The House Returns - January 2020

The House Returns – January 2020

Introduction

With the House of Commons set to return next Monday, January 27, the federal cabinet held a three-day pre-session retreat in Winnipeg earlier this week.  At the top of a long list of issues was the need to set directions for the legislative agenda in the House, which will begin the task of implementing the promises of the fall election campaign, and preparing for Budget 2020, which is likely to be tabled in late March.

The decision to hold the retreat in Winnipeg was not accidental and resulted from the outcome of the October 21 election, which saw the Liberals shut out in western Canada, taking no seats between the Manitoba capital and the eastern outskirts of Vancouver.  The prime minister has promised a more collaborative approach to western concerns, but the passage of time means the rubber will soon hit the road on several issues that are driving western alienation and expectations of the government are rising. Consulting and listening must now turn to doing.

During this week’s retreat, the cabinet heard from several outside experts with knowledge of the key issues under discussion:

  • Canada’s Chief Statistician Anil Arora and economists Armine Yalnizyan and Kevin Milligan led a discussion on the state of the economy and the middle class. Yalnizyan is a labour economist with expertise on the impact of technological change on workers, and Milligan is a UBC professor and co-editor of the Canadian Tax Journal.
  • A session on climate change was led by Andrew Leach, an energy and climate change expert at the University of Alberta and Katherine Hayhoe, an atmospheric scientist and director of the Climate Science Center at Texas Tech University.
  • Ian Anderson, CEO of Trans Mountain Corporation and William Downe, chair of the company’s board, provided an update on the ongoing construction of the TMX pipeline. They were accompanied by Linda Coady, who was named by the federal government last fall to lead Indigenous engagement on equity for the project.

The prime minister updated his colleagues on the aftermath of the shooting down of the Ukrainian airliner in Tehran and the loss of 57 Canadian lives, the government’s efforts to assist the families of the victims and to enforce accountability on Iran.  The issue has dominated the agendas of the prime minister and several of his key ministers since January 8 and their handling of a tragic and difficult situation has earned the government plaudits.

Issues facing the government

Budget 2020

Finance Minister Morneau briefed cabinet on his preparations for Budget 2020. The complexities around budget planning and minority government negotiations suggest that the budget will be pushed off to late March. There are two break weeks in March which make the final week the likeliest for tabling the budget.

As the first post-election budget, it will be important in laying the groundwork for implementation of the government’s election promises as well as its fiscal program for the first year of the new mandate.

In his budget, Mr. Morneau’s challenge is to juggle three principal sets of initiatives:

  • The platform spending commitments slated for implementation in the 2020-21 fiscal year;
  • The tax and other measures the Liberals promised during the campaign to increase revenues; and
  • The federal spending review, which he confirmed in his fall economic update tabled on December 16. This review must find savings of $1.5 billion in federal spending in the 2020-21 fiscal year and in each succeeding year of the government’s mandate.

Earnscliffe estimates that in order to take all of these initiatives into account, Mr. Morneau will have to add a net increase of roughly $1.4 billion in new spending in Budget 2020. That is on top of a revised deficit estimated to be $28.1 billion in 2020-21, up from the $19.8 billion deficit projected in last spring’s budget for the current fiscal year, as Mr. Morneau revealed in his fall economic update.

Ratification of the Canada-US-Mexico trade agreement

With Mexico having ratified the deal last year and the U.S. Senate following suit last week, the pressure is now on Canada to ratify the agreement as soon as possible.  The prime minister said on Tuesday that moving forward with the agreement is the government’s “most pressing priority” and that a “ways and means” motion will be tabled in the House next Monday to formally begin the ratification process.

It can be assumed that minority dynamics may delay passage of the legislation as the various parties posture for their respective audiences, and how long the Senate may take to process the bill is anybody’s guess. Since it is an election year in the United States, the government will not want to raise the ire of President Trump by appearing to be moving slowly on ratification.

Western alienation

The prime minister, deputy prime minister Freeland and special representative to the prairies, Jim Carr, have all been consulting and listening to western premiers, mayors and stakeholders on a wide variety of concerns.  Two issues will dominate the early weeks of the winter session of the House.

  • Alberta and Saskatchewan are pushing for changes to the Fiscal Stabilization Program, through which the federal government can compensate provinces that experience unanticipated economic shocks that reduce their revenues. Premier Kenney is seeking a payment of $2.4 billion in fiscal stabilization money going back six years, which is the amount Alberta claims it would have received had there not been a federal $60 per resident cap on payments since the oil price crash in 2014. The government has promised an answer on this request soon.
  • Alberta is also pressing Ottawa to give the go-ahead to the huge Frontier oil sands project, which was approved last year with 62 conditions by a joint Alberta-federal environmental assessment panel. If it goes ahead, the project is slated to create 7,000 jobs during construction and contribute an estimated $70 billion in federal, provincial and municipal taxes over 41 years of production, but will also emit about 4 megatonnes of GHGs per year, which will reduce Canada’s ability to meet its reduction targets.

The federal government is required to decide on the project by the end of February.  Federal environment and climate change minister Wilkinson has promised to take the decision to cabinet if he concludes that the project will have significant adverse impacts: “I can’t prejudge the decision of the federal cabinet, but what I can tell you is that the issue around the greenhouse gases associated with that project will be very much relevant to the decision that cabinet will take.”

Assisted dying

Last September 10, the Superior Court of Quebec ruled that the 2016 federal law that provides for assisted dying was unconstitutional in allowing only Canadians who are already near death to seek medical assistance to end their suffering.  The court gave the federal government until March 11, 2020 to change the law.

The federal government is now seeking public input through an online consultation and outreach by several ministers to interested stakeholder groups.  So far, the online consultation has attracted an unprecedented 220,000 public responses.  The new law will need to seek balance between an individual’s choice to end their life and the protection of vulnerable individuals who could be pressured into an early death.  A major issue to be addressed is whether people who fear losing mental capacity should be able to make advance requests for medical assistance in dying.  Several high-profile cases have highlighted these issues in the current legislation.

Due to the complexity of these questions and the tight deadline mandated by the court, Justice Minister Lametti will likely be forced to seek judicial approval for the government to work to a later deadline.

China, Ms Meng and Huawei

It has now been 13 months since Canada apprehended Meng Wanzhou, the chief financial officer of global tech giant Huawei, related to U.S. allegations her company violated American economic sanctions against Iran.  In the meantime, China has detained two Canadians—Michael Kovrig and Michael Spavor—in a thinly-veiled kidnapping and locked out Canadian imports of canola and pork, costing canola farmers over $1 billion in lost sales.

On Monday this week in Vancouver, the first extradition hearing began with attention focused on “double criminality” which involves arguments over whether the United States and Canada had the same laws regarding fraud and sanctions against Iran.  For the extradition to proceed, criminal acts must be considered an offence is committed in either country.

Other developments on the Canada-China front:

  • When the House met in December, the opposition forced the government to establish a Special Committee on Canada-China Relations. The committee held is first meeting this past Monday and called Dominic Barton, Canadian ambassador to China, to meet with them before February 7.
  • In the Globe and Mail last weekend, Eddie Goldenberg, former chief of staff to Prime Minister Jean Chretien, called for a prisoner exchange to solve the issues with China over Ms Meng and the two Canadian detainees. This approach was promptly rejected by deputy prime minister Freeland this week.
  • Still outstanding is a decision by Canada on whether Huawei will be allowed to participate in building Canada’s 5G telecommunications networks. For the first time, the public safety minister said this week that geopolitical considerations will figure into the final decision in addition to the technical issues around the threat to security Huawei technology might pose.

Gun control

During the election campaign, the Liberals promised a ban on certain assault weapons, to allow municipalities to ban handguns and to enact additional laws to restrict access to illegal weapons.  Speaking in Winnipeg this week, public safety minister Blair said that the assault rife ban would happen quickly, but the other measures will take more time, such as the partial handgun ban which requires negotiations with the provinces.  He also said the upcoming budget will provide money to help communities impacted by gun violence.  The minister also said the government’s specific gun control initiatives will involve a combination of legislation and regulations.

Indigenous child welfare compensation

For many years successive governments have ignored several decisions of the Canadian Human Rights Tribunal, finding that federal underfunding of the Indigenous child welfare system resulted in the removal of children from their homes and communities.  Late in November, the tribunal gave the federal government until January 29, 2020 to pay compensation of $40,000 each to those affected—both the children themselves and their relatives.  It is estimated that the total cost of this compensation could be as high as $6-$8 billion.

While the federal government has appealed the tribunal’s latest ruling, it has agreed that compensation payments need to be made. Federal officials are currently in discussions with stakeholders in search of “a solution that will provide comprehensive, fair and equitable compensation for First Nations children in care.”  A resolution of this issue is expected in a matter of weeks.

Pharmacare

The Liberal campaign platform committed to “take the critical next steps to implement national universal pharmacare so that all Canadians have the drug coverage they need at an affordable price.” That said, the platform did not include any amount for pharmacare in its costing of new investments. (See page 81-82.)

It should be remembered that the Parliamentary Budget Office estimated in 2017 that implementing pharmacare would cost approximately roughly $20 billion a year. Given that implementing all of the Liberals’ platform commitments between 2020-21 and 2023-24 would cost a cumulative $56.9 billion, it is clear that pharmacare cannot be implemented without doing serious damage to the existing fiscal framework and jeopardizing the finance minister’s need to keep the debt-to-GDP ratio on a downward track.

Following the Winnipeg cabinet retreat, health minister Patty Hajdu acknowledged the federal government’s challenges facing pharmacare, admitting that it’s “hard to say” whether a national, universal plan can be accomplished during the Liberals’ second term.  Several key provinces have questioned the sustainability of a major new program when they are struggling with the costs of the existing health care system.  The willingness of the provinces and territories to participate in the program and cooperate towards its implementation is critical to its success.  It is therefore likely that the government will take a “go-slow” approach to pharmacare, focusing on consultations with stakeholders and planning for later implementation.

Delays in proceeding with pharmacare will also attract criticism from the NDP, because pharmacare was a central part of their election platform.

Environment and climate change

The newly established Canadian Institute for Climate Choices released its first report this week.  The institute is funded by the federal government with $20 million over five years and is the successor to the National Roundtable on the Environment and the Economy, which was wound up by the Harper government in 2012.  The report provides a broad overview of global climate change, the current state of climate policy in Canada and possible paths forward.

During the election campaign, the Liberals promised a plan for Canada to reach net zero emissions by 2050, but the cabinet meeting in Winnipeg ended without any indication as to when implementing legislation might appear.

In March, the Supreme Court of Canada will hear appeals on lower court decisions that rejected attempts by Saskatchewan and Ontario to declare the federal government’s carbon pricing regime unconstitutional.  Alberta is still waiting for its own appeal court’s decision.

Finally, federal public servants are now at work drafting the regulations to accompany Bill C-69, the legislation passed in the last Parliament that completely overhauls the regulatory environmental assessment and approval processes for large oil, natural gas and mining projects.  Both Alberta and Saskatchewan have been loudly insistent that that they be consulted and listened to in the regulations-drafting process.

Minority dynamics

Presumably, the Government House Leader and the Whip will have led a discussion at the Winnipeg retreat on the complicated realities of managing a legislative agenda in a minority. The first real test of the minority dynamics will come in the quiet negotiations between the government and opposition parties on their wish lists and minimum demands in relation to the budget and their ability to vote for it or at least not vote against it

House dynamics are critical and constant vigilance about the location and availability of members, including ministers, is essential.  When guiding legislation through the House, ministers must be aware at all times of the views of their opposition critics and be prepared to negotiate and make deals. It may take ministers some time to adjust to these minority realities, where the government no longer controls committees and where opposition days and Private Members’ Bills can be weaponized to damage and embarrass the ruling party.

Getting ready for House business

Liberals, Conservatives, NDP and the Bloc Quebecois all held their pre-session caucuses this week.

The negotiations between parties to establish the membership of House committees are now complete.  Committees will be structured with the following membership:

  • 5 Liberals
  • 4 Conservatives
  • 1 Bloquiste
  • 1 New Democrat

The Procedure & House Affairs committee report (whose tabling establishes all the committees) is ready to be introduced in the House as early as Monday.  If that does indeed happen, committees will then immediately thereafter be free to set their inaugural meetings, to elect a chair and begin doing business.

Key dates

  • Imminently: The prime minister will appoint a Senator to become Government Representative in the Senate to replace Senator Peter Harder, who signalled his intention to resign just before the Christmas break.
  • January 30: Following release of the report of the Broadcasting and Telecommunications Legislative Review Panel (date TBA) Janet Yale, chair of the review panel and member Monique Simard will be speaking at Prime Time on January 30 at the Shaw Centre, Ottawa, 5:45- 9:00 PM.
  • Early February: Likely federal-provincial-territorial First Ministers meeting, to be hosted by the prime minister, at which the Fiscal Stabilization Fund and the Frontier project are sure to be discussed.
  • End of February: Deadline for environment minister Wilkinson and/or the federal cabinet to decide on the Frontier oil sands development.
  • June 27: Conservative Party conference in Toronto, at which the next Conservative Party leader will be announced.
  • October 3-4: Green Party National Convention in Charlottetown, PEI.  The Green Party holds its national policy and leadership convention. Elizabeth May’s successor will be chosen.