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2015 Canadian Federal Election: What Happened …What it Could Mean to Business

The result:

Oct 19,2015

Liberals

Conservatives

NDP

Bloc
Quebecois

Green

Total Seats = 338

Majority = 170

184

99

44

10

1

By contrast, the previous election results:

May 2,2011

Liberals

Conservatives

NDP

Bloc
Quebecois

Green

Total Seats = 308

Majority = 155

34

166

103

4

1

Roughly summarized, what happened in the election?

The 78 day election started with the NDP in first place, the Conservatives in second and the Liberals in third but the parties were bunched close together in the polls. None were in majority range. Both the Liberals and NDP had more capacity for growth as they had more second choice preference.

The governing Conservatives were only about 30% of the voters’ first choice and a small number of voters’ second choice. Their best-case scenario was to win the largest number of seats in a minority government and try to cling to power.

The election was about change. It was a question of whether the NDP and the Liberal would grab the change mantle and turn those second choices into first choices. The NDP ran a poor campaign with a leader lacking broad appeal. The Conservatives ran a poor campaign that retained but did not grow their vote.

The anti-Conservative change message was powerful for a couple of reasons:

There is the normal wear and tear any government faces after ten years.

The Conservatives were not a clever government with a lot of interesting ideas. They became the vehicle for one clever man with a few ideas and an absolute and ruthless adherence to a certain way of campaigning and running a government. The tactics and/or by-products of this commitment to message control and campaign methodology were a bunker mentality; shrill partisanship; robotic spokespeople endlessly looping party talking points; negative advertising first and always, the bullying and bulldozing of Parliament and critics; open hostility to the press; exclusion and deafness to voices and facts that contradicted party positions and the relentless bending of government messages to a partisan purpose.

It is worth pointing out that what eventually defeated the Conservatives is also what helped them previously win three elections in a row. It just stopped working! Instead of adapting they doubled down with predictably bad results. Their election campaign was a showcase to remind the voters of what was objectionable about the Conservatives. They had no new ideas and, when desperate, they are nasty and stupid. At the end of the day, they kept their base but were no one’s second choice. Like a bad house guest that stays too long, they wore their hosts out and were sent packing.

It is an old story. As Talleyrand is reported to have said of the Bourbon monarchs: “They had learned nothing and forgotten nothing.”

In contrast, the Liberals offered the country a young, attractive leader with a sunny, optimistic message. Justin Trudeau is a great retail politician, natural and comfortable in the public eye. He and his team rebuilt a party that had been on the edge of extinction a few years previously. They executed a good campaign. Mr. Trudeau got better as the campaign wore on.

The Liberals seized the change mantle and harvested votes from both the left and right. Once it was clear that they were the best choice for throwing Mr. Harper out - the final vote results showed that 68% of the voters really, really wanted that to happen – then the momentum built and carried them past a minority government to a four-year majority. Few expected this before the election. The polls seem to be trailing, not predicting, the voter trend. There were many surprised people on Election Day, including, one suspects, our new Prime Minister Justin Trudeau.

Mr. Trudeau has a history of being underestimated and exceeding expectations. Hopefully, he will continue to do so as our country’s Prime Minister.

This is now being described as a re occurrence of ‘Trudeaumania’ which accomplished his father’s first win in 1968. This is a highly exaggerated claim.

Mr. Trudeau won his majority with 39.5% of the popular vote; almost the same as Mr. Harper four years previously. Once the new seats added to the House of Commons are included, it is an equivalent-size majority.

Our Parliament ‘first-past-the-post’ system both rewards and punishes party results when there are three and four-way competitive local contests

This can be shown by comparing this election to the previous one:

2015 Election

Share of the Popular vote

Share of the Parliamentary Seats

Liberals

39.5%

54%

Conservatives

31.9%

29%

NDP

19.7%

13%

Bloc Quebecois

4.7%

3%

Green

3.5%

Almost 0%

2011 Election

Share of the Popular vote

Share of the Parliamentary Seats

Liberals

18.9%

11%

Conservatives

39.6%

53.9%

NDP

30.6%

33.4%

Bloc Quebecois

6.1%

1.3%

Green

3.9%

0.3%


What hurt the Liberals last time helped this time!

Additionally, 71 MPs won their seats by 5% or less. 23 ridings were won by a thousand votes or less. Had the Conservatives and/or NDP ran better campaigns and gained a few more points of the popular support, then the results of the election would have been a muddled, minority government situation.

It was a much closer affair than the froth from the morning-after pundits suggests.

The historic aspects of the victory are:

  • The movement from third party to majority Government. Mr. Trudeau picked up 150 new seats in a 338 Parliament. That has never been done before.

  • Mr. Trudeau is the first son of a Prime Minister or even direct family minister of a Prime Minister to become Prime Minister. Although Canada has a monarch, our politics lacks the same aristocratic and monarchical vestiges of our Republican neighbour to the south. The churn in Canadian politics is hard on dynasties.

  • More women were elected to this Parliament (88 in total and 26% of all MPs). Since Mr. Trudeau has promised general equality in his Cabinet, this matters!

  • More individuals from visible minorities were elected than ever before – 46 members or 14% of the total, a percentage approximately the same as the general population.

There are some recent historical markers.

  • At 68%, this is the highest voter turn-out since 1993– also a ‘throw the bums out’ election in which a Liberal sunny optimist crushed a conservative party.

  • Due to both retirements and electoral defeats, there are only 124 incumbents returning to the House of Commons. That means almost 2/3rds of the MPs are new. High turn-over is a feature of Canadian politics but this may be or is a historical high.

The PM and new cabinet will be sworn in on November 4.

There is no public commitment to recall Parliament before the holiday break. Some pressure is building to do so but so far there has been some resistance from the centre. MPs have to be assigned offices. Thousands of staffers have to be hired including experienced staffers from the previous Chretien Government to pair with new rookie Ministers.

Mandate letters must be prepared for each new Minister. A Speech from the Throne has to be written. A fall Fiscal and Economic Outlook has to be released by a new Finance Minister.

There are the Commitments made for their first ‘100 days” including:

  • Introducing the new tax bracket of 33% for annual incomes over $200,000 and reduce the middle class tax bracket by from 22% to 20.5%

  • Meet with provincial and territorial leaders for a new pan-Canadian Framework on climate change and possibly a new Health Accord.

  • Meet with provincial, territorial and aboriginal leaders to begin work on the National Early Learning and Childcare framework including funding discussions.

  • Launch a public enquiry into missing and murdered aboriginal women and girls.

Meanwhile the new Prime Minister is booked for the Conference on Climate Change in Paris and possibly the G-20 in Turkey; the APCE Conference in the Philippines, and the Commonwealth Heads of Government Meeting in Malta.

There are 22 Senate vacancies and a Conservative majority in the Senate. This suggests an imperative to appoint new Senators quickly. However, there remains a platform and public commitment to withhold Senate appointments until such time as a committee of eminent persons has been appointed and made recommendations to the new PM. A consultation with Senate leadership of all parties will take place early in the mandate.

And this is just the start of the New Governments’ to-do list.

What Does this Mean to Business?

This will be a more activist and progressive Government. Unlike Mr. Harper, Prime Minister Trudeau will not be a micro-manager. His Cabinet will matter more, be smaller and with a high representation of women, therefore, less patriarchal. Whereas the Conservatives seemed to be at war with the public service, Liberals traditionally take a more symbiotic approach to merging their political decision-making with the public service processes. That means the public service will matter more. There will be a more activist environmental and scientific agenda.

Individual business sectors will have some issues but Liberals tend to run from the left and rule from the centre. They are not anti-business.

The Liberal Party Platform is busy but not radical. It is intended to undo a number of things that the Conservatives did and restore funding that matters to selective constituencies. There are many spending initiative promised but they are not novel. The Platform can be viewed as a “Greatest Hits” collection from the party’s governing past.

Pundits are already claiming that the Platform will be a major challenge to implement. That is simply not true. Because of the sheer number of commitments, it will take time but 90% of it is stuff that Government has done before. The hard parts are the political reforms and the pieces that require federal-provincial consensus. Sometime they will be required to take half or a quarter of a loaf and declare victory. But, it is mostly doable.

The defeat of the Conservatives has created palpable relief in many quarters. As long as the Liberals keep it civil and show they are listening and consulting widely, they have a lot of running room.

The items that affect Business generally:

  • They will work with the provinces to increase the size of the Canada Pension Plan benefit which will logically included higher contributions from both employers and employees. Exactly, how high is not clear and will have to be negotiated. Minimally, we should expect at least a 25% increase in the potential benefit and then some corresponding increase in contributions.

  • Parental benefits will be made more flexible.

  • There will be a managed cap on stock option deductions.

  • They are supporting the Conservative tax measure in the budget to lower the small business tax deduction from 11% to 9% by 2019.

  • Tax Free Savings Accounts will be rolled back to $5500 per year.

  • There will be more money available through the provinces for labour market training.

And issue that matters is whether the Liberals will support the Trans Pacific Partnership Trade Agreement. Mr. Trudeau will be under pressure to declare himself by the time he attends APEC. He has already said publicly that Liberal policy supports trade agreements generally.

The Liberals are promising much new infrastructure spending and to run deficits for the next three years. Depending on which economist you listen to this will push economic growth in Canada up by .3% to .5% of GDP a year.

Since those monies are to be targeted at municipal infrastructure (transit and highways); old age homes and social housing and green technologies, those industries can expect to benefit.

The promise to legalize marijuana has this ‘emerging’ Canadian industry atwitter.

There messaging on defence procurement is a little confusing. They are promising to hold existing defence funding levels and also expedite a series of projects including replacing the CF-18s and re-equipping the Royal Canadian Navy, top equipment priorities will include acquiring cost effective search and rescue aircraft, long range surveillance UAVs, and finalizing a variety of Army projects. At the same time, they are planning to review and shift many of the major roles of the military.

Although this has not been recognized, there are proposals in the way that Parliament and Parliamentary Committees work that matter. This will have an impact on how business interacts with Government. In essence, individual MPs and Ministers will have a lot more say and influence, particularly in matters where they have a portfolio or Parliamentary role.

The challenge for the new Government is not in the implementation of their platform.

There are plans to run a deficit for three years and achieve a balanced budget in the fourth year. That involves approximately $35 billion a year to fund the new spending and $24 billion annually in new revenue to pay for it. Some of that revenue is a little speculative. Much depends of the growth in the Canadian economy. We are a commodity-driven export economy with commodity prices suffering. We have aging demographics and low productivity growth. Seven out of ten provinces are heavily indebted and fiscally strained. None of the spending planned by the Government will fundamentally shift that dynamic. Strong economic growth will solve most of the government’s problems. Anemic or a reversal in economic growth will squeeze them on the spending side and potentially undermine their narrative.

Change but managed change and lots for business to consider! But this election confirms that politics is unpredictable and campaigns matter!





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