OTTAWA & MONTREAL — Michael Sabia is swapping federal fiscal policymaking for provincial power-making, with the current deputy finance minister set to be appointed Hydro-Québec’s new CEO. Here’s what you need to know.

The news: Last night, La Presse and other Francophone media outlets broke the story that Sabia had agreed to take the reins of the utility after the March federal budget. 

The impact (in Ottawa): In his second go-round in the nation’s capital, Sabia worked to convince the kinds of corporations and institutional investors he led between his stints in government to invest more in innovation and policy-aligned projects. 

In late 2020, the former longtime CEO of the Caisse de dépôt et placement du Québec (CDPQ) was one half of a new duo picked to frame the Liberal government’s fiscal approach coming out of the COVID-19 pandemic. As deputy to Finance Minister Chrystia Freeland, he was the department’s most senior bureaucrat. 

In Ottawa, Sabia and Freeland delivered three budgets. 

The first, in 2021, pledged billions to reinforce key pillars of the Liberal government’s innovation agenda. It renewed a suite of programs under the auspices of Innovation, Science and Economic Canada (ISED) designed to foster AI, R&D and venture capital.

The third, in 2023, offered tens of billions in tax credits for clean energy and manufacturing. It is Ottawa’s bid to ensure Canada secures some of the money flooding into the global net-zero transition, in the face of a U.S. incentive package that one senior government official described as “something of a gravitational black hole for international capital.” 

But it’s the impact of Sabia’s second budget, the one in 2022, that the innovation economy may ultimately feel most. It allocated $15 billion to establish a Canada Growth Fund, which would put up public money to attract institutional investors to green megaprojects, as well as $1 billion for a new agency to help improve commercialization outcomes.

The deputy leaves his mark: While both new programs cross departmental mandates, Finance Canada and Sabia assumed an active role in shaping them. 

Sabia had first-hand experience with the model that the growth fund was meant to follow. Before taking the No. 2 job at Finance Canada, he’d spent eight months as chair of the Canada Infrastructure Bank. The agency was created at the recommendation of an advisory group of which he’d been part, and designed to attract private capital to big builds. Before Sabia became chair, the most notable institutional investor involved in a bank-backed project—a too-rare case, critics argued—was CDPQ, a partner in Montreal’s Réseau express métropolitain light-rail network. The pension fund’s CEO at the time: a certain Michael Sabia.

Ottawa ultimately opted to outsource operation of the growth fund to the Public Sector Pension Plan Investment Board, a Crown corporation that manages bureaucrats’ retirement savings. 

Meanwhile, Sabia participated in consultations with industry executives on the agency—now dubbed the Canada Innovation Corporation (CIC)—and in February Ottawa laid out its blueprint for the organization, putting it under the oversight of ISED but reserving a role for the finance department. 

Sabia’s exit comes just as the CIC is supposed to get going. A multinational recruitment firm retained by Ottawa is currently fielding applications for a board chair and CEO. Both postings call for candidates with experience running an organization of 400-plus workers and $250 million or more in revenue, as well as “navigating complex stakeholder environments” and with public-sector entities, government bodies and regulation. Someone with that CV is currently departing Ottawa.

Ottawa to Montreal: Worries that Sabia’s ego and temper wouldn’t suffer Ottawa’s bureaucracy were overblown. “My impression was that he was respected and did a good job,” a senior Liberal source told The Logic. 

Yet his return to Quebec was a bit of déja vu. In addition to his time at CDPQ, Sabia served as CEO of Montreal-based BCE from 2002 to 2008. Though he speaks fluent French, his federalist bona fides were apparently too much for some nationalists, who marked his arrival at the Caisse by loudly (and literally) calling for his head. Sabia subsequently steered the Caisse through the biggest financial crisis in its history. Yet his Ontario lineage seemingly still haunts him in Quebec nationalist circles. “We were expecting something new, someone who can manage the economy as well as the environment, someone who is a Québec nationalist, and, on the resume of Mr. Sabia, we don’t see that,” said Parti Québécois MNA Pascal Bérubé, who referred to the new Hydro-Québec CEO as an “Ontarian” during a press conference Wednesday.

Hydro-Québec: Quebec Premier François Legault telegraphed his priorities for the public electricity utility in January when he said the next CEO needs to be in “development mode.” This includes building new dams to fulfill the provincial government’s ambitions, which include turning the province into a crucial cog in the EV production cycle, supporting the production of carbon-neutral (though energy-intensive) aluminum and otherwise making Quebec  “the green battery of northeastern America.”

Notably, Hydro-Québec is able to avail itself of programs and initiatives designed or advanced by Sabia during his time at the finance department, including a bevy of green-energy tax credits and some of the $10 billion or so earmarked for clean electricity grid builds from the infrastructure bank. It also means Sabia has to contend with Innovation Minister Pierre Fitzgibbon, so-called “super minister” who is no shrinking violet himself, and who counts energy as part of his portfolio.