This interview was originally published in Report on Business April 9, 2011.
Jim Flaherty tries to avoid carbohydrates to keep his weight down, but it's not such a worry during election campaigns. He figures he'll walk off many of the calories we're tucking into at Bella Notte, an Italian eatery in Whitby, Ont., by spending his afternoon knocking on doors.
The campaign trail is familiar territory for the 61-year-old, who grew up in an Irish Catholic family in Montreal. In the summer of 1968, he came home from Princeton - which he attended with help from a hockey scholarship - to learn his oldest sister had a task for him and their six siblings. She was dating the Liberal candidate in their riding, and she wanted help.
"She said, 'You're all Liberals, go knock on doors.' And so we did," Mr. Flaherty recalls. It was the height of Trudeaumania, and the Flaherty clan was right in the middle of it. But over the following decade, as the hockey-mad undergrad transformed into a Bay Street lawyer, he became disenchanted with Pierre Trudeau. "I thought it was really quite irresponsible, these deficits and debt and the inflation that followed," he says.
A conservative attitude about spending began to cement in Mr. Flaherty, who still speaks with admiration about the budgeting techniques he picked up from his mother. It's tough to miss the irony, then, that he would one day become the finance minister responsible for the largest deficit in the nation's history.
In December, 2008, Mr. Flaherty found himself in control of Canada's purse strings at the onset of the most challenging economic period since the Depression. He and other global leaders decided the best way to beat the crisis was to throw money at it. And so, after vowing never to preside over a deficit, Mr. Flaherty drove the country deep into the red.
As stressful as the period was, Mr. Flaherty says he misses the adrenalin rushes that came with making tough decisions. By comparison, even elections are easier to take on. "During the events of the last few years, during the economic crisis, it's been fairly stressful. A lot of travelling around the world and a lot of travelling in Canada and the U.S. I spend more time at home during election time, which is kind of nice."
Mr. Flaherty has been keeping a fairly low profile in the runup to the election on May 2. His 2011 budget in March, which is now a key part of the Conservative election platform, essentially kicked off the election as opposition leaders decried what they said was a lack of action on affordable housing, childcare, and measures for the elderly. But he hasn't backed away from it.
This is the finance minister, after all, who stunned investors in 2006 by shutting down income trusts. He has pumped tens of billions of dollars into the economy in the blink of an eye. He has taken on the banks for ABM fees and online insurance sales. He has barrelled through opposition to a national securities regulator. And, if his party is able to pull off a majority government, he plans a radical overhaul of the country's tax code - something that hasn't been done since the sixties.
He's also not one to hesitate. He remembers standing next to Prime Minister Stephen Harper in December of 2008, the period in which they crafted the stimulus plan, and saying: "Let's all hold our breath, because if this doesn't work we're running this country into one huge deficit."
In fact, he has worried his decision to pump billions into the country's mortgage financing market spurred some consumers to take on more debt than they could afford - a fear he tried to counteract by repeatedly tightening up the rules about who can take on a mortgage.
"I do listen to lots of people," he says. "Even the developers in the last year were saying to me - it's in their self-interest to build all these houses and condos - even they were saying 'It's okay to tighten up a bit more, we have a level of discomfort in what we're seeing.'
"And you see a lot of people buying these houses, huge houses they don't need. Everyone wants instant gratification, you have to have everything your parents had right away."
His fears about housing-related debt levels hit a peak at the start of this year, causing him to tighten the rules again in January.
"In the condo market in Vancouver, Montreal, Toronto, we were seeing a fair amount of speculation," he says. "And the developers helped me with that, the economists helped me, and the banks helped me, because they finance a lot of these developments and some of the CEOs would tell me from time to time - even though they're lending money - that it was starting to concern them."
While the crisis might have peaked, that's not to say there's no more drama. Just a few weeks ago, the finance ministers and central bankers of the G7, which Canada chaired last year, decided to intervene in currency markets to weaken the surging Japanese yen.
But the bonds that were built among the G7 and G20 finance ministers by collaboratively battling the global meltdown are loosening now that the worst appears to be over. "The unity starts to stretch a bit because there is less of a crisis situation now and so, like everything else, there are some people going off in their own directions and somewhat more discord," Mr. Flaherty says.
Back on home turf, he's carrying three BlackBerrys, partly to parcel off all expenses related to his campaign. But during election periods he spends more time in Whitby, where he and his wife Christine Elliott, the Ontario Progressive Conservative MPP in the same riding, have a farmhouse.
He still keeps up his workouts, which he normally does in Ottawa at the MPs' gym. It's one of his favourite spots to do business.
"They say we never work with the minority; I've made some good arrangements in that gym in the last five years with [Gilles]Duceppe, Jack [Layton] on the elliptical machines and that," he says. "How serious can people be when people walk around in shorts and T-shirts? It's not like being in the House. So that's a good place to talk."
At Bella Notte, despite all the calories he's expending going door-to-door, he's still mindful of carbs - passing up the pastas and paninis on offer for golden beet soup with a giant scallop and a bowl of mussels.
This may be his seventh campaign in the riding, but he has tasted defeat. His first attempt to enter the fray of provincial politics in 1990 was a failure. Five years later, he succeeded and became a key figure in the Mike Harris government. After losing two bids to lead Ontario's Progressive Conservatives to Ernie Eves and John Tory respectively, Mr. Flaherty found himself making a phone call to Stephen Harper, then federal leader-of-the-opposition. Mr. Flaherty told his acquaintance he was worried the federal party might be drifting. So the two of them sat down to a lunch in Ottawa.
"I was satisfied at having listened to him one-on-one that he had a plan, so I was good with that, but he suggested that I might want to run federally," Mr. Flaherty says. "So I went away thinking about that, rather than worried about him not having a plan."
Mr. Flaherty became Finance Minster in February, 2006. Less than nine months later, on Oct. 31, he shocked the business community by deciding to effectively kill income trusts - a Halloween surprise that left many investors thinking he was a monster.
It's a decision that he stands by to this day, even though he knows it probably led to a view on Bay Street that he was erratic - an impression that he thinks he's since overcome. He rhymes off a list of major decisions that have been made in the interim, including corporate tax reductions, tax-free savings accounts and registered disability savings accounts.
As we sip espresso, Mr. Flaherty is thinking of the evening event that Mr. Harper is coming to Ajax for, which Mr. Flaherty will MC. He's still got a few hours of canvassing before then.
Though he's an old hat at the campaigning life, he's still willing to try the occasional new tactic. The previous day he was talked into using Twitter for the first time. He wasn't a convert.
"I did one tweet," he says. The tweet was: First local debate tomorrow at Sinclair Secondary School - regular election event and usually lively forum in Whitby.
"I thought it was a fairly boring thing to say," he says. "And it appears to have been accepted as very boring because there has not been a lot of response."
Mr. Flaherty notes that Industry Minister Tony Clement is constantly tweeting. "And I'm like 'who cares.'"
Born Dec. 30, 1949, in Lachine, Que.
Graduated from Princeton University, and Osgoode Hall Law School
Called to the bar in Ontario and practised law for more than two decades.
Elected MPP in 1995 for Whitby-Ajax.
Held posts that included minister of labour, minister of finance and deputy premier.
In 2006, became the member of Parliament for Whitby-Oshawa and finance minister.
In 2009, Euromoney magazine named him "Finance Minister of the Year."
Wife is Christine Elliott, the MPP for Whitby-Oshawa.
Triplet sons, one of whom is studying at McGill University and whom Mr. Flaherty invites to dinner when he's in Montreal. "He shows up usually with four or five rugby-slash-football friends. They just want free steak and beer … They want to go to the Keg, that's where you get lots."
Advice to business leaders
"Get out and sell to the emerging economies as quickly as you can … [and also]we still want to see more spending on new machinery and equipment."
IN HIS OWN WORDS
On his best job ever:
The best job I ever had was when I was 19. I didn't have a summer job and I was coming home from Princeton … and they offered me this job as a waterfront director at this camp in rural Quebec because they were bringing in sailboats that someone had donated. And so I took the job, delivered the sails, and I didn't realize until I got there that it was an all-girls camp with all girls as staff and I was the only guy. This was the best job ever.
On why he now skates on the Rideau Canal rather than playing hockey:
I still have my teeth. I don't want to lose them at age 61 in some hockey game.
On what keeps him up at night:
What worries me is the next time we have a crisis it will probably happen even more quickly than the last time. Partly because of Dodd-Frank [law]in the United States which gives the U.S. government the power to move in quickly and take over financial institutions, which causes concern on Wall Street. So that if they perceive any particular financial institution might be taken over overnight, you've got to get out quick. And they can get out quick now with electronic trading.
On the dollar:
I remember being in the Ontario Legislature and the Liberals yelling over at me about the fact that the dollar was rising and that was bad for business and didn't I realize that. And I thought "what are you talking about?" The value of the currency in part, large part, reflects the world's view of the state of our economy. So the world now looks at us more positively than they did. Also, of course, the weakness in the U.S. economy, there's a relativity there. When I went to Princeton in the 1960s the Canadian dollar was $1.05 (U.S.), so I don't have any problem with the currency being around parity. Obviously there would be a problem if the currency were to spike up as it did a couple of years ago.