Talking Canadian Politics with Rona Ambrose
Host: Peter Haynes, Managing Director and Head of Index and Market Structure Research, TD Securities
Guest: Rona Ambrose, Deputy Chairwoman, TD Securities
In Episode 33, we listen in on a special interview with The Honorable Rona Ambrose conducted at our 23rd Annual TD Securities Portfolio Management and Market Structure Conference held on November 3, 2022. Rona tackles several important topics on the minds of Canadians including the leadership race in her home province of Alberta and the 411 on the Federal Conservative Party's new leader Pierre Poilievre. While Rona's Conservative Party background differs from Frank McKenna's Liberal upbringing, the two former leaders hold a mutual respect for one another. That said, we look forward getting Frank's take on Rona's view that both Danielle Smith and Pierre Poilievre are electable.
PETER HAYNES: Welcome to a special episode of TD Securities Podcast on Geopolitics. My name is Peter Haynes, and today we will listen in on a fireside chat at a recent TD Securities conference in which our colleague, the Honorable Rona Ambrose, presents an across the aisle look at politics in Canada and globally. It is no secret that our regular monthly guests the, honorable Frank McKenna, cut his teeth in politics representing the Liberal Party, while Rona rose to prominence in federal politics as a cabinet minister of Stephen Harper's conservative government. Rona and Frank have tremendous respect for each other, the kind of respect lacking in today's political dynamic where the side of the aisle you come from is the hill you die on without compromise. In this interview, Rona provides a view from Alberta on the local political scene, including her perspective on what it will take for the new UCP party leader and current Premier, Danielle Smith, a staunch conservative, to keep the premiership when Albertans go to the polls in May of 2023. We also get an inside look from Rona at Pierre Poilievre, the new leader of the opposition Conservative Party of Canada. Poilievre is a political leader known for aligning with some of the fringe elements of the Conservative Party. But as we learn from Rona, he is not exactly what one imagines in a non-centrist right side of the aisle leader. There's a lot more to learn in this 45-minute interview, and we look forward to getting Frank's rebuttal comments on some of these topics later in November when we tape our monthly show. Before we get started, I want to remind listeners that this TD Securities Podcast is for informational purposes. The views described in today's podcast are of the individuals, and may or may not represent the view of TD Bank or its subsidiaries. And these views should not be relied upon as investment, tax, or other advice. For now, we hope you enjoy the special edition of Geopolitics.
RONA AMBROSE: Good morning.
PETER HAYNES: Well, Rona--
RONA AMBROSE: In the hot seat with Peter Haynes.
PETER HAYNES: Yes, yeah, I got a lot of tough questions for you, as you know.
RONA AMBROSE: You always do.
PETER HAYNES: And I know you do your homework, so I'm going to start with a fairly easy one, which is close to home for you.
RONA AMBROSE: Yeah.
PETER HAYNES: In your province you live, in Calgary-- by the way, you said there was a snowstorm yesterday?
RONA AMBROSE: Yeah, huge snowstorm, yeah. But we're happy. We love snow. We love skiing, so we're OK.
PETER HAYNES: Good, good. Well, for those of you who like to ski, obviously, Alberta's open for business. But staying close to home, you have a new Premier by the name of Danielle Smith. And she was elected by the United Conservative Party, UCP, a couple of weeks ago to replace Jason Kenney, who I know you're close to, as he stepped down in May. Tell us about Danielle Smith, and can you help the rest of us Canadians understand what the so-called Alberta Sovereignty Act is?
RONA AMBROSE: Sure. Yeah, lots happening in Alberta in the last little while. We have a new Premier, Premier Danielle Smith. I mean, I'll start by saying that as you know, at one point in the recent past, we actually had an NDP government in Alberta, which was a real anomaly. But it was because we had two conservative parties. We had the long standing progressive conservative party that had been in power for a really long time, sort of seen as the establishment party. And at one point, people sort of almost saw them as too close to business. There was allegations of even corruption. And because of that, there was a new right wing party that emerged called the Wildrose Party. Danielle Smith actually led that party. So she sort of was the first person to kind of lead away from the established Conservative Party in Alberta and start the Wildrose Party, which was to the right of the right party. And so the NDP got elected. And if you just look at the pure numbers in Alberta, if the conservatives vote together, they win. So fast forward, I'm in Ottawa. I'm the leader of the opposition at the time, leader of the Conservative Party. Stephen Harper just left. Peter MacKay left. James Moore left. Lots of people were leaving. And thinking about succession-- what are we going to do? We need to really think about who-- and Trump had emerged. There was a lot of concern from a number of us that we had to think a lot about what the conservative movement looked like in Canada, and make sure that we had really thoughtful people, principled thinkers in our movement, and that they'd stay in the movement and want to be active in the movement. And we were losing a lot of those people because they were just tired and it was time for them to retire. Anyway, I called Jason Kenney to Stornoway and said, I need to talk to you, and with the intention of trying to convince him to run for the leadership of the Conservative Party of Canada at the federal level. Because I knew the caucus would support him. I knew the membership would support him. I knew his policies. I knew him to be a thoughtful and principled conservative. And we needed him, on the federal stage, to combat some of the stuff that was emerging, you know, a la Trump. And the dinner turned quickly into him telling me he was leaving federal politics. And the reason he was leaving was to go home, back to Alberta, where he was from, because the heart of conservatism, which is Alberta, was in peril. The NDP had been elected. The parties were fractured. If we couldn't save conservatism in Alberta, we were in trouble nationally. So that wasn't where I hoped the dinner would go. But I said, well, I wish you well. And I'll do everything I can to help you, because I see why you're doing this. So he went back to Alberta with two fractured parties, the NDP as government. And this is an unruly bunch. I'll just start with that. He managed to bring these two parties together, create a brand new party called the UCP, the United Conservative Party, and within 18 months, win a majority government with a brand new party. I say all that because he lost a leadership review recently. He was running the government as Premier, and COVID happened. There was-- we have PACs in Alberta. And a couple of PACs, well-funded PACs decided that he was too pro-restriction, too pro-lockdown, too pro-vaccine mandate, even though Alberta probably was the least restrictive when it came to any of those issues in the country. There was a group of people that thought he was too restrictive on these issues around COVID. So they raised a lot of money, sold a lot of memberships, and took them out in a leadership review. So Danielle Smith was the person that was able to really take advantage of that. But she only won by 53%. So when you're a leader, you really want to win your party by at least 70%. You want to have a strong, solid mandate. I only raise that because he lost with 51. She won with 53, so our party is still very divided. So that's what's happening in Alberta right now. And half the party voted against her because of the Sovereignty Act. But that is her number one issue. So she [AUDIO OUT] office with some very controversial policies, but her supporters are expecting her to deliver on those. So she's got a tough road ahead. The Sovereignty Act, when she was running for the leadership, I think was more controversial than it is now. She said she was going to ignore all federal laws that the Alberta government did not want to enact. Of course, anyone who-- thank you-- is a constitutional legal expert took a lot of issue with that. And so how can you just ignore Supreme Court rulings? Since she's taken office, she has said in fact she will support any rulings of the Supreme Court. But until that point, Alberta will fight and appeal every law from the federal government that they don't agree with. So that's the stance. Now, why does she get support in the party for something like the sovereignty act? Because Albertans, there's a strong sentiment in Alberta that's very anti-Ottawa. And I'll give you just one little example. You know, Alberta is a very entrepreneurial place, a lot of pioneering spirit, very busy tech sector, very busy fintech sector. I mean, I could go on and on. I mean, there was an article in The Globe and Mail recently was interesting that someone said, you know, welcome to Alberta, sort of the heartland of what's happening on renewables and green tech. And it's true. So there's a lot happening in Alberta from that perspective. And you know, the energy transition is happening, a great amount of investment there, policy happening around the green transition. And yet, we continue to see policy come out of Ottawa that is very offensive, frankly, to Albertans. So I'll give you one specific example. The oil sands has an emissions cap. The oil sands is also highly taxed, highly regulated in a number of different ways. And just recently, the federal government announced another more restrictive emissions cap that they're trying to negotiate. Just imagine if you're an Ontarian, and the Federal government says to you, the automotive sector creates greenhouse gases, so we're going to put a cap on it. You can't produce any more cars above this cap. This industry that creates a lot of revenue for you, jobs for you, opportunity for you, you can't build any more cars than this. You can't make any more money than this. There will be no more production than this, and that's it. That's where we're going to cap your production. That's where we're going to cap your industry. That's what they're doing in Alberta. So yes, we all understand the policy imperatives here around the green transition, but this is the type of policy that upsets Albertans, when it's handed down unilaterally without consultation with industry, or the provincial government. So you get this type of backlash. So she is really just reflecting that type of backlash, and she's not the only one. The Premier of Saskatchewan, Scott Moe, just passed a law, or introduced a law yesterday that mirrors the Sovereignty Act. So you've got two provinces in Alberta that are saying, we want more autonomy. We want sovereignty over our energy, and over our resources, and we'll fight Ottawa for that. So you haven't heard the end of this federal provincial battle around energy, and specifically in Alberta around the oil sands.
PETER HAYNES: When I mentioned to my colleague, or our colleague, Frank McKenna, that I was interviewing you today, I said, Frank, what question should ask Rona? And he thought about it for a minute. And he said, you have to ask Rona how to bring the province of Alberta back together, because it's a fractured province. You just told the story there. So Frank wants to know what you would do to try to bring the province back together.
RONA AMBROSE: Well, look, I mean, I would argue with Frank. The province isn't fractured. I mean, the provinces is an economic powerhouse. The issue with what's happened in Alberta politically, and specifically within the party that's governing, is something that's happening in a lot of political movements. And it's this polarization around certain types of ideology. And it's happening in the Democratic Party in the US, and the Republican Party. We're seeing it in a lot of different political movements. I guess I would say that one of the things that all of us have to do, and I think Frank would agree with me, anyone who's involved in public policy or politics is, we can't normalize. We can't allow the normalization of this kind of debate where people just throw misinformation around as fact, and no one fact checks it, or no one calls it out, particularly within our own parties. I mean, if we see that type of behavior, we have to call it out. And I go back to my conversation with someone like Jason Kenney. I've had conversations with other very thoughtful, very principled conservatives. There are people who call themselves conservatives that are not in my mind, philosophically conservative. And I think it's incumbent on all of us to make sure that we don't allow people to go down a road within our movement that pedal in misinformation and pedal in conspiracy theories. It takes a lot of work to call people out and to constantly be debating them on fact, but it's important that we do. And it's happening in all the-- I think it's happening, frankly, it's not just the conservative movement. It's happening in politics writ large.
PETER HAYNES: One of the other aspects that Danielle Smith has talked about, and I know admittedly was during her time as a right wing radio host, was this idea of separating Alberta from the Canada Pension Plan. And I know that you're going to be interviewing the CEO of CPP Investments later today. And it is a very complex process as I understand it if a province wants to break out of CPP. Do you think Danielle Smith is going to make that a platform issue when you go to the polls in May?
RONA AMBROSE: Yes, I do. There's a lot of support for it. And she promised it in her leadership campaign. So yes, I have no doubt that she will do it. But as to your point, the government has to let the Federal government know there has to be a certain amount of time, notice given. It's a huge and involved process that takes many, many years. But yes, I do think she will start the province down that path.
PETER HAYNES: Well, I think what's important, and John Graham can speak better to this, you talk about misinformation. I think it will be very important that people explain to the public it might sound like a great idea, but let's just talk about exactly how this works. I believe they have something like five years to give the money back. They can give back cash, not investments. And you have to have the infrastructure then to turn around and invest that money. I think it's important that the citizens of Alberta understand that. And I'm sure that'll be something that John will obviously have to get in the middle of if we do go down this path. And just another topic with respect to-- and you mentioned Rachel Notley earlier-- I think you have an election in May of next year.
RONA AMBROSE: We do.
PETER HAYNES: Provincially. Is that correct? And Rachel Notley is going to be a formidable opponent from what I understand. The polls are fairly close right now between the two parties, but I found it sort of thinking about what happened to Liz Truss in the UK, and comparing that to the process of electing Danielle Smith as the leader. These leaders are being elected within their party, not by the country itself. Is there a better way for governments to figure out who their new leaders are? Because at the end of the day, you could argue that Liz Truss was elected by perhaps only an extreme portion of her party. You maybe can say the same thing about Danielle Smith, which makes them extremely hard to be elected at the country or provincial level. Is there a better way to do this? And I'm just curious what your thoughts are on Danielle Smith's electability when we get to May of next year.
RONA AMBROSE: Yeah, I mean, look, I think we see in every party that leaders will campaign to the base during their nomination for the leadership. And then you usually see some softening when they go to the polls, because they have to speak to the entire electorate. So we see that. Now, you don't want to see too much of that, because you want to know that people will do what they say they're going to do, right? There's a level of integrity and character that's at play. But you do see that happen. Now, how do we choose our leaders in Canada? We, in the conservative movement, it's very, very grassroots. So anyone, anyone who holds a Conservative Party membership, as long as they're vetted and can pay the cost and go through the process can run. So one time, we had 13 people run. The Liberal Party is a bit of a different process, but they're also quite grassroots. In the UK, the caucus goes through a runoff, and they choose two people. And those two people then go to an election within the party through the party membership. And I always thought that was kind of a good idea, because what you don't want is for the party membership to pick somebody that nobody in the caucus wants to work with, that nobody supports, because let me tell you, it's the guys in caucus that have to put their name on the ballot that usually have a good sense of who's going to help them get elected. They really do, because they're the ones that have to go to the polls with that person. They need that general to lead them in that fight. And they make a pretty strong assessment. Anyway, we don't do that. So we run into the situation sometimes in Canada where the membership will choose somebody that in fact, shows up in front of the caucus, and nobody really wanted them. But guess what? The membership chose them. You've got to trust the membership. They saw something in that person clearly, and you've got to try and work with them. And that's what you do. You have to. It's not always sustainable. And we've seen that with a couple of examples in the last little while in Canada. So I can't tell you there's necessarily a better system. In our party, we feel really strongly that the grassroots membership has to be the final, has to have the final say. But the flip side of that is-- and I don't believe in PACs. We have PACs in Alberta. I don't believe in them. We don't have them at the national level, and I'm glad at the Federal level, because I think it's really unfortunate that at this moment in time at least, especially with social media and the way fundraising is going, a special interest group can hijack the membership of the party. And so I'll leave it at that. So I think it's just have to be aware of the different pressure points and how certain things like PACs can influence the party membership. But it's a trade off. I think our system is probably about-- it comes with its flaws. What you don't want is somebody saying, you're going to be the leader, and it's a committee of people of elites within the party deciding who's going to be the leader. That's definitely not something you want.
PETER HAYNES: So do you want to guess on who wins in May?
RONA AMBROSE: I think it'll be Danielle Smith.
PETER HAYNES: You do?
RONA AMBROSE: Yeah. Even if she's controversial, even if there's things that she says that people don't agree with, in Alberta, if the conservatives stay united, they win. The way the seat count is, you can even lose all of Edmonton and most to Calgary, and still win. And the NDP will never get elected outside of the cities in Alberta. So she could actually lose all the seats in both cities and still win government. And that's if they stay together. If there's one conservative alternative to vote for, she will get re-elected, or she will get elected. So we'll see how it goes.
PETER HAYNES: I noticed she was trying to curry little favor inside Calgary with some comments about the new arena. So she seems to be-- because she's really been sort of anti-urban. And I'll just pivot to the national stage and discuss another what I'll call polarizing leader that arguably rode the populism train to leadership of the Conservative Party, and that is Pierre Poilievre, if I'm pronouncing that correctly. What is the 411 on Pierre Poilievre? And do you think he's the leader that can beat Trudeau in 2025?
RONA AMBROSE: I do. I think he can beat him. It'll be interesting to see if the Prime Minister stays. He has just-- once Pierre win, interestingly, the Prime Minister said no, he wants to stay and fight another election. So it would be a battle royale if the two of them end up. But it's surprising that the Prime Minister would want to stay after the length of time he's been in office.
PETER HAYNES: Let me ask you, will his party let him stay is the question for you? Maybe that's a better question for Frank.
RONA AMBROSE: Well, it's not really about the party deciding. I mean, these discussions happen within cabinet. They happen within caucus. They happen within the party. And people will make a determination about who's the best person to take them into the next election. And the Prime Minister carries the liberal-- he carries the liberal brand. Like, the Liberal Party really is Justin Trudeau. It's interesting how it's become that way. And so it'll be very difficult for someone else to step into that and think that they're going to be as popular as he is with the liberal and progressive movement in this country. So it'll be a really difficult situation to assess whether or not he should take them in to the next election. He may very well be the best person they have to carry that brand forward. So interesting. I really like Pierre. I've known Pierre for years. I've worked with him for years. He's an extremely bright, very thoughtful person, very policy oriented, very emotional person, like, very sensitive, compassionate person. You will see that as he does his thing as Opposition Leader, I have a lot of time for him. I think he'll do very well he cares very deeply about the common person. I don't know how else to say it. He wants to help people who work hard and are feeling left behind in some ways. So no, I think he'll do very well. And sure, the media parts of it will try and demonize him. The other parties will try and demonize him. They'll have a tough time of that, because he is pro-choice. He's pro-gay marriage, and everyone should be. But those are the sort of two areas where people always get attacked in politics. And they won't be able to attack him there. His wife is a refugee. His father is a gay married man. I mean, he has a very complicated, very Canadian upbringing. He's from Saskatchewan, adopted out of a single mother's home, and parents were teachers, moved to Ottawa, has been elected there for decades, and in a seat that was never really held by a conservative, and has been elected over and over and over again in that same seat where it was always a liberal held seat, and liberals all around him. So he's done something right. That's what I'll say, and always worked extremely, extremely hard, kept his head down, worked hard. Yeah, it'll be a very interesting-- I think he's the right person right now.
PETER HAYNES: So one of the--
RONA AMBROSE: For the party.
PETER HAYNES: The criticisms that you hear obviously, is his dealings with the Freedom Convoy. And I know that maybe that's a one-off. But he's also made some comments about potentially changing the leader of the Bank of Canada, should he be elected. And last week, the Bank of Canada raised interest rates by only 50 basis points when the market was assuming it would be 75 basis points, especially given that there had been CPI data that came out that was very hawkish. Leading up to the decision, the NDP leader, Jagmeet Singh, had written a letter, or made an open plea to slow down rate increases, that it was hurting less affluent Canadians disproportionately. And then follow that on with the Fed move 75 beeps yesterday. Do you think the Bank of Canada was in fact, influenced by some of the comments that came from Jagmeet Singh and the like? Or are you comfortable that there is a absolute separation of those decisions from government?
RONA AMBROSE: Yeah, I think as an institution, the Bank of Canada is-- I believe in their integrity and their independence. I do think, though, we have to always-- anyone who is part of institutions has to always be careful to remind ourselves that reform is possible, and that people are watching, and how institutions evolve, and how the leaders of those institutions respond and carry themselves. And I'm not talking about a lack of independence. When there was criticism of the governor, he actually responded, right? And I thought that was really good. And it wasn't that he said, yeah, you're right, but he responded by answering those questions, making certain things clear to Canadians about what his role is with the role of the Bank of Canada is, what their position is on whatever the issues were of the day. And I thought that was really positive, because what we don't want is for institutions to seem like they're completely out of touch with regular Canadians, because that's not helpful, because then when you get rhetoric that attacks institutions, people believe it because they feel completely out of touch from-- whether it's the judiciary, the Supreme Court, or the Bank of Canada. So I just really hats off to him the way he responded around some of that, because it's not difficult-- or it's not easy to get caught up in that. But he managed it really, really well. Yeah, I mean, look, it's part of being in politics to criticize the actions of institutions as well. I don't like to see politicians going too far down that road, because especially attacking the integrity of the institution itself. It's one thing to attack the decisions, or policies, or question them, but-- so look, it's affordability, inflation, these are on the minds of a lot of Canadians. And I think Jagmeet Singh and Pierre Poilievre are not the only people who have questioned monetary policy in this country. But again, back to the Governor, I think he responded really well.
PETER HAYNES: Well, I think for all of us that have been around since-- you were born in the '60s, so was I-- I still don't remember inflation, but our parents do.
RONA AMBROSE: Yeah.
PETER HAYNES: And they remember their 20% mortgages, or 15% inflation, and how evil it is. You can go to a country like Argentina where inflation is 100%, and people can understand how evil inflation is.
RONA AMBROSE: Oh yeah, I lived in Brazil when I was young.
PETER HAYNES: Right.
RONA AMBROSE: Oh, I know.
PETER HAYNES: Yeah, so inflation is an evil. And I think that there's two sides to that. Then just in the same vein, there'll be people in this room that are impacted by a decision that is being made today about our local schools closing due to a wage battle, the public sector with support workers in schools. They're looking for a 12% wage increase. The government's offering 2%, or something like that. That's a [? big ass ?] spread that's going to be hard to narrow down without a strike. I just worry, and would you agree with me that public sector wage pressures are going to be something that we're going to be seeing a lot of over the next little while?
RONA AMBROSE: Yeah, absolutely. And I think and when you're at the table, whether it's provincial or federal, at the cabinet table, those labor agreements are-- that's restricted funding. That's money you can't touch, right? And so there's only so many programs in government that you can do anything about, that you have any control over. And that spending just keeps going up and up and up and up. And of course, people deserve a raise. There's no doubt about it, especially people in the health care sector. But yeah, I mean, I feel for the Ford government, and I feel for parents in this province who I think you guys were like the most locked down--
PETER HAYNES: Yes.
RONA AMBROSE: --jurisdiction in the world--
PETER HAYNES: That is correct.
RONA AMBROSE: --or something crazy like that.
PETER HAYNES: Except China, I suppose.
RONA AMBROSE: Yea, I guess except China. And friends that I know that have kids, like, it was rough, really rough. Kids were out of school for a long time. And so I can--
PETER HAYNES: And they're falling behind. We're seeing all the math stats and everything. It's really scary.
RONA AMBROSE: For sure. I can understand why the Ford government is being really tough. Look, at the end of the day, it's about mediation, right? I mean, they both have to-- they're saying, if you take the strike off the table, we'll continue to talk. They're not going to get 12%. Of course, they're not. It sounds like they're still talking. And hopefully-- I don't know, is it tomorrow, the strike?
PETER HAYNES: They're going to strike tomorrow I think. And the hope is that it's only a one day strike
RONA AMBROSE: But the problem with a raise like that at 12% is it pushes up all the other collective agreements, right? And as I said, that's an area you can't touch. And when you're in government and you're trying to figure out how are we going to bring costs down, what are we going to do, you can't touch any of that stuff, right, none of that spending. So then you're starting to look around the edges to see what programs can we cut. And it just becomes the inflationary pressures is huge. PETER HAYNES: So speaking of which, we have a mini budget that's going to be announced later today by Chrystia Frelund. I noticed a headline there that they're going to introduce a buyback tax similar to the US, which seems like low hanging fruit. But it's not that significant to the market, at least at 1%. But do have any rumblings of anything else that you expect today? Are you expecting her to send the message that they're going to cut spending knowing that would be inflationary if they didn't?
RONA AMBROSE: Yeah, I mean, I do expect that. We'll see if it happens. There's definitely a lot of pressure to do that. And all the signals are there that the government wants to show some restraint. It's tough, because there's a lot of spending that's already been announced, that the child care agreements are massive, new structural spending that will be there forever, really important spending. But it's the budget is what it is. So we'll see what comes out of it. I think the other thing that people are watching for, there's a lot going on behind the scenes between the Federal provincial government and industry around the Pathways Initiative, and the oil sands. And CCUS, and credits around CCUS they've already announced a credit, but it's not enough, or industry says it's not enough.
PETER HAYNES: You're referring to the carbon capture?
RONA AMBROSE: The carbon capture and storage investment credit. Biden, since he brought in his act, he has really I guess, set the stage for the Federal government to match what the US now has in place for carbon capture and storage investment credit. And there's a lot of expectation that something will happen today around that. We'll see. So that's coming out of the energy sector, and some talk around whether or not that will happen in this budget or the next budget. But the expectation is that it might happen today. And then the windfall tax, right? I mean we know it happened to the banks. And no one thought it would. I did, but I'm not saying no one--
PETER HAYNES: Have we paid that tax yet?
RONA AMBROSE: I don't know if we've paid that tax yet. But the energy sector is a big target, right for a windfall tax.
PETER HAYNES: So is that going to cause a hue and cry in Alberta? Obviously, that's a bit of a loaded question. Is there an expectation it's going to happen, it's a matter of the magnitude at this stage?
RONA AMBROSE: I think everyone's just sort of bracing themselves for something, whether it's the tax on share buybacks, because that will impact all the energy companies anyway, or it's some sort of energy, or a windfall tax on energy companies, because they're an easy target.
PETER HAYNES: Every other government in the world has done it that way right now.
RONA AMBROSE: Has either done it, or is doing it.
PETER HAYNES: Speaking of other governments, next Tuesday, we have a few American friends in the stands here today.
RONA AMBROSE: Oh, they have to tell us what's going to happen.
PETER HAYNES: You have very good connections in the conservative movement in the United States. I know that we've talked about that in the past. You have connections, obviously, through all government in the United States. What is your expectation for next Tuesday? Will the Republicans take both chambers of government?
RONA AMBROSE: It's always so close, but I think they probably have the-- the Republicans probably have the upper hand. And I would say because of just what's happening on the macro level, I mean, what it was a Bill Clinton said it's the economy, stupid?
PETER HAYNES: Yeah.
RONA AMBROSE: Right. I mean, there's a lot of really important things that people care about, but nothing is more important right now than paying your mortgage.
PETER HAYNES: Maybe Saudi Arabia is going to win the election for the Republicans based on their decision on OPEC. Like, that's going to really hurt--
RONA AMBROSE: I mean, people can't put gas in their tank. People can't buy groceries. People are really struggling with their mortgages. That is front and center. And the Democrats are just not focused on those issues like the Republicans are. So we'll see what happens.
PETER HAYNES: So as a conservative, do you support governments supporting individuals that are struggling? Because everyone uses the word disproportionate pain for the people that aren't making as much money. So in budgets, in elections, et cetera, are you comfortable with a significant amount of benefits to the people that are most-- who claim that are the most affected by it.
RONA AMBROSE: That is the primary, essential, most important, fundamental, and really, only reason governments should exist, to take care of people that need help. I mean, there is a lot of things governments do that we don't need them to be doing, that the private sector could do, that other organizations could do. But for those people who fall between the cracks, that is absolutely the most fundamental thing governments should be doing.
PETER HAYNES: As we look at the war in Ukraine, are you comfortable that Canada has done enough to support Ukraine, or there is more that we should be doing?
RONA AMBROSE: Absolutely. I'm very, very impressed and supportive of what we've done.
PETER HAYNES: Maybe for everyone's benefit, can you outline some of the things that you think--
RONA AMBROSE: Well, I mean, I have friends in the military that are involved. And there is no doubt that what Canada, the Canadian military did with training Ukrainian troops before this happened has been fundamental. The President of Ukraine has said it, but also, it's been shared by between military members. And it's true. There's no doubt in my mind. So I think that we have done a lot. I wish we had more equipment to send over, but we are doing a lot to support Ukraine. And the most important thing we can do is send money and send military equipment.
PETER HAYNES: What about the NATO pledge of 2% of GDP. And the Canada has been below that number. Now, we're into inflationary times. We don't want to necessarily fuel that inflation by spending on-- spending is a concern. So I'm curious, how do we cross that T and support NATO the way we're supposed to, and have said we were going to? Yet now, we're in a major inflation period here.
RONA AMBROSE: Look, there's always a debate about how much you spend in-- I support NATO, support us, increasing our spending in NATO. But there's different ways in which a country like Canada can continue to support NATO. But yeah, I mean, there's no doubt that this has been a wake up call for the government of the day, probably going down the road of not spending as much as they would have to think about our sovereignty in the North, and in rebuilding. And that's happening. We're seeing investment in the military. So I think we have to continue to recognize where the threats are real, and where they come from.
PETER HAYNES: Do your military contacts give you any sense of an off ramp for Putin? Are we in a stalemate right now for--
RONA AMBROSE: Yes, anybody I know that I've heard, and I would recommend Fiona Hill, if anyone's ever heard her speak. I think she's got a great couple of interviews with The New York Times on their Daily podcast. But she's an expert, and close to some Canadians, actually. She's really interesting person, but is the preeminent expert on Putin. And she'll say, we're in a stalemate. There's no way this guy is going to lose face. We should be really worried. And she'll also say, we should have all seen this coming. She says, just read his speeches for the last 10 years. He's been telling us he was going to do this. And yet, everybody just pretended like he would never do it. And of course, Germany is the big issue there with the pipeline and whatnot. But she's really interesting. I would recommend her.
PETER HAYNES: OK. Speaking of they say they're going to do it and no one ever wants to believe it, we can move over to China now talk about what's going on with Taiwan. Again, a question for John Graham, CPP has publicly said that they want to be 25% emerging by 2025, or 1/3 emerging by 2025. And China is obviously a big place for them to have made investments. If you're speaking to North American investors right now, and they're looking at China for growth opportunities, would you suggest the geopolitical risk in China post Russia is higher or lower that they do something on Taiwan?
RONA AMBROSE: You know, I think a lot of people thought when Ukraine happened that President Xi would see that and look at the outrage and concern globally, and Putin's a pariah. And well, I don't want to be one. But I don't think that changed their mind. I think they're right on track. And we know that from looking at how their military is moving, and the things he has said repeatedly over and over again publicly that they are on their way, on track to invade Taiwan. So yeah, everyone sitting around a boardroom table should be thinking about what risk that poses to their companies. Do they have investments? Do they have employees? Do they have manufacturing? I sat on the government of Canada's committee on the-- we call it the China strategy, but it's real Asia-Pacific strategy. And that report that will come out soon. And we all signed an NDA, so I'm not going to talk much about it. But what I will say is the same thing I've said publicly, is that it's important that we work closely with our allies. The government just announced they're joining the IPEF, which is an American formed coalition of allies to deal with Asia-Pacific, and deal with this issue specifically around China. So I think that's very positive. And we have to continue to think about-- and Chrystia Frelund did a really interesting speech a couple of weeks ago, I think it was in Washington. And it was the first time we really heard the government sort of putting a red line around some of these issues about thinking strategically about who we're going to trade with, why we trade with them, thinking about Asia, on-shoring, friend-shoring, all of that. It's been talked about in policy circles for the last couple of years. But it was really good to see the government come out and talk about what that means for Canada from a foreign policy perspective. So I would say should read that speech, because that's the direction the Federal government is heading, which is instructive to investors. And yeah, I think you have to take the threat extremely seriously.
PETER HAYNES: Just before we finish up, I've got a couple more questions. I just want to see if anyone in the audience has any questions for Rona. Ben, do we have any that are online?
BEN: Yeah, we got one question.
PETER HAYNES: Can you grab a mic for Ben, if you don't mind? Thanks. Let's start with that one. It's email@example.com if you want to be anonymous.
BEN: Can you hear me?
PETER HAYNES: Yeah, go ahead, Ben.
BEN: So we got one question so far. And it's, "Are we worried that the recent rise of global bond vigilantes will turn and face Canada like they did in the UK?"
RONA AMBROSE: The rise of what? Sorry.
BEN: Global bond vigilantes.
PETER HAYNES: This is referring to the run on the long bonds in the UK that caused Liz Truss to basically lose control of her economy, and ultimately, her government.
RONA AMBROSE: Yeah, no, I would ask did that come before or after her positioning on her economic plan?
PETER HAYNES: No, it was in response. Basically, what happened was the market said we are not going to allow you to have an unfunded tax cut.
RONA AMBROSE: And wasn't it nice to know that the markets actually have a say?
PETER HAYNES: Yeah. But the question is--
RONA AMBROSE: What happens in the economy--
PETER HAYNES: The person is saying bond--
RONA AMBROSE: It's just government.
PETER HAYNES: They're referring to bond vigilantes almost in a negative way, I think, in that it's they've run them basically, as opposed to again-- I understand why the market reacted the way it did. I guess the question is--
BEN: [INAUDIBLE] wasn't in a negative way. It was the [INAUDIBLE]--
RONA AMBROSE: Right.
BEN: --come back. They were around 15, 20 years ago. They actually forced the government to change [INAUDIBLE]-- RONA AMBROSE: Yeah. BEN: --overnight. That happened in Canada when our dollar went to $0.60 back in the day. They could easily turn and look at our dollar [INAUDIBLE]--
PETER HAYNES: Right.
BEN: --what's going on over there.
PETER HAYNES: Well, they could do it today if we can with an unfunded tax cut, you know what I mean?
RONA AMBROSE: I don't think that'll happen though.
PETER HAYNES: No, that's good.
RONA AMBROSE: Yeah, I don't think we're going that'll happen.
RONA AMBROSE: Yeah, I don't think that's going to happen here. But it is instructive for policymakers and politicians to think about the kinds of things within the context today, the economic context going around, if they actually have power. It's one thing for an opposition leader to say something, but she was the Prime Minister, right? And as to your point about she ran on a certain very extreme kind of right wing platform economic, and then when she came in, she did what she did. And the bond market reacted the way it did. Jeremy Hunt, who accepted the job as the Finance Minister is a good friend of mine. And he is really thoughtful, really steady hand. And I've spoken to him, and just said, thank God you're there. You'll be the right person to support the new Prime Minister.
PETER HAYNES: You could argue that those same vigilantes might look at pressure from the government to remove the leader of the Bank of Canada as the type of interference that they might just say, I'm out, and sell Canada. And I guess the only country in the world that can get away with it is the US, because they're the default currency. But I think it's a great question. Wayne, I think you had a question.
WAYNE: Yeah, going back to semiconductors, we've let ourselves in the West become dependent on Taiwan and China the way that Germany and Europe was dependent on Russia for energy.
RONA AMBROSE: That's true.
WAYNE: Even when the US passed CHIPS Act, TSMC is opening a plant in Arizona, but it's going to be 1.66% of the production capacity. If there's a war on Taiwan, we're screwed.
PETER HAYNES: Your phone's not going to work.
WAYNE: Yeah, well, and/or you're not going to be able to get another phone for 10 years, right? Why is nobody focusing on this issue? Like, this-- we would be frozen. Our economies would be dead if Taiwan, if TSMC goes down in the semiconductor manufacturing that we get today out of China and Taiwan. Why is nobody focusing on that and doing something about it in a big way? Just like in Germany for years, they just said, we'll build another pipeline to Russia, and we're good.
RONA AMBROSE: Yeah. You know what, I think people are focused on it, but can things move as quickly as need be? Because we're talking about a couple of years from now, which is people predicting 2027 this is going to happen. And it's pretty-- we couldn't possibly move industry that quickly. So you hear leaders warn Xi, don't do it or else. Don't do it, or else. But do you really think that the Americans are going to send troops to Taiwan? Right? They won't even send them to Ukraine.
RONA AMBROSE: Right. So yeah, it's a concern, absolutely. So definitely, governments, I mean, I was just saying the Canadian government will release its plan soon. The Americans have a plan. And other allies have a have plans to realign trade, trade manufacturing. That's all the talk. But how quickly can it happen? And is industry working with them? Are the right incentives in place? I mean, yeah, it's a big issue.
PETER HAYNES: Well, I want to thank Rona very much for-- I know we're going to have to get the stage ready here for the open of the market. But Rona, thank you very much for joining us today. We'll see you again later today when you're interviewing John Graham. I'm sure some of the comments you've heard today you can weave in.
RONA AMBROSE: Yeah, Make sure you have lots of good questions for John.
PETER HAYNES: Thank you very much.
RONA AMBROSE: Sure. Thanks.
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Managing Director and Head of Index and Market Structure Research, TD Securities
Managing Director and Head of Index and Market Structure Research, TD Securities
Managing Director and Head of Index and Market Structure Research, TD Securities
Peter joined TD Securities in June 1995 and currently leads our Index and Market Structure research team. He also manages some key institutional relationships across the trading floor and hosts two podcast series: one on market structure and one on geopolitics. He started his career at the Toronto Stock Exchange in its index and derivatives marketing department before moving to Credit Lyonnais in Montreal. Peter is a member of S&P’s U.S., Canadian and Global Index Advisory Panels, and spent four years on the Ontario Securities Commission’s Market Structure Advisory Committee.
Deputy Chairwoman, TD Securities
Deputy Chairwoman, TD Securities
Deputy Chairwoman, TD Securities
The Honourable Rona Ambrose is a dynamic national leader, a champion for the rights of women and girls, the former leader of Canada’s Official Opposition in the House of Commons, and the former leader of the Conservative Party of Canada. Her service includes developing federal policies in military procurement, industrial strategies, health innovation and improvements to sexual assault laws.