just about cutting but about reallocating and allowing the public service to identify areas where they can be more efficient divert resources accordingly. It can actually be a really constructive activity. And I think he’s more likely to approach it in that direction,as opposed to the, south of the border model.
Lori Turnbull
I was going to ask that about how the whole DOGE approach could affect the conversations here. Kevin, please.
Kevin Page
I think the Liberal platform is very different than the Conservative platform. In terms of numbers, the deficits are bigger, quite a bit bigger in the Liberal platform than they were, even if you’ve kind of fixed the numbers that were in the Conservative platform. So government is going to get bigger actually.
And if you look at where the money is going, a lot of that money, like is over a four-year cycle. It’s about $130 billion more over the next four years. And about half of that in accrual terms is operating and the other half is capital. But if you look at the cash amount, it’s closer to $200 billion over four years. This is an historic amount of money going to build the country. And so I think that our capacity as a public service will be directed to build, to get this investment going.
I was reading a book on the weekend called Abundance by Ezra Klein and Derek Thompson. Even in the US, they’re having their own debates about the size of government versus the capacity of government. It’s painful to watch what is going on in the United States. I’d be surprised if this Liberal government is going to do any version of that.
There are cuts in the Liberal platform. It amounts to a little over $20 billion over four years. If you look at the numbers, our government is relative to the size of GDP in nominal terms, a lot bigger than it was a decade ago. It’s going to get bigger. And in terms of the dollar amount, a lot of that’s going to go to capital, some of it on the national defence side.
But a lot of it is building infrastructure. It’s building homes, trade infrastructure. And we need it. There’s a risk around doing that. We should all be reading some literature out there in terms of how to do big projects. But he wants to build the Prime Minister in a big way.
Graham Flack
So let me drill down though, on the spending review. And I’m going to take a different approach on this because the platform proposes $13 billion ongoing in, quote, efficiencies from the public service. I just want to put that in context because I did the last spending review in the government.
If you take a government budget of $450 billion, and you take out all the direct transfers to individuals, direct transfers to provinces. You take out capital budgets because, as Kevin can tell you, they’re all under underwater anyway. You have to take out addressed debt transfers.If you take out all the things off the top that they are politically unwilling to do, guess how much of the $450 billion is left? The base is now $93 billion. Half of that is grants and contributions, never politically popular cuts. So let’s say they take the grants and contributions off. Now, you’re down to $45 billion.
A fifth of that is Department of Defence. I assume in a world where we’re growing the Department of Defence, you can’t cut the Department of Defence. Now, assuming you keep the normal political logic of we’re not going to do anything that’s going to create any noise, you’re talking about taking $13 billion ongoing out of a base of less than $40 billion to find inefficiencies. The only way you’re going to get those kinds of cuts is if you do a serious spending review, where you look at what you’re going to stop doing. You’re not going to get it from efficiencies as keen as I am to do so. Efficiencies from AI are very promising. But you’re talking about hundreds of millions in the medium term, not billions in savings.
To put the $13.5 billion in context, the most significant cuts exercise we’d had was $5.2 billion. But our analysis when we looked at draft ten years later was almost $2 billion of that had to be given back because of operating pressures that got created as a result. There were cuts that were not sustainable. So in comparison to drop and the Tories wanted to cut the $13 billion would represent 3 to 4 times the cuts we did on a much larger government spend. But that is not going to happen unless you do a serious deep spending review exercise. These are not the kind of things we saw under previous majority governments. Hiring freezes and caps does not create long term savings. It creates cuts in areas you didn’t want to have the cuts.
If you’re actually going to achieve $13 billion in efficiencies by year three, the deficit level would remain at this north of $60 billion range. Basically the declining deficit is exactly a function of the efficiencies they’ve proposed to get out of the public service. The only way that’s going to happen is if you do a Chretien-Martin style serious deep spending review that does not talk about efficiencies, but does a deep dive in what is core to government, what can we stop doing and what are we going to cut.
And just couple observations on that. First, that is an all-consuming major exercise. That’s going to be challenging for public servants to simultaneously be doing a deep spending review at the same time as their driving forward on many priority friends that, that Martin and Kevin have talked about.
Secondly, it’s going to take political courage to go beyond saying, can we just get this out of, quote, “efficiencies”? You’re not going to get $13 billion out of efficiencies. You’re going to have to go into a deep dive and do that. And that’s going to be a big impact for the public service. So I think if they follow through on this they’re going to have to do it seriously. And it’s going to be the most significant exercise of public service has seen since the Martin-Chretien cuts.
Kevin Page
It’s not going to be easy. There are different types of reviews. One type is like austerity which we kind of lived through in the 1990s with Chretien-Martin when we ran deficits and debt in the early 1990s and we had some bond rating pressures.
Today is not austerity. This is government getting actually bigger. This is more about reallocation efficiency and effectiveness. It is nauseating when political leaders put out campaign numbers and they said, well, well, you know, we need to plug a hole. So this is what we’ll get from efficiencies. And they don’t do the arithmetic that, you know, that Graham just did.
If Mr. Carney is going to be successful in terms of balancing his operating budget in four years by 2029, he’s going to need some positive economic news that doesn’t seem to be in the short term. He will need to find some of these savings as well. And whether they get all these savings again, as an outside observer, I have a bit of different numbers than Graham with respect to the size of the operating budget and something we call transfers.
There are other transfers that departments run, not just transfers to people like old age security and child care or transfers to governments like the Canada Health Transfer and Equalization. A lot of my time in the last few years was spent looking at First Nations history, where we really increased the transfers to deal with First Nations related issues, particularly children. There’s going to be a hard look at those transfers. But the operating budget of the government of Canada is closer to $90 or $100 billion, not $60 billion. The wage bill alone is $60 billion and when we add in the national defence component, it will get bigger.
So this is about reallocation. And will they get all the efficiencies? Probably not. Would I bet that Mr. Carney’s going to actually balance the operating budget in four years? Probably not. Would it be like, terrible news if we didn’t achieve that? Probably not.
Lori Turnbull: One of the messages that that is coming through here is the role of political will. At this moment, the Prime Minister has an enormous amount of political capital because he’s new and people really want him to do well. I think he’s got political capital. Does he have political will?
The Chretien-Martin model was a very specific one where Chretien had not the same kind of mandate that Carney has, but he had a big majority. He knew he had to keep the left side of the Liberal Party happy, while he used Martin to do the cuts and deal with the right side of the Liberal Party.
How is Carney going to do this like cabinet wise? What do you see to be his approach to being prime minister and organizing the team around him?
Kevin Page
Unfortunately, it kind of feels like we’re also dealing with a unity crisis, which is like the first time around. It was a really tough time for Canada. We’re dealing with a kind of a public debt crisis, but we’re in, which resulted in a lot of steep cuts to transfers to health.
And we were dealing with a Quebec referendum, which we pretty much we came very close to losing. I got very nauseated listening to the premier of Alberta kind of throwing out this question of another referendum. Unity is job number one for the Prime Minister at this time.
Prime Minister Mulroney’s majority government did big things. They had very strong cabinet ministers. So, I think we’re going to need all the talents of this cabinet. And I would bet that Carney manages more by the cabinet. There was a sense, like Prime Minister Trudeau, when he came in in 2015, talked about government really by cabinet. But I don’t know that it really happened that way. I think at first we’ll start to see a lot of these very strong cabinet ministers playing a lead role. It’s going to be tough work.
Marta Morgan
Yeah. So, I mean, this is kind of really the moment where a lot of decisions are being made. And I think, you know, who’s in the cabinet and what does a cabinet look like. It won’t be as big as the recent, cabinets that you’ve seen by Prime Minister Trudeau. And I think that’s going to be a function of wanting to convey sort of a seriousness of purpose and focus.
They do have some very experienced cabinet hands. They’ve also got some very experienced individuals who have who are going to be new to Parliament. And I think it’s really with a view to what are really the top line priorities, he knows he’s going to have to move and it’s really going to be it’s going to be Trump. So it’s trade, finance, and foreign affairs, I’d say for the first time in a long time it’s also defence. Because defense really has to deliver on increasing its budget quickly. And it’s not it’s not an easy task for them to do that.
And then I think the other thing to look for is kind of what governance does. A big change from Prime Minister Harper to Prime Minister Trudeau was there was no kind of priorities and planning. Harper had a small committee of ministers. It was his core cabinet, called Priorities and Planning.
This is where they discussed the really tough issues. This is where they set the set, the strategy for the government. Prime Minister Trudeau didn’t. it was a lot more diffuse in terms of accountabilities because of that. It’ll be interesting to see if Prime Minister Carney kind of has a small kind of core group that he’s going to turn to that are clearly his senior ministers that he’ll be relying on to get him through the next couple of years.
Graham Flack
Because I saw Mark operate with Minister Flaherty and Prime Minister Harper in a crisis, I am pretty confident he will understand not wasting the crisis and the potential that the window in which you can exercise the leverage you have. And Canada had considerable leverage internationally during the financial crisis that that that doesn’t endure forever.
So, he will be very, very focused on the need to act quickly not just because of the external factors, but because the conditions will be there. domestically to enable him to do the things that were probably impossible before. I think he will be very focused on need for speed, to not waste the opportunity and drive super quickly.
That part I’m pretty confident on. On how he will organize, you never know until a prime minister is in office and how they’re going to do it. I had 31 ministers over my career, over half as a deputy. What I observed over my career is a significant decline in the authority ministers were able to exercise. And I think that has been highly damaging to effective government in Canada.
And so in my wish list the prime minister would return to a more traditional Westminster style government and the attributes of that and some have highlighted them already. It would be a smaller cabinet. Not a minister of everything, but ministers who have wide ambit of authority and make judgments within their authorities.
As Marta said, you need a decision-making body in cabinet. I’m still a fan of the of the Mulroney model and a P and P and Operations committees as the two inner cabinets that can drive things collectively; not through political staffers in the Prime Minister’s office, but through elected ministers who drive the collective decisions that can’t be taken by ministers. But with that would be a reduction in both the size and authority of political staffers, particularly the Prime Minister’s office. And I think that is going to be critical to him executing the broader parts of his agenda.
If you try in any organization, government, private sector, if you try to centralize the running of a wide range of priorities through some central function, you will fail. You just don’t have the decision making bandwidth in the in the center of government. You don’t have the operational expertise in the center to understand it like it is. There is no company that successful in the long term in the world that centralizes all their decision making at the top of the organization, so this is as true of governments as it is there.
So that would be my wish list.
Lori Turnbull
Thank you very much. Our theme is federal government transition in a time of uncertainty. So I just want to paint a little bit of a picture of the, the ways in which things are uncertain or the causes of uncertainty. Obviously, we have the situation with Trump and tariffs, which is uncertain because this is a total reset of our relationship with the United States. We don’t know what Trump means and what he doesn’t.
There’s economic uncertainty that goes with that and is exacerbating a national unity crisis. This is the second part of the uncertainty in that you really have a pretty strong urge on the part of some provincial premiers to put their hands up and say it is not ‘Canada first’, it’s our province first which leads to a kind of zero-sum situation for dealing with Trump.
What is Carney going to concede? What is he not going to concede? How will that affect different provinces and how Canadians care or are concerned about the quality of life in other provinces with which they may not have a connection?
Carney has a minority government, not a majority, so it does mean that he has to push this through a House that he doesn’t totally control. Then he goes to the Senate and it’s another story where the Senators are more independent now. You’re not exactly sure what’s going to happen in the Senate. They may seek to amend legislation rather than simply pass it. Then the bill has to go back to the House. Even if you get the bill passed, eventually, it’s a much longer and less predictable process.
There are now questions about how to engage with the Carney government. How to get our issues on the agenda. How does that how is that whole process around advocacy?
What kind of public service do we need to provide support during that? If you were to say, here are the skills we need, here are the things we need to focus on from the public service side, what would be the ideal configuration?
Graham Flack
So I think there’s never been a higher level of importance that the public service needs to accord than now to speaking truth to power. Because I think the situation’s pretty dire. The solutions that have broad party support are going to fall short of what’s necessary to begin to really seriously address the challenge that’s in front of us. We all know the productivity challenge and Canada’s economic growth challenge has been a challenge throughout our whole careers in public service. But, the per capita GDP performance of Canada over the last decade has been truly catastrophic. And that was before Trump. We are among the most trade-dependent democracies in the world. What’s our number one source of exports? Fossil fuel exports. What’s our number two source of revenues from exports? Autos.
I was a deputy of intergovernmental affairs that tried and failed to move interprovincial trade barriers. I think there’s a window now to drive that. We should absolutely do so, But I think the upside economic gains from internal trade barriers are not as significant as some are hoping for. On the international trade diversification front, we have among the most diverse set of trade agreements in the world in terms of access to other markets.
Export Development Canada is world class, one of the best at the world of what it does. Our Trade Commissioner Services is one of the best in the world. And yet we’ve hardly seen the neighbor needle move at all in trade diversification. So the idea that we’d take or 10 or 20 points of trade that currently go to the U.S, and easily move them to other markets, I think is completely unrealistic in the near term.
So, I think that truth to power is about some of the hard choices that are going to be need, need to be made.
The most Trump-proof exports we have are our natural resource exports because they’re global commodities with a global price. They include agriculture, but they certainly include fossil fuels. Australia and the United States had zero net LNG exports ten years ago. Now, Australia is the number two LNG exporter in the world, and the United States is the number one LNG exporter in the world; $20 billion in revenues to the Australian Treasury every two year from LNG. Canada has virtually limitless LNG potential. We have one facility, one LNG facility that hasn’t yet exported, it’s only about to begin exports.
And those are both, I would argue, a climate sensitive solution in terms of getting countries like India off of coal. LNG consumption is going to happen regardless of whether it’s produced in Canada or elsewhere. Canada’s also one of the lowest cost LNG in terms of emissions. But if you’re going to massively ramp up things like natural gas exports, which I think we need to do, you cannot do that by just saying we’ll rely on markets to navigate through the existing environmental uncertainty regimes.We have a law, C-69. You cannot do it with a cap on emissions that counts all the exports the same way as accounts of production.
So that is a hard, hard choice. Are you going to on energy deliberately take advantage of this or not? And we saw in the polling, climate change, even among Liberal voters, was at 2% in terms of what they were driving in terms of their vote.
This is a super hard choice for the Prime Minister himself, because I know how deeply he believes in climate change issues and the need to address them and use market mechanisms. But for Canada right now, my question would be, what are even the medium-term sources of economic growth that we’re going to drive? In terms of carrots for the U.S., we can offer things like natural resources and critical minerals. So are we willing to suspend the current operating rules on environmental assessments to radically accelerate the production of projects of critical importance?
Historically, this is doable. The major natural gas grid that comes to Ontario from Alberta was built in two years in the 1960s. This is not technologically impossible. We have created a regulatory environment where the uncertainty is so high and the build costs are so high that no one will go in, and that’s what the energy sector is saying.
This is an example of where there needs to be real truth to power. Not around the things that sound good that we need to do, like, internal trade barriers and trade diversification. But the hard things where you’re going to actually have to face trade-offs where not everything’s possible.
Marta Morgan
I don’t have much to add to that because I think that’s, that’s really at the heart of it. Here’s two things. One is, for the public service, it’s time to bring to the fore the other things that matter, the things that haven’t played a strong role in the campaign platform.
What does the innovation economy look like for Canada? The early wins and the low hanging fruit is still in the natural resources sector. But, what are the areas where maybe they haven’t received the attention? Are there kind of changes to the way Canada needs to kind of do business in terms of our own policy orthodoxy? We’ve seen an evolution on how we think about investment, about procurement, about where pension funds should be investing. Are there ways in which we need to adjust the way that we’ve seen our, our own economic interest now that we are being overtly threatened by the United States?
The second thing is just building on what Graham said, it’s a solutions-oriented approach to procurement to regulatory streamlining, etc. It’s the public service that really understands these processes. The processes that we have in place are so slow, so cumbersome – need I say so bureaucratic – how can we in this moment of crisis find ways to streamline, to prepare, to take more risk? The political side is not going to come up with those answers. They’re going to say, we need to do this but it’s going to be the public service that’s going to have to tell them how.
Kevin Page
As Lori outlined, I think the three different dimensions are going to bring an enormous amount of uncertainty to our lives and our ability to deal with policy challenges. I think it’s quite possible that we’ll also have to deal with some version of a significant economic recession. And just to add that to the mix but I just I cannot see the path that President Trump is on with respect to this global trade war ending well. As Mr. Carney wrote in his book, Value and Values, probably high on his list in terms of making decisions would be the unity of the country.
There’ll be a lot of trade-offs that will have to be made that may surprise people. You could start to see that he was making them even during the campaign. I think that there even in the platform, things like, you know, carbon taxes, which I’m a proponent, I think is the right solution. It’s just not going to happen in this environment.
Graham talked about energy but I think unity has to be above all. As Nancy Pelosi once said, you got to find advantage in any situation and no matter how dark it is. So, strengthen the country, whether it’s to interprovincial trade barriers, but it’s kind of how we need do it. I was heartened to see this Team Canada approach meeting with the premiers. There was a lot of that in the late 1980s, early 1990s. And we of sort of gotten away from that. And with First Nations people rebuilding that kind of governance in a way that just brings the country together. I think we need that, and I think the public service will be part of that.
I think Mr. Carney’s kind of already told people where he thinks the extra growth is going to come from. Like if you listen to his podcast, his book, he says three things. He thinks biotechnology is going to be a big growth potential. And he thinks it will be carbon and it’ll be energy. It’ll be conventional energy but it energy with less carbon in it.
I think really keeping the country strong, rebuilding that kind of governance, whether it’s through intervention or trade barriers, building like international trade, but always doing it as a country, bringing us together, I think we’re going to see that.
Graham Flack
Can I just come in the unity point? Because I’m actually a lot more optimistic on this one.
I think the table is set because of the external threat for a broadly supported national unity like we’ve never seen before. The potential outliers are Alberta and Saskatchewan, but they are potential outliers. If a government were to take a decision that it was going to continue to shut down export potential for those assets I think Mark is a unique figure in that his credibility is so strong in the climate change issues that he is ‘Nixon going to China’ moment in terms of I agree, we have to get our GHG track down.
But these emissions are different because they’re displacing other emissions globally. And we are going to facilitate this export of the resource. I think he can do that in a way that’s harder for any other leader of any party to do or easier than any other leader of any party, because he has credibility on his climate change commitment, but also realism about the economic situation.
If you navigate through that, I think you’re in as positive a national unity environment as we’ve had in a long while. If that isn’t successfully navigated that where I think the brake raises. If you add on to that a deal on interprovincial trade barriers, which will be less than we all hope, but more than we could have accomplished in the past.
I think you have a very positive energy environment, but I think he’s uniquely positioned to drive this. So to me, the execution on this is going to be key.
Audience Question:
You’ve all spoken about the need for speed and results, and you’ve spoken a lot about the need for the Parliament sitting government, but for the public service and public servants to meet that need. What are we going to require? What are the top three things that we are going to require in order to actually meet that coming need?
Graham Flack
We should first take comfort in the fact that we can do it. In every crisis we do the impossible, whether it’s COVID or the global financial crisis. All these things that are impossible become possible in a crisis. The public service will have to be able to pivot if it’s in crisis mode and do the impossible things by moving fast, suspending the rules, and taking risks that otherwise wouldn’t risk do.
The bigger challenge in the expectation of democratic governments around the world is that the cadence of public servants is going to increase much faster than it is normally in peacetime. The public service is going to have to be able to operate at a much faster pace and to me that means making innovation not a thing we do at the side of our desk, but core to what we do.
Taking on risk, not treating risk like a four-letter word or seeking out risk-free innovation, which is kind of like calorie-free diets. It doesn’t exist. But driving innovation into the core of what we do means lightening the burden internally on roles and all the rest. So I’m less worried about the crisis response. We have models for that, but it’s more how we make the attributes of how we operate in a crisis more permanent.
Marta Morgan
I’d say two things that are a little bit more internal about how the public service organizes itself. And one I would say is to stay connected to the outside world. I think that sometimes in the public service, you know, we can tend to get a little bit insular. We don’t talk to people outside enough. We don’t make sure that our staff so talking to people, we don’t send them out to conferences, we don’t write. So having a focus on that because there’s a lot of ideas being generated out there that need to come into the public service. There’s a lot of kind of worthy kind of critique that needs to be heard.
And then I think the second thing would be thinking about what kind of governance the public service needs in place to move quickly. A lot of times that governance is not vertical. We operate in such a vertical kind of institutional structure. But oftentimes when you got to move fast, what you really need to do is have a much more nimble horizontal kind of governance model for the key issues that you’re trying to drive. So, you know, if you’re in leadership positions thinking about, okay, how do I put that structure in place while still maintaining the accountability? There’s lots of good models for that, we need to be thinking about this.
Kevin Page
I would say like building on Marta’s point about reaching out would be helpful like, if I was still back at the Privy Council Office, I would I want to spend time thinking about how to implement specifically the government’s agenda. Take, for example, an enormous amount of capital investment, a big build up in the military. Who has done that successfully? What tools did they need? Just take that one example and like I think also like the Prime minister, Prime Minister Carney spent a lot of time in in the UK in his role as a central banker. He watched the UK and how they were dealing with productivity challenges. They were discussing it openly. They changed the way they do their budgeting. They separated operating and capital as part of their platform. They launched commissions on infrastructure and also conducted big reviews of past projects. So I think we could learn a lot in that area.
I think we’re there’s a lot of whining going on globally, even from some premiers, I feel like I should drop some F-bombs right now because I grew up in Thunder Bay! Things are not all that bad. You can even look at our productivity numbers. People talk about a lost decade. What lost decade? Honestly, we put in major new social programs like pharmacare, dental care, child care. These programs will boost participation rates, keep people healthier in the future, reducing income inequalities, wealth inequality. Those are always investments where you’re on the front end of making investment.
There’s always a bit of pain. Ten years from now, people are going to look back and say, well, just this may look like a great change with Paul Martin in the 1990s. How did they solve the fiscal problem? How was how come Prime Minister Maroney was so smart when he put in the GST and free trade? No. And when they left, there was a lot of pain.
And then things got a little bit better than growth. Can we could we participate in the AI future, the biotechnology future, you know, building a new energy corridor infrastructure, new conventional and non-conventional, you know, energy I think the absolutely we can do it.
But I think yeah, studying like a basically Marta’s point where other people have had to do rapid build-ups in the military. How did they do that? How did they do procurement? Look at infrastructure. We can bring those models in on all different kinds of sectors and start mapping out what is possible in terms of actually spending this money wisely.
Audience Question:
I want to follow up on centralization versus horizontal coordination and, looking at what other countries are doing via open sources, to get information out there so we can better understand the trade-offs. What are countries that really effectively steer their economies doing? What gears do they use to they connect labor, government, industry?
Where do we come together to have those kinds of conversations that allow us to choose outcomes? The UK does it a little bit now, trying to rebuild this capacity from a mission-oriented perspective. I’m curious how you see those trade-offs for Canada.
Marta Morgan
One of my big takeaways from my experience in government is that nothing important gets done without a team. If we think if we think back to the amazing response of the public service during COVID, It took everybody. It was all hands-on deck and it required coordination. It required a common sense of purpose and vision, and then it required all of the departments that had to contribute to making things happen, to lean into that vision.
To me, it’s not so much centralization, but it’s establishing that common sense of vision, purpose and objectives. And it’s having all that at the table, not in a consultative kind of way, but in a decision making and action oriented way, the key players that have to actually be on board and be acting to make it happen. Its creating those kinds of institutional arrangements, whether it’s governance or information platforms or whether it’s kind of external advisor committees that that help bring in good advice from the private sector and labor.
All of those things really make a big difference when you’re trying to move fast. So sometimes it seems almost a little bit slow at the beginning, because you got to set up the right mechanisms for the right projects or the right priorities. But once you have that, that’s what allows you to actually move faster.
Kevin Page
I like that metaphor about gears and the engineering kind of perspective of getting things connected. It doesn’t necessarily mean you need some kind of Trumpian style autocratic decision making process, which I don’t think is going to be very successful.
Building and, moving quickly, but, also, moving together. When I grew up in the Department of Finance in the 80s, it would seem we every month we were meeting with the provinces on some tax matter or some economic outlook item or some pre-budget related thing. There was a constant dialogue that everybody was being brought along together explaining, this is why this province got this amount and Equalization. We’re going to do not just with provinces, but with First Nations peoples, with the private sector, because for a lot of this investment Prime Minister Carney talked about, the catalyst going to come from the private sector. Connecting the dots, if we could do something like that, I think that would be unifying.
Graham Flack
I’ve spent a lot of time working with UK colleagues, particularly on innovation issues. And I would say they are the world leaders in branding. So, ‘mission government’ is the latest version of deliverology. And I can go through each one and on each subsequent visit you find the previous ones discarded, which was also fantastic, but is now no longer fantastic.
So I don’t think we need a branding exercise around this. The core issue in our Westminster system is vertical accountabilities. You have an increasing number of big horizontal issues on which you have to find ways to coordinate, so you can label it and mission or whatever the heck else you want, enable it. It’s in large, complex organizations. How do you enable governance on horizontal issues? And we’ve been trying different ways to do it for years. And it’s hard. And some branding exercise isn’t going to solve it, nor is there some magic new way to do it.
You have to be selective on the issues you do this on. If you try to centralize this approach for all issues, you have a collapse of the system because it just overwhelms itself. You have to be strategic and pick those issues. The horizontality that Marta was describing about in the best circumstances is a horizontality that’s happening at every level across government. But in most of government, issues are not cutting across different departments, and this kind of centralization approach is highly damaging to the effective deliverance of government.
So as we’ve got these systems to try to focus on these select horizontal issues where we need to drive things, I think you also need to decentralize back to ministers. The Westminster system places the core decision making power and issues within departments so they can run those more efficiently in terms of the ability of the government to come together and steer the economy.
And that’s why I wanted to go last, because Kevin and I have had lots of good debates over this. I’m skeptical about the degree to which countries you’d be pointing to that have governments running the economy, driving the economy, steering it, pulling the sectors together to figure out exactly how it’s done. We will see if the new version of industrial strategy is any more effective or ineffective than the previous iterations that came before it. Core here is the government getting the fundamentals of regulatory and other regimes right. But I’m a skeptic of the kind of we’re going to put all stakeholders in Canada in a room together and collectively decide how we’re going to, quote, ‘steer the economy’.
Coming back to Kevin’s point, I think the fundamental issue is we need to catalyze private sector activity in Canada. The private sector has an even weaker performance in Canada in terms of investments in innovation, generating growth generating activities. But that’s a difficult thing to do by government fiat.
Lori Turnbull
We are just about out of time. I am going to thank everybody so much for coming for both sessions. But I just wanted to say thank you so much to our three panelists. This has been awesome.
