Ottawa - Joe Oliver, a veteran banker and former energy minister who championed the controversial Keystone XL pipeline, was named Canada's new finance minister on Wednesday, signalling a stay-the-course approach to fiscal and economic policy.
“I just named Joe Oliver Canada's new finance minister,” Conservative Prime Minister Stephen Harper wrote on his official Twitter feed. “He will continue to strengthen the economy and balance the budget by 2015.”
Oliver takes over after Finance Minister Jim Flaherty announced his resignation from the Conservative cabinet on Tuesday after eight years in the job. Flaherty was the third longest-serving finance minister in Canadian history and had vowed not to step down until he was certain the federal budget deficit was eliminated.
Montreal-born Oliver is a graduate of the Harvard School of Business and has extensive experience in the investment banking industry, working at Merrill Lynch earlier in his career and as executive director of the Ontario Securities Commission. He later became chief executive officer of the Investment Dealers Association of Canada (IDA).
At 73, he is one of the oldest cabinet ministers and he has leap-frogged over some younger stars in key portfolios even though he was first elected to office less than three years ago.
As the minister responsible for natural resources since May 2011, Oliver has been cabinet's biggest advocate of TransCanada’s controversial proposal to build the Keystone XL pipeline to take Alberta oil sands crude to the US Gulf Coast.
He has clashed with environmentalists, at one point blasting those opposed to Enbridge’s proposed Northern Gateway pipeline in Western Canada as foreign-funded “radicals”.
Harper appointed Greg Rickford, a 46-year-old lawyer, to replace Oliver as natural resources minister with responsibility for the Keystone file. Rickford had been junior minister for science and technology and also responsible for so-called Ring of Fire mining projects in northern Ontario.
Rickford has worked in aboriginal communities, referred to in Canada as First Nations, and was parliamentary secretary to the Indian and northern development minister from 2011 to 2013. Harper may see him as an effective interlocutor with native groups concerned about resource and pipeline projects on their land.
Markets took the appointments in stride. The Canadian dollar weakened in early trade, but that was largely due to comments made by the central bank chief on Tuesday.
“The Harper government has a clear agenda as set out in the last budget, so the change in leadership is unlikely to lead to any abrupt changes in policy,” said Craig Alexander, chief economist at Toronto-Dominion Bank.
Tom Caldwell, who heads wealth manager Caldwell Securities and has known Oliver for more than 40 years, said Oliver brings much stronger financial expertise to the job than did Flaherty, whose background was in law.
He said that when Oliver was head of the IDA, a body that oversees investment dealers and trading activity in debt and equity markets, he was adept at balancing the often competing interests of large banks and small firms.
“I can think of no better training for Ottawa than the IDA of those days,” said Caldwell, who likened the role to that of heading the United Nations.
“At least in the UN you have people feigning diplomatic behaviour. None of that veneer existed at the IDA.”
But knowledge of finance and economics is not enough, said Thomas Mulcair, leader of the opposition New Democratic Party. Mulcair said Oliver “made stuff up” on climate change and was out of touch with Canadians on issues such as health care, housing and transit.
“I honestly don't see how they can name this guy to that job, unless the only purpose is to have the ideal yes man,” Mulcair told Reuters.
“This is the guy who's going to represent us on the world stage? He doesn't understand social issues, he doesn't understand environmental issues, he tries to pretend they don't exist.”
Oliver, who had heart bypass surgery about a year ago, is married with two sons.
He inherits a federal budget that Flaherty made sure would return to surplus in 2015. Ottawa plunged into deficit as it fought the effects of the global recession in 2008 after 11 straight years of surplus.
Other parts of his job won't be as easy: he must try to figure out how to get the sluggish economy and jobs market growing faster and how to avoid an ugly end to the country's long post-financial-crisis housing boom.
Canada recovered much more quickly from the financial crisis than did the United States and Europe, and none of the country's big banks failed. But economic growth has largely disappointed in the past year, and the pace of job creation has stalled.
Manufacturers in Central Canada have struggled, while the country's natural resources sector has benefited from relatively high commodity prices.
Fears of a housing bubble have been calmed somewhat by reports showing the market has cooled after Flaherty tightened mortgage rules four times. But the central bank still sees the housing market and the record-high household debt associated with it as a risk to financial stability.
The Conservatives pledged in 2011 to offer tax cuts once they had a budget surplus, allowing couples with children to split their incomes to reduce their tax burden.
Flaherty openly questioned the benefit of that proposal before he left his job and there is likely to be more debate about whether the government should use its surplus to pay down debt, cut taxes or undertake other initiatives.
“Over the next few years there is a fiscal dividend on the order of about C$45 billion ($40 billion),” said Craig Wright, chief economist at Royal Bank of Canada.
“As we move forward in this era of fiscal dividends, there will be a number of trial balloons sent up and some will survive and some won't,” he added.
Another area of unfinished business left by Flaherty is his push for is the creation of a national capital markets regulator to replace the current system of individual regulators in each province.
Flaherty and two provinces produced a plan last September to create a new national watchdog and Oliver's background could help give that project impetus, former colleagues said. - Reuters