Canadians recently went to the polls in snap elections triggered by the governing Liberal Party. With a considerable voter turnout of almost 70 percent, the polls ended in a Liberal victory that, while slightly short of the needed parliamentary majority, was still unimaginable for the center-left party just a few months ago.
The Context
Canada’s elections came at a time of heavy economic uncertainty and a looming prospect of recession. Stagnating economic productivity and wages, coupled with inflationary pressures, have been eating away at Canadians’ purchasing power for years.
On top of that, nearsighted immigration policies designed to provide quick macroeconomic relief during the pandemic years, led to levels of immigration that were not commensurate with the country’s infrastructure and construction capacity, resulting in a self-inflicted, economically devastating, and absurd housing crisis in the country that has the second largest surface area in the world and the lowest population density among Western nations.
All of this was before US President Donald Trump took the stage at the White House, asking Canada to become the 51st American state and announcing high tariffs on the Canadian economy, where industrial manufacturing sectors largely rely on trading across the southern border.
Former Prime Minister Justin Trudeau, whose name was inevitably associated with the country’s economic woes, ended up having to resign in early January after a decade in office.
His successor would be Mark Carney, a Harvard-educated economist who was not actively involved in politics until then. Headed for a crushing defeat in the opinion polls, the Liberals turned to an outsider who came out of nowhere and who did not even hold a seat in parliament at the time.
Until the radical change in the Liberal leadership, the Conservative Party, the mainstream opposition faction, was enjoying a comfortable lead in the polls. Its relatively young leader, Pierre Poilievre, ran on a campaign with catchy slogans, promising to lower taxes, cut red tape, and stimulate housing construction.
Causes of the Liberal Turnaround
Despite this last-ditch strategic maneuver, it might still not be easy to understand at first sight why Canadians would give another chance to a party whose policies have caused so much turbulence and left their country extremely vulnerable in the face of the impending tariff wars.
Several dynamics could have led to this outcome.
First, the rally-round-the-flag effect. Whether the US President intended it or not, his rhetoric triggered a wave of reactionary patriotism that had not been seen in Canada in a long time. While most Canadians would probably welcome a European Union-style economic integration with the US, the direct attack on sovereignty resulted in a backlash in the country, whose very origins lie in its refusal to join the American Revolution in the first place.
For a relatively inexperienced politician, Carney did an unexpectedly better job surfing on this collective outrage than Poilievre’s Conservatives, who, out of a sense of caution or failing to read the room, were much more measured in their response. Having been campaigning on how “broken” Canada is for years, the Conservatives were caught on the wrong foot when external adversity led to a sudden outburst of national pride.
Second, Carney was unburdened with political baggage from the previous government. While the last-minute reshuffling of the Liberal leadership might be evocative of the Democratic maneuvering in the middle of last year’s US presidential elections, it is important to note that Carney did not hold an official position in the Trudeau government, as opposed to Kamala Harris who was an extremely unpopular Vice President in the Biden administration.
Plus, Carney was successful in branding himself as a seasoned expert in crisis management, having served as the governor of the Bank of Canada where he dealt with the fallout from the 2008 global financial crisis, and as the governor of the Bank of England where he managed the British central bank’s response to Brexit.
Amid the increasingly negative economic prospects clouding their country’s horizon, many Canadian electors might have seen their savior in this down-to-earth and boring-looking banker.
A third factor that should be noted is Canada’s single-member district electoral system. Officially referred to as “First Past the Post,” the system involves electing one MP for each electoral district (called “riding” in Canada). The candidate with the most votes secures the seat in the House of Commons, even if it is below 50 percent.
This electoral system generally favors bigger parties over smaller ones. It also disadvantages the Conservatives, whose supporters tend to be more concentrated in western provinces such as Alberta and Saskatchewan, as opposed to the Liberals, whose voters are distributed more evenly across the country.
As a result, the Liberals were able to receive almost half the seats in parliament despite having received only 43.7 percent of the vote, while the Conservatives were left with only 42 percent of the seats despite being a close second in the popular vote with 41.3 percent.
The Liberals enjoyed comfortable victories in major urban centers like Toronto, Montreal, and Vancouver.
While the Conservative failure in Montreal could be partly understandable given the permanent minority sentiment in the French-speaking province of Quebec where voters can be more focused on the protection of their culture and language than bread and butter issues, the outcome in Toronto and Vancouver which were hit hard by the rising housing costs and unemployment in the last decade, needs to be examined closely by the Conservative leadership in the next four years.
What Comes Next
As mentioned at the beginning, the Liberals fell a few seats short of the parliamentary majority threshold of 172, which means Mark Carney has to lead a minority government until the next elections.
In Canada, parties rarely form the type of formal coalitions with shared cabinets that we often see in Continental Europe. Instead, they rely on informal arrangements with other parties to maintain confidence in the House of Commons. These smaller factions agree to support the governing party on key votes such as budget and confidence motions without joining the cabinet.
In the last three years of Trudeau’s time in office, this outside support came from the New Democratic Party (NDP), which can be roughly described as the Canadian equivalent of the UK’s left-wing Labor.
The last elections wiped the NDP almost completely off the map, bringing its vote percentage down to 6.3 percent compared to 17.82 percent in 2021 and its number of seats from 25 to 7. Due to its failure to secure 12 seats, the NDP has lost its official party status, which entails several parliamentary privileges such as participation in committees and being able to ask questions at debates.
The heavy defeat led its leader, Jagmeet Singh, to resign. The new leadership will have to decide whether they paid the price of shoring up the increasingly unpopular Trudeau government for as long as they did and whether they will support the new Liberal leader going forward. Carney ran on a platform promising to bring the focus back on the economy and might turn out to be less left-leaning on social issues compared to his predecessor, which could widen the gap between the Liberals and the NDP.
Another candidate for alliance is the Bloc Québécois, a center-left and separatist faction known for its obsessive hostility to political agendas outside of Quebec, particularly any nationwide economic project. The Bloc is unlikely to be the first choice for Carney, as it would be much more unpleasant to work with.
Whoever he allies with, Carney faces an uphill battle, as there will probably be a significant disparity between the time it takes to undo years of Trudeau’s economic legacy and the voters’ expectations for him to deliver on his promises quickly. Having marketed himself as someone capable of rising to the occasion at times of crisis, he will have to undergo a real test of his ability to ride out a perfect storm involving stagnation, low productivity, and a housing crisis.
Not to mention tough tariff negotiations with the US President, the success of which will determine his ability to avoid a full-fledged recession. New trade partnerships with Europe and other parts of the world are highly unlikely to fill the gap that will be left by the loss of volume with the only land neighbor Canada has.
On the campaign trail, Carney often portrayed Poilievre as someone with empty slogans who lacks a basic understanding of economics, highlighting in contrast his long career in global finance. Failure to provide economic recovery quickly would greatly undermine the credibility he generated for his party and make the Liberals much more vulnerable to Poilievre’s electoral revenge. It is important to reiterate that in any vote of no confidence at the parliament, Carney’s Liberals will be at the mercy of the NDP, and worse, the Bloc Québécois.
* This photo is licensed under CC BY
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