Deputy finance minister says protests came at 'delicate time' for Canada's economy

OTTAWA — Canada's economy was already facing uncertainty when protests against COVID-19 restrictions blockaded borders and occupied downtown Ottawa last winter, the top civil servant at the Finance Department said Thursday.

Michael Sabia, the deputy minister of finance, is one of three senior officials from the department testifying at the public inquiry tasked with determining whether the Liberal government was justified in triggering the Emergencies Act on Feb. 14 to end the protests.

He said the country's economy was at a "very, very fragile moment" when the "Freedom Convoy" protests began in late January, due to lingering effects from the ongoing COVID-19 pandemic and shifting dynamics in global trade.

Sabia told the Public Order Emergency Commission the protests, which shut down several border crossings, were hurting Canada's reputation as a reliable trading partner at a time when there was growing protectionist sentiment in the United States.

He also said the Finance Department feared there would be lasting consequences for the economy, particularly on Canada's automotive industry, if the protests went on for too long.

“Duration is everything here, in terms of the disruption on the Canadian economy,” Sabia said.

He said it was a "very delicate time" for Canada, as the federal government was preparing the 2022 budget and anticipating the consequences of Russia's imminent invasion of Ukraine.

Department officials prepared a memo for Finance Minister Chrystia Freeland on Feb. 9, detailing how legislative levers could be pulled to help end the protesters, including a proposal to have bank accounts frozen.

When it invoked the Emergencies Act, the government was able to regulate or prohibit "the use of property" to fund or support the blockade, allowing financial service providers to immediately freeze personal or corporate accounts without facing any liabilities.

Sabia said that was meant to deter people from coming to the protests, and to encourage those already participating to leave.

The regulations included an order that banks, credit unions, crowdfunding platforms and other financial services providers register with FINTRAC and report suspicious transactions to the financial watchdog.

They also required institutions to review their relationships with anyone involved in the blockades and report their holdings to the RCMP or the Canadian Security Intelligence Service.

About 280 accounts were frozen as a result, with about $8 million in total assets.

The Department of Finance has not produced an assessment of the economic impacts of the blockades, but assistant deputy minister Rhys Mendes said there was no direct, long-term impact on Canada's economy.

"It's fair to say the impact was limited," he said, adding that was only the case because protests weren't widespread or long-lasting.

Prime Minister Justin Trudeau's national security adviser, Jody Thomas, is also due to testify Thursday.

The commission previously learned that a few hours after the history-making decision to invoke the Emergencies Act on Feb. 14, Thomas reached out to the RCMP for a threat assessment of the protests in Ottawa and at several border crossings.

Her actions, detailed in documents previously released by the inquiry, provide some insight into the advice Trudeau and his cabinet colleagues were receiving when deciding to use the Emergencies Act.

The inquiry learned Thomas did not go through official channels and told the RCMP the protests were a threat to democracy and the rule of law.

When Trudeau invoked the act, he told Canadians its extraordinary but temporary powers were needed to quell protests against pandemic-related restrictions and the Liberal government.

This report by The Canadian Press was first published Nov. 17, 2022.

David Fraser and Marie-Danielle Smith, The Canadian Press