Fall economic update 2016 – Q&A with Peter Donolo, Vice-Chairman of Hill+Knowlton Strategies Canada

H+K Strategies Canada Vice-Chairman Peter Donolo is the longest-serving prime ministerial director of communications in Canadian history (to Prime Minister Jean Chretien). He has also served as a senior executive in the private and public sectors, including as special adviser to the Ontario government on intergovernmental affairs and communications, and has represented Canada abroad as a senior diplomat.

Why have an economic statement rather than a budget?

Peter Donolo: Economic Statements have become part of the landscape since the 1990s as an opportunity to set the tone and narrative leading up to the next budget. It’s also a chance to give a mid-year assessment of the state of the economy and what the impact is on your government’s fiscal and economic plans. And it’s a way to engage the public.

What has changed since the March 22 budget that the government would want to highlight?

Peter Donolo: Clearly, the economic numbers, in terms of growth – both international growth and domestic growth – are still pretty low, pretty slow. I think the economy is coming below what the expectations were of private-sector forecasters, and even their projections were pretty low. So in terms of whatever message the government wants to send out in terms of a reality message leading up to the next budget, this is a good time to do it.

How much will the potential election results in the United States have factored into the government’s thinking about what it wants to do between now and the next budget?

Peter Donolo: One thing the government needs to worry about coming out of the U.S. election, whoever wins, is a greater reluctance to promote trade liberalization. I wouldn’t say that Canadian trade with the United States is under assault, but the U.S. is less enthusiastic about trade than it has been in a very long time, and that’s all the more reason for Canada to be pursuing trade initiatives with other regions, as we were finally able to do over the weekend with the European Union.

I think Canada had the debate about liberalized trade back in the 1988 election that the Americans are going through now. Because of the nature of our economy, because of our long periods of low exchange rates for the Canadian dollar, and because of the social safety net we have that doesn’t exist in the U.S., we’ve been able to absorb a lot of the dislocation caused by liberalized trade in a way that the U.S. hasn’t been able to do. Which is not to say there aren’t parts of Canada that are hurting, by the decline in manufacturing in particular, but by and large, we’ve managed to absorb these dislocations better than the Americans have.

How important is an Economic Statement?

Peter Donolo: My experience, both inside government and as an outside observer, is that the most difficult thing for a government to communicate in concrete, sustained terms is what it’s doing on the economy. That’s because these tend to be systemic changes that take a longer time to take effect and be felt. They also tend to be complex and technical, without much built-in drama or controversy (unless you’re raising or lowering a tax). And drama and controversy are what capture and sustain media attention and top of mind.

That’s one reason such a frequent and common refrain against all governments (of every political stripe) is “I wish they would do something about the economy,” or “I wish they would pay attention to jobs instead of … you name it.” But it’s very difficult for governments to sustain an ongoing message about what they’re doing on the jobs front or what they’re doing to modernize the economy, or to support employment and economic growth. So governments look for and need high-profile, marquee events to do that. Even if the ministers or the Prime Minister go out to announce a new factory opening with 3,000 jobs, chances are that event gets hijacked by whatever the issue of the day is, whether it’s Syrian refugees or fundraisers or whatever, and the PM or the minister is asked a question on it and the headline becomes about that particular issue – and not the less flashy or controversial economic message. So it’s very difficult for governments to find these inflection points, these moments to communicate all the things they’re doing on the economy. That’s why they look for opportunities and events in which they’re completely in control, and the Economic Statement would be one of those opportunities.

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