The investment industry may be excited to have one of their own as federal finance minister, but Joe Oliver won’t have much influence in the post, say experts.
Oliver will “stay the course and do what he’s told,” says Scott Clark, a past deputy minister of finance.
Oliver, 73, has served as executive director of the Ontario Securities Commission. He also led the Investment Dealers Association of Canada (precursor to IIAC and IIROC) and he’s served as chair on the advisory committee of the International Council of Securities Associations.
But his Bay Street chops have “absolutely no benefit whatsoever to being a minister of finance,” Clark says. “The responsibilities of a minister of finance are huge.”
In his new job, Oliver is responsible for tax decisions, federal-provincial issues like pension reform, and international relations. “He’s got no experience in that,” Clark says of the former natural resources minister.
“Over the next year, he’ll be constantly in a state of briefing and trying to understand the issues. It won’t let up—it never does,” he adds.
But Oliver will be a quick study, says Ian Russell, IIAC president and CEO. He and Oliver worked together at IDA for 10 years, while Russell was in charge of industry relations and representation.
“He’s very organized, and he’s a very smart guy,” he adds.
IIAC wants the government to incentivize investment in small publicly traded businesses, and Russell says Oliver could help advance that case. “I’m not going to say he’s going to buy the arguments, but I think he’ll be sensitive to them; he’ll understand them,” he says.
Jeff Kehoe also knows Oliver from the IDA. Kehoe was director of litigation under Oliver for nearly a decade. Oliver “is a strategic thinker,” says Kehoe. “When we got together on important files, he would ask questions, but he always left decisions to the people responsible for them.”
Oliver’s guidance when Kehoe was working on the IDA’s market-timing case was invaluable, he adds.
“Those were difficult issues that affected the securities industry as a whole, and as a sensitive file, it required oversight from the CEO. Joe was very supportive of me, and supportive of going forward with those important cases,” he says.
Will income splitting happen?
When Oliver became minister on Wednesday, Prime Minister Stephen Harper tweeted his new mandate: “continue to strengthen the economy and balance the budget by 2015.”
Under former minister Jim Flaherty, the budget is already on course for a $6.4-billion surplus next year. And the Conservatives’ 2011 campaign promises have already determined much of next year’s pre-election budget.
“That budget, like a lot of them even under minister Flaherty, is going to be written by the prime minister’s office,” says Clark.
Budget planning is year-round in the finance department, he adds, and bureaucrats will be busy this summer preparing proposals for Oliver to take to Cabinet in the fall.
“Whatever happens between now and the budget, it’s all going to be decided by the prime minister. [Oliver] will be told what to do,” he adds.
That goes for the Conservatives’ income-splitting promise, which would let families with children assign up to $50,000 of income to the spouse in a lower tax bracket.
In February, Flaherty questioned whether the pledge would be the best use of a surplus. His remarks caused his colleagues to defend the policy.
The Conservatives have pinned their political fortune on a potential surplus so small, it could easily be a deficit, says Clark. If it does happen, income splitting could eat up to half of it. With another chunk earmarked for debt repayment, there’s little left to make other pre-election promises with.
Oliver told the The Globe and Mail he would take time to study income splitting before deciding its fate, but Clark says the choice has already been made for him. The prime minister wants it, so it will happen.
But Kehoe says Oliver won’t be afraid to weigh in at Cabinet.
“Joe Oliver is someone who will not be afraid to speak up on issues around the Cabinet table, and to the prime minister,” he says. But he adds that Harper is in control of the agenda, and Oliver is a team player.
It’s for that reason that he was likely picked for the job, says Gareth Watson, vice-president of the investment management group at Richardson GMP.
“Being 73, he likely is not going to be a contender for the leadership when Stephen Harper eventually decides to step down,” he notes.
Observers thought the finance post would go to Economic and Social Development Minister Jason Kenney, Foreign Affairs Minister John Baird, Treasury Board Minister Tony Clement or Industry Minister James Moore—who are also considered leadership contenders.
Assigning one of them the post would have given that person a significant visibility and credibility advantage. It could have also implied Harper is biased in favour of a particular successor. Oliver, who became a MP in 2011, has said he would run in the 2015 election, but hasn’t expressed leadership ambitions.
And so he’ll continue to toe the party line, the experts say.
“If people are looking at Joe Oliver and thinking, ‘We really have to understand this man, because we have to understand what type of changes he’s going to bring about to fiscal policy,’ I would say don’t even waste a second thinking about that,” Watson says. “What you have to think about is what the prime minister wants for the next election.”
Read: Flaherty quits