Stephen Harper’s government will examine a broad pool of candidates to replace Mark Carney as Bank of Canada Governor, and won’t let a tight timeframe deter it from looking beyond internal candidates such as Senior Deputy Governor Tiff Macklem, according to a person with knowledge of the process.
Finance Minister Jim Flaherty issued a statement yesterday saying he will be directly involved in the selection of Carney’s replacement before his June 1 departure. A second person with knowledge of the process said the comments were meant to emphasize the government’s role in choosing a new Bank of Canada chief. Both people declined to be identified because the process is private.
The government should be “looking for a personality type and a set of intellectual skills that are not necessarily identified with a particular career path,” said Brian Lee Crowley, who runs the Macdonald-Laurier Institute, an Ottawa- based independent research organization, and who helped lead a private policy forum attended by Flaherty. Carney “has probably changed to some extent people’s assumptions about what’s desirable.”
The 12 outside directors on the bank’s board started the job search earlier this month, placing an advertisement in newspapers. The directors “will then recommend a roster of qualified candidates to the Minister for him to interview,” Flaherty said in the statement. While Macklem, 51, has been the unanimous choice of economists and analysts asked about the appointment, the previous two selections passed over the senior deputies who had been seen as favorites.
“You can’t rule out the two past precedents that have been set, to bypass the second-in-charge,” said Derek Holt, vice- president of economics at Bank of Nova Scotia (BNS) in Toronto. “If they truly wished continuity, Tiff Macklem is the odds-on favorite.”
Whoever takes over when Carney leaves to head the Bank of England must guide the world’s 11th largest economy through a sluggish expansion threatened by weak exports and record consumer debts. Carney and Macklem have kept the bank’s policy interest rate at 1 percent since September 2010, the longest pause since the 1950s, and have said since April that borrowing costs may rise.
The job has a seven-year renewable term and the salary range for last year was C$431,800 ($438,000) to C$507,900. The advertisement called for “unquestioned technical competence” in monetary policy, and the last three governors have had a doctorate in economics. It also says the position requires “a highly developed understanding of the financial sector,” as well as “exceptional communications skills” and ability in both English and French.
Flaherty’s public statement may be “inappropriate,” said John McCallum, Liberal Party lawmaker and former Royal Bank of Canada chief economist.
“It seems to reduce the independence of the Bank of Canada,” McCallum said by telephone. “There is supposed to be a certain balance” between the board and government, he said.
Macklem will face competition from a pool of candidates that may include former Deputy Governor Jean Boivin, Bank of Montreal Vice Chairman Kevin Lynch, Chris Ragan of McGill University in Montreal and Andrew Spence of the Ontario Municipal Employees Retirement System, say economists who have advised the government and central bank.
Boivin, 40, would be the first francophone bank chief in the bilingual country if selected. During his time at the bank, he oversaw experiments on how Canadians would react to different inflation targets. Boivin’s resume is enhanced by past research with Ben S. Bernanke before he became Chairman of the U.S. Federal Reserve. Boivin’s current posting as associate deputy finance minister follows a path taken by Macklem and Carney.
Boivin declined to say Jan. 15 whether he was interested in the position.
Ragan, 50, has experience in Ottawa as a special adviser to Flaherty at the finance department and held a similar post at the central bank under former governor David Dodge. “The Bank is a wonderful institution,” Ragan, co-author of Canada’s most widely used economics textbook, said by telephone. “The position of governor is obviously very important and I would be honored to be considered.”
Spence, who began his career as an economist at the U.K. Treasury, is managing director of a portfolio strategy group at the Toronto-based OMERS pension fund, as well as former global head of research for rates and foreign exchange at the investment-banking unit of Toronto-Dominion Bank and also held a term as special adviser to the central bank.
Asked to comment, Spence, 52, said in an e-mail, “clearly it would be an honor to be considered, and I would have to think about it.”
Lynch, who turns 62 this month, was named Canada’s chief civil-service adviser by Harper in March 2006. He was deputy minister in the industry and finance departments for a decade starting in 1995, experience similar to Dodge, and was also Canada’s representative at the International Monetary Fund. He holds a doctorate in economics from McMaster University in Hamilton, Ontario. Bank of Montreal’s media department didn’t immediately return calls seeking comment.
Other candidates suggested in interviews were Don Drummond, a former Toronto-Dominion Bank (TD) chief economist and former associate deputy finance minister, and Stephen Poloz, chief executive at Export Development Canada. Drummond said in a November interview he isn’t interested in the job and EDC spokesman Phil Taylor said by e-mail yesterday that Poloz won’t comment on the job competition.
Flaherty said Dec. 5 he has “a lot of respect” for Macklem, who was silent about his job prospects in a lecture last week.
Macklem, a Montreal native, was hired by the central bank as an economist in 1984, later getting a doctorate in economics from Western University in London, Ontario. He first joined the rate-setting panel in December 2004 and has been senior deputy since July 2010. Macklem also leads a policy committee at the Carney-led Financial Stability Board, the Basel, Switzerland- based body charged by the Group of 20 nations with strengthening global financial rules.
Canada must pick the candidate that can handle all of aspects of the job, said Paul Boothe, a former Group of Seven deputy at Canada’s finance department who now teaches at Western University’s business school.
“It’s pretty hard if you haven’t had experience in government and real work on the policy side,” he said. “You don’t want a great orthopedic surgeon doing your brain surgery.”