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Special Report

Cabinet shuffle: The moves that matter to Canadian business and the innovation economy

OTTAWA — Prime Minister Justin Trudeau revamped his cabinet Friday, naming new ministers to jobs they might not keep for more than a few weeks.

Special Report

Cabinet shuffle: The moves that matter to Canadian business and the innovation economy

Veteran MP but rookie minister McGuinty takes up border duties, Anand tackles internal trade

By David Reevely and Laura Osman
Employment Minister Steven Mackinnon speaks to reporters following a cabinet shuffle at Rideau Hall in Ottawa, on Friday, Dec. 20, 2024. Photo: The Canadian Press/Spencer Colby
Dec 20, 2024
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OTTAWA — Prime Minister Justin Trudeau revamped his cabinet Friday, naming new ministers to jobs they might not keep for more than a few weeks.

Just before the Rideau Hall ceremony, NDP Leader Jagmeet Singh announced his party will vote to bring the government down as soon as it can. If all three major opposition parties unite, that would trigger an election.

Talking Points

  • Justin Trudeau’s immediate future as prime minister is in question and the NDP has turned on him, but Donald Trump is still going to be president next month and the federal government needs ministers
  • Trump’s demands that Canada stop drugs and migrants from crossing the U.S. border land with new minister David McGuinty, while Anita Anand takes up a new assignment as minister responsible for knocking down internal trade barriers

The House of Commons just broke for Christmas, it isn’t due to sit again until Jan. 27 and the NDP’s chance wouldn’t come that day. Besides that, the prime minister could put off a reckoning even longer by proroguing Parliament. Current polls suggest an election would devastate the Liberals and give the Conservatives a huge majority in the Commons.

In the meantime, the federal government needs ministers, and the Liberal cabinet has been understrength for months. Some ministers have stayed on as caretakers after announcing they planned to leave politics before long. Others, such as Anita Anand, have been doing double duty to cover for former colleagues who resigned.

The situation became untenable Monday after finance minister Chrystia Freeland quit and a hasty Rideau Hall ceremony made Dominic LeBlanc the minister of finance, public safety and intergovernmental affairs.

In other words, a single minister responsible for the economy and federal spending, the RCMP, Canadian Security Intelligence Service, prisons and border security (and, therefore, the incoming Trump administration’s public beefs with Canada), and relations with the provinces.

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A shuffle that had been just around the corner for months became urgent, even with Trudeau’s future as prime minister uncertain. Trudeau himself participated in the private swearing-in but left without answering any questions from reporters.

Newly named minister Rachel Bendayan acknowledged she isn’t sure he’ll stick around: “I think the prime minister was quite clear that he has a choice that he’s reflecting on,” she said.

“I understand there’s going to be a short runway. I’m not blind to that,” said Nate Erskine-Smith, the new housing and infrastructure minister.

Several front-benchers with important economic responsibilities stayed in place—including Industry Minister François-Philippe Champagne, Trade Minister Mary Ng and Immigration Minister Marc Miller—but the shuffle affected several others.

Here are the moves that matter most for Canadian business and the innovation economy:

The minister

David McGuinty, public safety (with new associate minister Rachel Bendayan)

Last seen

Chairing the National Security and Intelligence Committee of Parliamentarians since its formation in 2017. The cross-partisan group has filed some damning reports on the government’s national security capabilities, including on its handling of foreign interference and the state of the RCMP. McGuinty was first elected in 2004, as the Chrétien/Martin-era Liberals were collapsing, after being CEO of the National Round Table on the Environment and the Economy. He’s never before had a sniff of cabinet responsibility, even as a parliamentary secretary. McGuinty is a brother of former Ontario premier Dalton McGuinty.

Bendayan gets her first cabinet post, too, divided between Official Languages and backing up McGuinty. The Montreal MP, a trade lawyer before politics, was first elected in 2019, winning what had been NDP leader Tom Mulcair’s seat. She was a parliamentary secretary to Freeland.

Waiting on the desk

If Trump follows through on his tariff threat, it will be up to LeBlanc to deal with the economic consequences and impose any retaliatory tariffs. LeBlanc’s successor at Public Safety gets the responsibility for trying to head them off.

“I am convinced that, working together with my colleagues here and beyond, we’re going to do this for Canadians. This is just too important not to get right together,” McGuinty said. Canada and the U.S. have a long history of cooperating, but the situation demands all hands on deck, he said.

Trump’s stated reason for tariffing Canadian goods is the small but real flow of illegal drugs and migrants across the U.S. border; LeBlanc leaves behind a new plan to stem that traffic, one he’s already been selling to the Trump camp.

McGuinty gets to put the plan into action by staffing up law-enforcement agencies, building new links within Canada and with U.S. authorities, and trying to pass legislation that would (for instance) give border guards powers to inspect goods on their way out of Canada, not just on their way in.

Public Safety is the lead department trying to improve the nation’s economic security, and in charge of the bill aimed at protecting critical infrastructure from cyberattacks. After well over two years, Bill C-26 is one housekeeping amendment away from becoming law, if the House of Commons should resume regular business. If it passes, the department will have to produce regulations for applying the law.

The bill would also introduce the very long-awaited ban on equipment from Huawei (and ZTE) in next-generation telecom networks. Even without a formal ban, Canadian telcos have avoided using such gear rather than be ordered to remove it later.

Public Safety is also the department most directly responsible for responding to foreign interference in Canadian politics, with an inquiry report from Justice Marie-Josée Hogue due by the end of January.

Bendayan began her first public appearance as associate minister by condemning attacks on Jewish institutions in Toronto and Montreal and saying she intends to convene a national meeting on the problem of hate crime. She will also likely address border issues in her home province of Quebec, which Premier François Legault this week emphasized is a major route for irregular migration into the United States.

The minister

Anita Anand, transport and internal trade

Last seen

Juggling portfolios as transport minister and president of the Treasury Board, which runs the federal government’s back-office functions. Elected in 2019, Anand earned her stripes as the minister in charge of procuring critical equipment and supplies and COVID-19 vaccines. Since then, she’s been one of Trudeau’s fix-it ministers, sent to Defence to address sexual misconduct in the Canadian Forces and then to Treasury Board to rein in spending. While there, she also championed digitalization of government services (despite a shortage of talent), cutting red tape and a strategy for the government’s own use of artificial intelligence.

Trudeau asked Anand to work on productivity and internal trade (the latter along with LeBlanc) at the end of the summer.

She took over Transport in the fall when ex-minister Pablo Rodriguez resigned to run for the leadership of the Quebec Liberal Party, and now makes the shift to that portfolio complete.

Waiting on the desk

Putting “internal trade” into a minister’s title is partly a marketing move (it’s previously been part of LeBlanc’s duties as intergovernmental affairs minister), but it does spotlight an important economic issue.

Canadian provinces can’t bar each other’s goods or put tariffs on them, but even small differences in regulations can make it hard for one company to sell the exact same product from one province to the next. Many provinces’ refusal to recognize each other’s professional credentials makes labour mobility difficult, too.

At an event The Logic co-hosted earlier this year, former Bank of Canada deputy governor Carolyn Wilkins said that these restrictions cost Canada billions of dollars a year. In 2019, the International Monetary Fund estimated that clearing them out entirely could be worth four percentage points to the country’s gross domestic product. Compare that to the Canadian Chamber of Commerce’s estimate that Trump’s tariff plan, if fully applied, would mean a 2.6-point hit.

After being sworn in, Anand said she sees improving internal trade as a response to the challenge Trump poses for Canada.

“I believe that that is the way we will maintain and grow our domestic economy and our relationship with the United States,” she said. “We need a Team Canada approach not only vis-à-vis the United States, but in our own country.”

The minister

Ginette Petitpas Taylor, Treasury Board

Last seen

As minister of veterans affairs, and covering as minister of employment, workforce development and official languages since Randy Boissonnault left cabinet a month ago. The New Brunswick MP has had an up-and-down-and-up career in this Liberal government, serving a stint as health minister when the Liberals had a majority, being bumped down to deputy whip after the 2019 election and then climbing back to a senior post.

Waiting on the desk

Anita Anand’s unfinished business. Refocusing government spending—cutting here to spend more there—is a years-long project that will inform LeBlanc’s first budget, if he gets to present one. The government is still short thousands of digital specialists, and the AI strategy Anand began is not finished.

Besides that, the federal government is struggling as a post-pandemic employer, including with physical workplace arrangements for a workforce with stricter in-office requirements, monitoring compliance and dealing with requests for disability accommodations.

The minister

Nate Erskine-Smith, housing and infrastructure

Last seen

Looking for other work. Erskine-Smith ran for the Ontario Liberal leadership, coming second, and announced early this year he wouldn’t run for re-election as an MP. He’s been seen as something of a maverick, if not exactly a rebel, in the Liberal caucus.

Speaking to reporters, Erskine-Smith said a cabinet post is an opportunity to make a difference, which changed his calculation about the sacrifices and benefits of his political life. He now intends to run again to try to protect what the government has done, he said.

Waiting on the desk

The Toronto MP takes up housing duties from Sean Fraser, another relatively young MP, whose announcement on Monday that he would leave federal politics for family reasons was blown away by Freeland’s bombshell. 

The Logic called Fraser a key person to watch in the capital in 2024, citing his insistence that municipal governments make housing easier to build if they wanted shares of federal money.

Rent and mortgage payments don’t top Canadians current financial anxieties—grocery bills do—but they’re high on the collective worry list. Housing costs interfere with people’s decisions on where to study and work, whether to start families, when to retire. They can be problems for businesses trying to hire.

“If you want to talk about productivity in this country, and we should, people are leaving my city, my province and our country because they can’t afford to live here,” Erskine-Smith said.

At the same time, with so much national wealth tied up in real estate, a price plunge that would benefit buyers could be devastating for current owners, especially those who took on big mortgages.

The federal government doesn’t control key local policies like zoning and transportation, but it can throw money at provincial and municipal governments that do what it wants. A report last week from the Parliamentary Budget Office found that recent federal activism on housing has made a difference, but not an enormous one.

The PBO projected that 2.6 million households will be in “housing need” by 2027. That’s 926,000 more than when the Liberals launched a national housing strategy in 2017. Without 10 years of federal work (and average spending of $6.1 billion a year), the PBO estimated, the number would have been 78,000 higher.

Not to be forgotten

Labour Minister Steven MacKinnon, who has forced ends to work stoppages at railways, ports and Canada Post, kept that portfolio and added responsibilities for employment and workforce development—other parts of the same sprawling department called Employment and Social Development Canada. He’ll have a hand in the Liberals’ attempt to rein in the sprawling number of temporary workers in Canada, alongside Immigration Minister Marc Miller, who retains his role. 

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Defence Minister Bill Blair and Procurement Minister Jean-Yves Duclos didn’t move. To the extent that meeting Canada’s defence spending target of two per cent of GDP is an irritant with the United States, dealing with it is their shared responsibility.

Alberta has no cabinet representation. Boissonnault, an Edmonton MP, left in a cloud. Trudeau chose not to put his only other option, Calgary MP George Chahal, into a cabinet post; Chahal has called for a secret ballot review of Trudeau’s leadership. The closest thing Albertans will have to a voice at the table now is cabinet newcomer Terry Duguid, a Winnipeg MP who was sworn in as minister for Prairies Economic Development Canada.

#border #Dominic LeBlanc #Donald Trump #economy #Justin Trudeau #migration #tariffs #trade #United States

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Photo: The Canadian Press/Spencer Colby

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