Canada’s Rising Star Sticks to Her Guns On Stimulus

Times and Routers in London and New York. They decided to give it all up to go back to her home country of Canada and get into politics. That was barely seven years ago, and now she's Finance Minister, one of the favorites to succeed the Prime Minister Justin Trudeau. My interview with Christians going to take up most of the show this week, but if you listen to the end, you'll also get to hear why milk and eggs have both been making news at Bloomberg, So stay tuned for that.

But now here's the Finance Minister of Canada, Deputy Prime Minister, Christoph Freedland, Deputy Prime Minister, thank you very much for being here. Um. I remember when I was at the BBC writing a blog about Canada, about the goody two shoes economy, because they dodged the global financial crisis so effectively, and you had very sensible banking and you hadn't made

lots of mistakes everybody else's pain. When you look at how Canada's responded to the pandemic, and particularly I guess the vaccine rollout, Um, do you regret that Canada hasn't done better and that somehow the US has managed to do something right on vaccines that Canada's got wrong? Um so, looks Stephanie. I would never claim perfection of myself or of any human being, and I think particularly with COVID, where not getting things exactly right has meant people dying.

I hope that every politician everywhere in the world, um, you know, with the possible exception of just into our journey, should look back and should have moments of thinking, wow, I wish we had gotten that a little bit more right. Overall, though, I would say I like the idea of Canada as a goody two shoes country. We sometimes talk about ourselves as being voice scouts or girl guides as the case. Maybe I think that is a good thing in our country.

I would also say where we have done things right, it has been where we have demonstrated social solidarity UM and so it's quite striking for me that Atlantic Canada, which has such strong community ties and a real commitment

to community, has done remarkably well in fighting COVID. You know, Atlantic Canada is basically the New Zealand of North America UM and did that by taking some really tough action, by closing the borders of Atlantic Canada and of provinces in Atlantic Canada to the rest of the country, and by having hard lockdowns early on. And I think why they were able to do that is because of that

strong community spirit. Interestingly, the other parts of Canada that have done really well are the territories, the Northern territories, the UK, in the Northwest territories, in Nunavut UM and

again it was solidarity preparedness to close the borders. And then finally, you know something that maybe isn't noticed outside Canada is Indigenous people in Canada UM, who have historically been really hard hit by public health crisis, showed real leadership, often closing their communities to outsiders, and as a result, there has been a really, really effective response to COVID in indigenous communities. We are now vaccinating at a really

really fast pace UM. In terms of per capita vaccination, it's in the top one or two or three in the G twenty, depending on the day. We always knew it was going to be a challenge, UM because Canada, as a small country fully integrated into the global trading system and into the NAFTA North American economy. UM, we went into this crisis without significant national bio manufacturing capacity. That has made it challenge to be dependent on the

factories of other countries. But by acquiring a lot of vaccines, and by getting into that vaccine acquisition race early, I think we have largely mitigated that. We as a country have decided we need to be in better shape going forward, and so the budget may makes an investment of more than two billion dollars in life sciences and bio manufacturing capacity.

When we met you were you were a journalist. I was thinking about who were the best known journalist politicians or journalists who later became politicians, And you'll be interested to hear the list is Winston Churchill, Boris Johnson, and Mussolini. U does it does that how does that affect the way you do your job? Now? Do you think all that time as a reporter, do you still feel a little bit like a reporter? Yeah, I I feel I'm gonna have to think about that list Stephanie and I'm

gonna left on that and for all listeners. Um, Stephanie and I were baby journalists together, so we've known each other for a long time, and I've still been a journalist a lot longer than I've been a politician. Um. It definitely shapes how I approach my job, and I would say, in maybe three principle ways, too generic to being a journalist and one sort of specific to my own time in journalism, I still always want to talk to the people who are at the coal face, and

I want to hear directly from them. I never really believe that a briefing note can fully capture as much as a conversation with the people who know stuff directly, so I continue to do that. The system really doesn't want politicians to do that. It's just not designed for politicians to be picking up the phone all the time. But that's what I believe in doing. The second thing that has shaped me a lot is at the ft. When I moved from being a reporter to being an editor.

One of our colleagues it was actually Peter Bruce, who I remember saying to me, Um, you're an editor now, and you're going to have to make a hundred decisions a day, and hopefully more than will be right than we'll be wrong. But the important thing is going to be not to be paralyzed by uh, you know, feeling you need to be perfect. The important thing is going to be just to make the decisions because otherwise the paper cannot be published at the end of the day.

You had to take the information that was coming at you, absorb it, analyze it as well as you could, and then make a decision on which story was in, which story was out, which quote was in, which one was out, and and not and not be so not be too scared, not be too scared of making the wrong decision. And I felt that training was really really helpful in the

heat of COVID, you know, especially last spring. And then my formative experience as a reporter was covering the collapse of the Soviet Union and really watching this extraordinary thing of a whole paradigm changing and breaking down just in the course of not even years, but months and days. Watching it showed me that systems are not eternal, and

systems can change really fast. And in particular, what I saw was the people who were the most successful in that transition were the people who were able to see that it was happening and embrace the transformation and understand that the greatest risk. It's a little bit like being a news editor, right that the greatest risk is in action. And when you when you're in one of those shifting paradigms,

you have to be prepared to act. Arguably, we have a different kind of slightly slower, but a different kind of paradigm shift that's happening over the last few years um in regard to China and how the world looks

at China. And I just wonder whether you feel maybe there's a risk that you're actually out of step with that, still carrying the flag for a belief that engagement with China and gradual bringing of China into the sort of multilateral liberal economic order was the direction the world was going to take. And instead now you have clear competition much more than engagement, and a very muscular China. Where does your vision I mean are you not changing your

approach fast enough? Oh? Well, definitely. I think a watershed moment in Canada's relationship with China has been the arbitrary detention of Michael Coverg and Michael's paybor. Uh. That is the key issue for our country when it comes to China. Uh. These are two really brave Canadian who have been detained for no fault of their own, and Canadians are really aware of it. And has that changed your view of what is possible in terms of future policy with China?

Is this a country that you can do business with and you can continue to engage with positively? Um? Well, look, it is a country that Canada and every member of the G seven and the G twenty does business with. Uh. So that's a reality. Uh. This is very different from the relationship of the world's democracies with the Soviet Union, for example, UM, where we occupied very separate economic spheres.

But you know in the game. Um. Turning to that Soviet experience of my own, UM, I have always believed that shared values are really important and are very important basis for deep international collaboration. For Canada, those values are democracy, Uh, they are human rights. There has also there has been this sea change in attitudes to spending and deficits. President Biden has proposed six trillion, just under six trillion dollars worth of spending, three big packages. Um. You talked about

having had your experience in the post Soviet world. You saw, we saw there how incredibly damaging it was to a society and economy. Sometimes if you lose control of inflation, lose control of the economy. Is there a bit of you that that things were being too complacent about spending and borrowing in this area and it's all going to come back to haunt us, not just not just Canada, but this this change in the global attitude. Um So No,

but I am very careful. I am a Canadian finance minister, so I am surrounded by economists who are very very careful, um with our numbers, with our projections, and I'm Canadian two so that comes naturally to me. And I think it's a good thing. And I'm going to give you an example, Stephanie. Um in our full economic statement, we predicted a deficit for of three one point six billion dollars and we came in at three fifty four point two billion dollars. Economy we you know what we we

embrace it. Some people say that we are earnest and boring, and I say, it's the Median way. It's a good thing. But the six Biden is not less. It's not being cautious, and we know that there are people on all sides, including his supporters, who were worried that the numbers are getting a bit big. If the US is incautious and gets into trouble, Canada gets sucked into that. You know, we talked about paradigm shifts and what shapes your you know how the lessons of the past shape your actions.

I would say something that has shapes my actions, our government actions, and based on the conversations around the G seven table, I can tell you this is shaping the actions of many G seven ministers. Is actually the experience of two thousand and eight two thousand and nine, and I think what most G seven countries feel looking back on the response to two thousand and eight two thousand and nine is we didn't do enough and we didn't recover soon enough from the two thousand and eight two

thousand and nine recession. And it's one reason that I am very focused on driving a fast and robust recovery from the recession Canada has today we still have. You know, we're glad to have had the ten growth in the fourth quarter of last year, but we still have five hundred thousand Canadians who either don't have a job or working fewer fewer hours than they were before COVID that it, to me is an economic imperative, but also a political

imperative to get them back to work. All of us politically can reap the whirlwind if we don't, if we allow economic hardship to fester. And I think a fair criticism of elites, you know, including financial journalist elites. Um I was a financial journalist in two thousand and eight, two thousand and nine, like you stuff me, And I think you know, people could quite fairly say uh, in the recovery, elite did pretty well pretty quickly, but a lot of regular people were left behind for far too long.

Um I think it behooves all of us to not let that happen this time. And I remember, Stephanie. I don't know if anyone ever told you this when we were baby journalists at the FT, but I remember one editor saying to me, you know what the difference is between a recession and a depression. It's a depression when a journalist's friend loses their job. And something I've been mindful of in this recession is the kinds of people who you and I know, Stephanie, white collar people, Um,

have actually been pretty fine. Um. You know. The worst we've had to deal with is eye strain from zoom and certain and you know, having your kids around the house and them struggling from ice stream from zoom to One of my children was doing online school today wearing sunglasses and he said it was because of the glare from the screen. When we look at the numbers in Canada, people at the top of the income distribution actually have more money than they did before the crisis. They've been

saving money. And I would just urge all of us to remember the K shape also means people at the bottom, people who work with their hands, have suffered a much greater health risk. They are the ones who have lost their jobs. And our economies will be weaker if we don't help them. But our societies, and at the end of the day, our democracies will be weaker if we don't help them too. Robert but Fall and the British author he's written about in a slightly different context. He

writes about book called Underland. He talks about unburials, and he's actually talking about, you know, in the Arctic Circle, where things have become unburied that people by climate change, that people thought were going to be buried for hundreds of years. I sort of like there's been massive loads of unburials due to COVID. You know, things have come onto this surface that we sort of knew were there.

I mean slightly with your if you were still a journalist and you think about the things that have been revealed by COVID, maybe permanently changed, you know, what's the book that you would be writing. What do you think is the most significant thing about this whole period um. I think that I would write a book called who Really is Essential? I think what really? You know, I think what COVID has shown us is who really are

the essential workers? And you know, again not to sort of bring it down to sort of needly gritty policies, but it's one of the reasons it was so important for me to increase the Canada Workers Benefit UM in our budget. You know, we all of us have been going out and saying ya, essential workers, thank you for your service. Well, I wanted to thank people for their

service with more money. What I think we've learned, certainly in Canada and I think around the world, is the people who are truly essential are very often the people who are the least well paid, who have the least security, and I think we need to support them more. And a corollary to that is we need mothers to be able to work. Um Our budget makes a historic investment

in early learning and child care. And the reason that I believe the political window in Canada is open to do that is with daycares, with schools being closed because of covid UH, what had been for fifty years a priority for Canadian feminists themed all of a sudden to become a real business priority. When there's a childcare challenge, it's the mother who quits her job. And you know, we have seen a sharp decline of women's participation in

the labor force. And we all sort of looked at each other and Cannon said, oh no, this is a problem. It's a problem for our economy. So I think we've learned who is essential, and we've learned that it's essential to make it possible for parents and particularly mothers to work. Um. I have to ask you one more question, Um, When you talk about the good management of the global financial crisis in Canada, obviously Mark Connie has took some of the credit for that because he was the gap Bank

of Canada's governor at the time. UM, are you I see he's kind of stake to claim, as you know, as being part of the Liberal Party in the recent weeks, would you support him for prime minister if it came to it. I support Justin Trudeau for prime minister. I'm very I'm very privileged to serve in his cabinets. But Mark is a good friend of mine. He's actually son's godfather, and uh, we've known each other for a long time.

And actually, uh he was one of the many many people I talked to as I was putting together the budget, and I'm grateful for his advice. Are you going to go out and do a pact at some make a pact at some point about which of you would run if and when there was a vacancy? I really, Stephanie. I'm wearing a short sleeve, short sleeve dress, so I

can only metaphorically roll up my sleeve. Um, But metaphorically I would have to say, um, my focus is on delivering the two hundred and seventy programs we have in this budget. There is a lot of work to do. And I really would also say the Prime Minister is younger than me, he is younger than Mark. He's doing a really good job and I am very confident he's going to lead are party in our government for a long time. Well, in your journalist days, you would have

said that was a non denial denial. But it's been a delight to talk to you and very nice to see you. Christian m h. Before we end the program, I did want to give you a taste of something completely different, food wars. Elizabeth Elkin covers agriculture for Bloomberg News in New York, and she's here to explain more. Elizabeth,

thanks for coming on Stephanomics. This was a story that caught my eye in Bloomberg's Supply Lines newsletter, and you brought together two stories which showed how changing social morays causing trouble down at the farm. Tell us first about those milk wars. Yeah, sure, So, basically, there are currently flexibilities in the law that are allowing schools to give kids low fat flavored milk in schools, so basically chocolate milk, right,

and these expire after the school year. So the argument is that milk is high in nutrients, right, and kids need nutrients to grow, and they're more likely to drink it if it's like chocolate flavored as opposed to just regular milk. But obviously there's some scrutiny around this chocolate milk.

And you know, all the flavored milks have more sugar in them, and so you know, there's a question of is it better to give kids the milk and have them, you know, taking those nutrients that they need and get a little bit of extra sugar, or is it, you know, better to just try to give them the non flavored

milk that has less sugar um and um. And obviously the dairy industry has a huge investment in this, right UH milks applied to American schools is a key source of demand for the dairy industry um and so two big dairy groups have issued a joint statement praising some of these lawmakers who are coming out and urging the U s d a S Secretary to permanently allow this low fat flavored milk in schools. Obviously, parents make the

same kind of trade offs every day. You know, what, how much how hard do I have to try to get this stuff into my kid? Or should I just force feed them? So? How bad are these are these milks? Are these milks that probably that many parents would hesitate to buy themselves because of the amount of sugar in them. Yeah, that's a great question. Um. And so in talking to like nutrition experts, um, and you know, people who are

working to get kids and adults better nutrition. Um, there's a lot of you know, saying that it's not necessarily that bad, right, I mean, the school lunches and meals at school are some of the most nutritious meals that kids will get. Um. A lot of kids, it's the most nutritious meal that they'll get in a day, right. And for some kids it's the only meal that they'll

get in a day. Um. And so dick getting kids to come in and eat these meals and drink this milk and get these proteins, it's better for them than say soda, right, which is something that a lot of kids will drink every day. Um. And they're probably having a big plate of fries as well as they sit down for that school meal exactly. Yeah, So it's not necessarily from a lot of people's perspective, you know, this

can be kind of an overblown issue. But presumably, I mean, these these dairy farms would have had a terrible then the milk producers would have had a terrible time last year when all the schools were out. I mean that must be part of this, that that just they feel like it's kicking them when they're already done. Absolutely, absolutely, yeah. I mean last year people were actually dumping milk when

schools and restaurants closed because they just wasn't enough demand. Um. And so this this has been a really tough last year for the dairy industry. Schools are obviously incredibly important for dairy's demand. What do you think is going to happen? There is the Biden illustrations. Does it seems sort of pro milk? Well, the head of the U s d U s d A came out and said, um, in a hearing that this was a really important issue that kids need more nutrition and that kids need more dairy

in their diets. And so I think it's a good possibility, especially because you know, more than fifty members of the House of Representatives came out urging the Secretary to to do something about this um to permanently allow these low fat flavored milks and schools. And that is, you know, people from across the aisle. Its Republicans, it's Democrats. This seems to be an issue that a lot of people agree on that kids need more nutrition. Sells to be

talked to. There's there to day. I would imagine that it probably will be, but we'll have to wait and see. Now, the other thing coming down the track for milk producers is a big shift away from dairy altogether due to not just health but but environmental concerns. And I did see that the other day. It shares in Oakley, the world's biggest oat milk maker, jump nearly on their first day of trading, and they valued the company at twelve billion dollars. It's just a little oat milk company set

up in Sweden not so long ago. But I hear that we're going to start to see some very expensive eggs in the grocery store, maybe where chicken farmers are also trying to cash in on this desire of all of us to be more green. In our purchases. Elizabeth tell us more about those eggs. Yeah, absolutely, Um. And two of my colleagues, Leslie Patton and Kim Titman, did a fantastic long look at this for Business Week that

I would highly recommend that anyone check out. But the egg industry is now bedding on climate friendly eggs is the next big thing. Um, what is the climate friendly egg? Great question. So basically what it means is that these eggs are made on sustainable farms, um, that use regenerative agriculture to make these eggs, right to produce these eggs, um,

And so they can be marketed as climate friendly. Um. They're not just happy chickens producing them that we've you know, we've often worried that we've bought free range, we've bought organic, but the carbon neutral yes, yeah, So it's it has to do with like the science of the the way that they're producing eggs themselves via the soil that they're using, you know, on the farm. Um, it's actually a scientific thing. It's not just letting the chickens roam freely, you know,

it's not just like good for the chickens. It's really about the carbon impact of the farm and of making how much and if we want to be this sustainable, how much are they going to be? These eggs? So these eggs can cost as much as eight dollars um. And you can still get Please tell me that's for like half a dozen or it does not just one? Yeah, yeah, yeah yeah. And you know you can go into a store and get eggs for like less than a dollar um.

And so it's just yeah, it'll be interesting to see how much people are willing to pay um, you know, and it's marketed as a premium product, right um. And there are a lot of people who will pay more money for climate friendly you know anything. I mean that's ranked pretty highly um, especially like younger generations, you know, millennials gen z usually will rank UM sustainability is very high on their UH concerns. And so you know, eggs are not the only industry that is taking a bet

on climate friendliness. But but it is fascinating, you know, I mean, would you pay eight dollars for a garden of eggs? Who the hell knows? I guess it depends how much everything else is. But Elizabeth, thank you very much. Yeah, and thank you for having me. Well that's it for this episode of Stephonomics. I'll be back next week with a lot more from around the world. In the meantime, please rate the program, and if you want to get more news and analysis from Bloomberg Economics, you can follow

at Economics on Twitter. This episode was produced by Manus Hendrickson, with special thanks to Canada's Deputy Prime Minister Christipher Freeland, Elizabeth Elkin, and Brenda Murray. Mike Sasso is executive producer of Stephonomics and the head of Bloomberg Podcast is Francesca Levi.