Earnscliffe Election Insights: Issue #10

Earnscliffe Election Insights: Issue #10

In his post-election news conference last Wednesday, Prime Minister Trudeau admitted that the results of the election had given him a lot to think about as he forms his new government.  He faces the immediate task of forming a cabinet to govern a country fractured along several regional and federal-provincial fault-lines. Conservative leader Andrew Scheer faces some heavy thinking too, as he faces widespread calls for accountability for a poor showing in a campaign that many in his party believe should have been winnable.

Mr. Trudeau’s challenges

Returning to office with a minority, the Liberals dominated in vote-rich Ontario but were shut out in Saskatchewan and Alberta and lost seats in British Columbia. The Liberals do not have a seat between Winnipeg and Vancouver and the vast majority of Liberal seats in the new Parliament come from urban and suburban communities.

After promising in 2015 to patch things up with the provinces, 85.4 per cent of Canada’s population is now represented by conservative or right-leaning governments at the provincial level, and the prime minister just spent six weeks personally attacking two prominent Progressive Conservative premiers by name.

While the national economy has been producing record-setting employment gains in recent years, Alberta and Saskatchewan face shut-in commodities due to the federal inability to build pipelines and Chinese trade sanctions against critical Canadian export products such as canola.

The strong showing of the Bloc Quebecois in the election, combined with that party’s alignment with the Coalition avenir Quebec government, promises a stronger and more strident nationalist voice for that province in national politics.

These divides will be front and centre as the prime minister unveils his new cabinet on November 20.

Cabinet considerations

Mr. Trudeau’s pre-election cabinet returns to the House relatively intact; only two ministers lost their seats, Public Security Minister Ralph Goodale and Natural Resources Minister Amarjeet Sohi. This means the prime minister’s first circle to square is putting a new face on cabinet without removing ministers, while satisfying the expectations of capable backbenchers elected in 2015 who expect to move up to cabinet. The current cabinet contains 35 members and the largest on record numbered 42, so Mr. Trudeau has some room to expand.  That said, it is inevitable that the making of the cabinet omelette is going to involve some broken eggs.

In addition to the loss of Ministers Goodale and Sohi, another challenge the prime minister faces is the sidelining of two current key ministers due to illness.  Former House Leader and Fisheries Minister Dominic has been fighting cancer for more than a year and Jim Carr, currently the Minister of International Trade, was diagnosed with cancer immediately following last week’s election.

To be successful, a minority government needs a capable and sage house leader who balances firmness with flexibility and possesses a vast knowledge of House procedure.  This will be a critical appointment for the prime minister.  He will also have to decide whether Bill Morneau should continue in Finance or if Chrystia Freeland should become Canada’s first female minister of finance. Another question centres on the future of the Department of Innovation, Science and Economic Development (ISED).  In the last Parliament, ISED was front and center in the government’s efforts to harness innovation to build the future economy and expand the country’s science capacity, but the Liberal platform virtually ignored these issues.  Will Navdeep Bains continue as minister?

Alberta and Saskatchewan

The Liberal shut-out in Alberta and Saskatchewan on October 21 was the ultimate measure of those provinces’ displeasure with federal policies of the last four years, but it was also self-defeating in that it removed the possibility of their Liberal MPs from joining the federal cabinet.

But Mr. Trudeau faces limited options in representing those provinces in his cabinet. As many have pointed out, he could use appointments to the Senate, either from outside or from existing members.  Alternately, he could appoint respected citizens of the two provinces directly to cabinet, bypassing the Senate altogether. Yet another option would be the appointment of outside cabinet advisory committees to represent the two provinces, as he did with the multi-partisan advisory committee on the renegotiation of NAFTA with the U.S. and Mexico. Premiers Kenney and Moe will be pressing the PM for direct and frequent consultations with the prime minister to represent their provinces’ interests at the national level.

All of these options are a distant second-best to the usual practice of appointing elected MPs to represent provincial interests around the cabinet table. They would significantly bend the usual norms of cabinet and democratic accountability. That said, they are workable solutions in the current circumstances.

Managing the federation

There are no easy answers to the regional and federal-provincial cleavages placed in relief by the recent election.

The premiers of Alberta and Saskatchewan fired off letters to the prime minister the day after the election listing a predictable set of demands. In his Wednesday news conference, Mr. Trudeau vowed not to enter a coalition with the NDP and to press on with the construction of the TMX pipeline. These are important first steps in addressing the alienation that is growing in Alberta and Saskatchewan.

But the prime minister and the Liberals are not at all inclined to veer away from addressing climate change or abandon carbon pricing.  A September Mainstreet poll found that 61 per cent of respondents strongly or somewhat believe that it’s more important for the government to solve the issue of climate change even if that means that the economy suffers.

Similarly, the Liberals are heavily invested in the changes about to be implemented through Bill-69, the legislation to govern the future evaluation of pipeline and natural resource projects based on their impact on human health, the environment and local communities.  The new government may be convinced to be sensitive to western concerns in the upcoming creation of the regulations necessary to implement the legislation, but the bill stands.

Equalization is the federal program that provides unconditional transfer payments to lower-income provinces to address fiscal disparity and support the provision of comparable public services across the country. Five provinces currently receive equalization payments, Prince Edward Island, Nova Scotia, New Brunswick, Quebec and Manitoba.

Alberta Premier Jason Kenney has threatened to hold a “constitutional referendum to end equalization, to assert our fight for fairness to the top of the national agenda.” Saskatchewan has also called for changes to the program.  As Premier Kenny puts it, “Every year, Alberta sends $20-billion in transfers to other provinces through the federal government.”

While the money that funds equalization comes from federal government general revenues, Alberta argues that there is an imbalance between the funds flowing out of Alberta and the transfer payments it receives from Ottawa. According to the federal Department of Finance, a major part of that “imbalance” is accounted by the fact that 21 per cent of Canada’s $100,000-plus earners live in Alberta, and Alberta collects about 21 per cent of Canada’s corporate taxable income.

The real target of Albertans’ anger is Quebec’s status as by far the largest recipient of equalization and its aversion for west-to-east pipelines. In December 2018 Premier Legault said there was no “social acceptability” to running a pipeline that would carry “dirty energy” through his province. In addition, despite posting a budgetary surplus, Quebec is receiving the lion’s share of federal transfer payments for 2019-2020—more than $13 billion.

Over the past weekend, Public Procurement Minister Carla Qualtrough was asked on Global TV whether the federal government would consider changes to equalization to satisfy western demands.  In reply, she said, “My understanding is nothing is off the table. We want to make sure everyone is being treated equally and fairly, and if people aren’t feeling like they’re being treated that way, then of course we are going to have to have these really important conversations.”