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UPDATED: Turnover at Finance Opens Door for a ‘Fundamental Retooling of the Canadian Economy’

The last 24 hours may have opened up an opportunity for the federal government to embrace a green and just recovery as a cornerstone of its COVID-19 recovery strategy, leading climate and energy strategists say, after Deputy Prime Minister Chrystia Freeland replaced Bill Morneau as finance minister and Prime Minister Justin Trudeau prorogued Parliament, with plans for a cabinet retreat in September and a Throne Speech in October.

Morneau quit yesterday during a meeting with Trudeau, after speculation swirled that the two had disagreed on the importance of a green recovery and the level of financial support Ottawa should extend to Canadians in the initial phase of the pandemic. Morneau was also under a cloud after accepting, then repaying, more than C$40,000 in free travel from the scandal-plagued WE Charity.

The former Bay Street human resources executive is also resigning as Member of Parliament for Toronto Centre, CBC reports. Privy Council President Dominic LeBlanc was sworn in Tuesday afternoon to take over at intergovernmental affairs.

Attention now shifts to Freeland, and any shift in priorities that might follow her move to the finance portfolio, after a steady stream of news reports and analysis that identified the two senior ministers and Finance Canada officials as key obstacles to federal investment in a green and just recovery.

Freeland “will have to be open to a clean and just recovery because she is now the Finance Minister for all of Canada, and not just the Minister of Alberta,” Environmental Defence Executive Director Tim Gray told The Energy Mix in an email. “Canada must move in the direction of investing massively in a clean economy or risk being left behind as the EU, likely the United States, and China set the pace.”

The possibility of a policy shift for the Toronto-area MP and former business journalist might be reinforced by recent word of a rift between Trudeau and Morneau on government investment in a green recovery.

“The face value reporting was that there was some level of disagreement on whether to invest in more conventional economic recovery with a focus on resources and oil, which was apparently the view of the finance minister, and the view of many others that we really do need to spend all that we’re going to spend on the transition to a clean economy,” Gray said. “It looks like that view is dominating right now, and that’s a very encouraging sign.”

“It’s no secret that Bill Morneau was no fan of a green and just recovery, and was kind of the Bay Street voice within cabinet,” agreed Greenpeace Canada Senior Energy Strategist Keith Stewart. Now, “I’m hoping the first speech by our next finance minister talks about how climate change action will be at the centre of Canada’s COVID recovery strategy, and will be the guiding principle for infrastructure and policy decisions moving forward.”

Gray called the changeover in cabinet portfolios “our last, best chance” for a green recovery, pointing to the “green strings” the European Union attached to its €1.75-trillion recovery plan and budget in May, and the US$2-trillion climate plan that presumptive Democratic nominee Joe Biden has promised to introduce if he wins the U.S. election this fall.

To meet that standard, Freeland and her officials “need to be looking at every aspect of the economy and how it needs to be transitioned to a clean economy,” Gray said. “These are across-the-economy investment decisions that have to be made—from transportation, to infrastructure, to housing, to procurement. Everything needs to be through the lens of how it supports the transition of the Canadian economy to one that’s clean. So it really should not be seen as some kind of niche argument. It’s about a fundamental retooling of the Canadian economy.”

Freeland’s reputed skepticism about climate change as a vote-determining issue in last fall’s federal election might also bring new focus to an apparently accidental overlap in a national poll in late April. It showed that, by a 23-point margin, Canadians are more likely to support specific green job and recovery measures than they are to back a more general call to address climate change through post-pandemic economic stimulus.

The main survey conducted by Ipsos Canada, part of a wider omnibus poll covering 14 countries, found that 71% of Canadians considered the COVID-19 and climate crises equally important, while 61% agreed pandemic recovery efforts should prioritize climate action. But a separate question commissioned by campaigners at SumOfUs showed 84% public support for a green recovery plan in response to the pandemic.

“Canadians want a clean and just recovery by wide margins, including in Alberta,” Gray said, and “I would imagine almost everyone in Minister Freeland’s constituency expects her to aggressively pursue a clean and just recovery for Canada. They need to make sure she hears from them, and also from the rest of country, because now she is in charge of the economic future of everyone.”

Energy efficiency is one of the key areas where that investment will have to take place, said Efficiency Canada Policy Director Brendan Haley. Earlier this year, Haley wrote that governments will need long-term investments to get a green recovery right—a point Morneau partly echoed during his news conference last night.

“As we move to the next phase of our fight against the pandemic and pave the road towards economic recovery, we must recognize that this process will take many years,” the departing minister said.

Freeland “was previously tasked with ensuring national unity and cohesion, and I think when she looks into it, she’ll realize that proposals for a green recovery are something that every region of Canada will benefit from,” Haley said. “That’s because clean energy opportunities are decentralized and available in all regions, unlike regionally concentrated oil and gas and hydroelectricity resources.”

Energy waste “is everywhere,” he added, and “energy efficiency is a resource capable of creating jobs and helping Canadians throughout the country.” Which means that “unlike uniform climate policies like carbon pricing that have triggered regional tensions, green investment policies can be tailored to particular regional circumstances” in a way that brings the country together and promotes national unity.

Some of the recent reporting on the path to a green recovery has suggested officials see a conflict between green stimulus and federal programs to address the recession’s outsized impact on women’s employment. In May, Efficiency Canada Stakeholder Engagement Director Natalie Irwin pointed to energy efficiency training as a ticket out of job loss for women caught in the COVID-19 “she-cession”.

Haley elaborated on the point last night.

“As we do energy efficiency in new ways in the future, there’s going to have to be really innovative marketing and customer outreach, where skills are transferable for people who might previously have had service sector jobs that no longer exist,” he told The Mix. “And within the traditional trades sector, the work force is aging, the sector will be in need of new workers, and it’s going to have to have much greater gender diversity if it’s going to continue to function. If it’s a challenge to try and move toward a more diverse trades community, there’s no time like the present.”

The wider context, Haley added, is that “a gender-balanced recovery is not about trying to protect people who were in precarious, service-based employment by putting them back into that precarious situation. It’s to provide higher-wage, longer-term, more secure employment, and proper child care and healthy schools are prerequisites to those types of better jobs and better careers”—so the two employment tracks can co-exist in a single recovery strategy.