Behind Trudeau’s Cabinet makeover

OTTAWA, Ont. — Against economic headwinds and the wear and tear of eight years in power, Justin Trudeau is out to win four elections in a row — a feat pulled off only twice in Canadian history.

The prime minister unveiled sweeping changes to his Cabinet on Wednesday, a mid-mandate move designed to persuade a shaky electorate that his Liberals haven't lost touch with average people — and that they can handle taxpayer money.

Standing in the way is Pierre Poilievre, the feisty Conservative leader who has spent two years blaming the government for soaring inflation, spiking interest rates, long lines at food banks and 30-somethings living in their parents' basements because they can't afford a down payment in an overheated housing market.

Poilievre is hosting rallies this week in northern Ontario's mining country, firing up his base with a boisterous appeal to lower taxes and cut spending. But his message could be resonating with a larger audience, too.

A poll out Wednesday from Abacus Data found only 16 percent of voters who consider the economy a top-three issue view the Liberals as the best party to handle it.

Forty-seven percent put their faith in Poilievre’s Conservatives.

With an election by 2025 at the latest, Trudeau acknowledged the uncertainty festering in Canada. But as he introduced his revamped bench Wednesday, which replaced seven veteran ministers with seven rookies, he insisted it’s the best he's got.

"We know times are challenging, but this is the team that is going to be able to continue the hard work rolling up their sleeves and delivering for Canadians," he told reporters.

Not everyone is sold. Robert Asselin, the senior vice president of policy at the Business Council of Canada, Canada's largest business lobby group, dismissed the shuffle as "the triumph of politics over policy."

"The optics is a big shuffle," said Asselin, who once advised Trudeau and former finance minister Bill Morneau. "But the government will stay the course on the main direction it has taken, which is not to be overly concerned about economic policy and continue to spend a lot of money."

Trudeau's A-team

Finance Minister Chrystia Freeland was one of 12 ministers who did not get shuffled.

Most ministers entered the swearing-in ceremony at Rideau Hall with family or senior staff. Freeland strolled in alongside Industry Minister François-Philippe Champagne and International Trade Mary Ng, a show of solidarity on the economic front bench.

Trudeau’s team had leaked news of a Cabinet overhaul. The fact that Freeland, Champagne and Ng stayed put signals their boss prefers the status quo over wholesale change.

Stevie O'Brien, a former chief of staff to two Cabinet ministers who left government in 2022, told POLITICO that managing the Canadian economy will fall to more than Freeland.

"We're seeing a fortification of the core economic team," said O'Brien, now a senior adviser at McMillan Vantage. "A combination of stable hands and continuity in Freeland and Champagne, but also adding some real high performers to key economic portfolios."

She pointed to Anita Anand at the Treasury Board; Marc Miller, who moves to the immigration ministry; Sean Fraser at housing and infrastructure; and Jean-Yves Duclos at public services and procurement.

All four ministers told reporters Wednesday they were focused on the economy. Fraser will serve as Canada's point man on the housing supply crisis.

Asselin and a long list of business groups want the Liberal government to rein in spending and focus obsessively on economic growth. He said he’s reassured that part of that job will now fall to Anand, who was moved from defense to become the new president of the Treasury Board, a central government agency.

Freeland's most recent federal budget pledged to eliminate billions in spending.

"If the PM has decided that spending has to be constrained, and those spending reviews were real and serious, then the appointment of Anita Anand is welcome news," said Asselin. "She's as solid as you can get in terms of rigor and intelligence and knowing the files."

O'Brien, Anand's chief of staff when she was the public services and procurement minister competing with the rest of the world for Covid vaccines, said her former boss will be a "prudent gatekeeper" at the Treasury Board.

"She is going to have to ask tough questions," said O'Brien. "It's very easy to sit around and talk about how we should spend money on this and we should invest on this. It's easy if you always pick the Cadillac option. Somebody has to be able to drill into it and to apply logic and process and rigor."

Surging Tories, sinking Liberals

Liberals have trailed in most opinion polls since last September, when Poilievre won the Conservative Party leadership. They've also lost the popular vote in two consecutive elections, relying on an efficient vote that delivered enough seats in the House of Commons to eke out a minority government.

Trudeau's team woke to bad news the day of the shuffle. Abacus Data's latest survey pegged Conservative support at 38 percent, 10 points clear of the Liberals.

The 338Canada polling aggregator, which projects seat counts based on a weighted average of recent surveys, gives the Conservatives (35 percent) a four-point national lead over the Liberals. But the same parties are virtually tied in 338Canada's most recent projected seat count, hovering around 140 seats apiece out of the 338 up for grabs.

Abacus has Poilievre ahead in British Columbia, Alberta, Saskatchewan, Manitoba and the traditional battleground of Ontario. He trails in Quebec, where the pro-sovereignty Bloc Québécois edges out the Liberals. But Liberals and Conservatives are tied in the Atlantic provinces — a bastion of support for Trudeau since he swept the region's seats in 2015.

The cost of living was the most important issue for voters by a wide margin. Seventy-two percent of respondents listed it as a top-three priority. The runner-up issue was health care at 45 percent, with housing affordability following at 43 percent.

Every finding is a warning sign for Trudeau as he seeks that elusive fourth term. If the prime minister hopes to win, this revamped Cabinet's record on key issues could make or break the next campaign.

The Abacus survey was conducted with 2,486 Canadian adults from July 20 to 25. The margin of error for a comparable probability-based random sample of the same size is +/- 2 percent, 19 times out of 20.

Liberals like what they see

For all the talk of renewal, Trudeau refused to move Freeland, the deputy prime minister and finance minister. She'll tell anyone within earshot that her government is on the right track.

In a recent conversation with POLITICO at the Aspen Security Forum, Freeland rallied applause as she celebrated Canada's most recent inflation data.

Statistics Canada reported a slowing of headline inflation to 2.8 percent, powered by a year-over-year easing of gasoline prices.

It's not all good news for nervous households. Groceries and mortgage interest costs remained elevated, growing year over year at 9.1 percent and 30.1 percent, respectively.

Most economists acknowledge that inflation has persisted thanks to a variety of global factors, though many policymakers admit Covid-era government spending has played a role.

A former high-profile Liberal minister added his voice to that chorus this week.

"Excessive government spending at all levels is fuelling inflation & higher interest rates," Scott Brison, a former Treasury Board president who left government in 2019, wrote on LinkedIn. "Canada is a lucky country. Sadly we’re frittering our good fortune away."

A renewed economic agenda could prove the government's doubters wrong. Trudeau's new ministers will get briefed up in coming days, and the Cabinet will head to Prince Edward Island for a retreat next month. Their goal: get themselves ready for the fall.

The House of Commons is back in session Sept. 18.

Tyler Meredith, another former economic adviser to Trudeau and Morneau who also crafted federal budgets for Freeland, tells POLITICO a shuffle is only the start.

"[The shuffle] is meant to convey a reset at a time when the economy may be turning a corner either for better or worse," he said. "A reset is ultimately about ideas."