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Business as usual for Canada’s Trudeau after he again falls short of majority

Ottawa, Canada
Reuters

It was business as usual in Canada on Tuesday after Prime Minister Justin Trudeau fell short of winning a majority in a tightly fought federal election, leaving him once again dependent on opposition legislators to govern.

Provisional results showed virtually no change from the 2019 election, leading voters to express frustration over the “waste of money”. Roughly 850,000 mail-in ballots must still be counted, which could have a minor effect on the final tally.

Canada election result Justin Trudeau

Canada’s Liberal Prime Minister Justin Trudeau, accompanied by his wife Sophie Gregoire and their children Ella-Grace and Xavier, waves to supporters during the Liberal election night party in Montreal, Quebec, Canada, on 21st September. PICTURE: Reuters/Carlos Osorio.

“Canada’s political landscape looks remarkably similar after this election to the way it did before – almost as if Canadians spelled out ‘we don’t want an election now’ with their votes,” said Doug Porter, chief economist at BMO Capital Markets.

Canada’s main stock market rallied on Tuesday and the dollar edged higher against its US counterpart, as Trudeau’s re-election reassured investors that the outlook for the economy would continue to improve.

Trudeau, 49, won a third term late on Monday after calling a vote two years early. His hopes of securing a parliamentary majority, which would give him a free hand to legislate, were dashed and he will again rely on the support of the left-leaning New Democrats.

NDP leader Jagmeet Singh said he would support Trudeau’s government on key social and environmental issues, but stressed his backing was not automatic.

The official opposition Conservatives, who finished a distant second in seats, announced a review of what leader Erin O’Toole called disappointing results.

“We are building towards victory next time,” he told reporters, making clear he had no plans to quit.

For the second election in a row, the Conservatives won the largest share of the popular vote but failed to defeat the Liberals, who have a strong grip on urban centers.

Provisional results showed the Liberals ahead in 158 constituencies, short of the 170 Trudeau needed to control the 338-seat House of Commons. The Conservatives were at 119, the separatist Bloc Quebecois at 34 and the New Democrats at 25.

Canada election result Erin OToole

Conservative party leader Erin O’Toole walks off the stage wife Rebecca and children Jack and Mollie during the election night party, in Oshawa, Ontario, Canada, on 21st September. PICTURE: Reuters/Mark Blinch.

Looser fiscal policy
Economists said the Liberals – propped up by the NDP – would most likely press on with a modest loosening of fiscal policy.

The Liberals promised tens of billions in new spending, while the NDP laid out some $C200 billion in initiatives over five years. 

“This raises the likelihood that the budget deficit will remain wider in the coming years than the Liberals’ costed platforms implies,” said Stephen Brown, senior Canada economist at Capital Economics.

US President Joe Biden spoke to Trudeau to congratulate him, the White House said in a statement.

The result was also seen as approval of the Liberals’ ambitious carbon targets and plans to cap oil-sector emissions. The oil and gas sector is Canada’s highest polluting industry, accounting for 26 per cent of carbon emissions. 

The Canadian Association of Petroleum Producers said the industry was ready to work with Ottawa, but warned that limiting production at home would see Canadian crude replaced by other sources of oil.

– Additional reporting by DAVID LJUNGGREN and STEVE SCHERER, ALLISON LAMPERT in Montreal, MOIRA WARBURTON in Vancouver, NIA WILLIAMS in Calgary and FERGAL SMITH in Toronto.

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