Mark Carney, who has served as the governor of the Bank of Canada and the Bank of England, speaks at the Sustainable Finance conference, on Nov. 28.Adrian Wyld/The Canadian Press
Prime Minister Justin Trudeau has made another attempt to recruit former central banker Mark Carney at a time when tensions with Finance Minister Chrystia Freeland have risen over increased spending on political strategies, three sources say.
In recent weeks, as the government has struggled to overcome a 20-point gap in the polls with the Conservatives, the sources say the former governor of both the banks of Canada and England was again approached to join the government, an offer which he is still considering.
Mr. Trudeau has previously tried to recruit Mr. Carney, including as recently as this past summer, to no avail. But two of the sources say the talks are progressing further this time. One of the sources characterized them as more advanced than in the past several years, while another said Mr. Carney is giving it serious consideration.
Although Mr. Carney was not specifically offered the finance portfolio, two of the sources said the Prime Minister and his inner circle believe it would be the only job he would accept should he decide to join the government. Mr. Carney is considered a potential successor for Mr. Trudeau.
The third source said the talks between Mr. Carney and the Prime Minister’s Office started more broadly but have become more specific in recent days. Still, they cautioned that the timing or specifics of any role has not been agreed upon.
The Globe and Mail is not identifying the sources who were not authorized to discuss the private talks.
Mr. Carney did not respond to a request for comment. The Prime Minister’s media relations director Ann-Clara Vaillancourt said: “I’m not going to engage on speculations.”
In July, Mr. Trudeau acknowledged that he had asked Mr. Carney to join the government after The Globe reported that the Prime Minister’s chief of staff Katie Telford had complained that Ms. Freeland was ineffective in communicating the Liberal’s economic agenda.
At that time, he turned down the offer but, in September, he agreed to head a Liberal Party task force on economic growth, seen by many as a rebuke of Ms. Freeland.
Relations between Ms. Freeland and the Prime Minister’s Office have chilled over increased spending that will make it difficult to meet her promised $40.1-billion deficit target in Monday’s fiscal and economic update. Keeping the deficit at or below that level was one of three self-imposed “fiscal guideposts” that she set for her government in April.
On Tuesday, Ms. Freeland gave the strongest signal yet that the pledge will be missed when the numbers are released. Parliamentary Budget Officer Yves Giroux estimated in October that the final deficit for 2023-2024 would be $46.4-billion while the Bank of Montreal predicted it could hit $55.8-billion.
At a news conference Wednesday after announcing another interest rate cut, Bank of Canada Governor Tiff Macklem told reporters that he was “a fan of fiscal guardrails.” But he added he wants to see what is in the fiscal update before deciding whether this could affect the next bank-rate cut at the end of January.
The Globe, citing 10 sources, reported Tuesday tensions have risen between Ms. Freeland and the PMO about increased spending on political strategies such as the two-month GST holiday on toys, alcohol and food and a promised $250 rebate for working people earning $150,000 or less. The two measures would cost $6.28-billion.
In Tuesday’s Question Period, Mr. Trudeau argued for his government’s spending but did not defend Ms. Freeland. The issue was again seized on by the opposition in Wednesday’s Question Period. Conservative Leader Pierre Poilievre took a jab at the Prime Minister for naming Mr. Carney as a key economic adviser at the expense of his Finance Minister.
“Not even eight months ago, his minister said the deficit would not exceed the $40-billion – the ‘guardrail.’ Then he went and got his banker friend, Carbon Tax Carney, to become his top economic adviser, stripping the power away from his Finance Minister,” Mr. Poilievre said.
“Suddenly, the guardrail was broken. Is he really going to subject his Finance Minister to the humiliation of reading Carney’s fiscal update which busts through the guardrail?”
Mr. Trudeau ignored the question but pointed out that Bank of Canada cut interest rates by half a point, saying that is “terrible news for the Leader of the Opposition but it is great news for Canadians for whom things will become more affordable.”
Mr. Poilievre also pressed the Prime Minister to say why he has forced the Finance Minister to abandon her deficit pledge, accusing Mr. Trudeau of “pushing her through that guardrail and pushing all Canadians off the fiscal cliff.”
Mr. Trudeau replied that Mr. Poilievre likes to “make up little dramas” but the Prime Minister never directly answered repeated questions about the deficit and the rift with his Finance Minister.
Instead, he defended the GST holiday and other government spending initiatives.
“It’s all about giving Canadians a tax break over the next two months that the Conservative Leader voted against. It’s about delivering dental care to 1.2 million Canadians of which three million Canadians are already approved for access to dental care,” he said.
Editor’s note: A previous version of this article incorrectly stated that there is a 20-per-cent gap in the polls between the federal government and the Conservatives. The gap is 20 points. This version has been updated.