Adjournment of the House of Commons

The Top Line

Earlier this evening, the House of Commons adjourned for the Summer. Barring a severe fourth wave of COVID-19 or an unforeseen political scandal for the Liberal Party, an election later this Summer or during the Fall is highly likely. So, the summer adjournment is probably the de facto end of this Parliament.

Needless to say, the 43rd Parliament was a very unusual one, marked by the first virtual sittings of the House of Commons and the Senate and a policy agenda that was predominantly concerned with the COVID-19 pandemic and its economic effects.

But, a different set of policy issues than those that the Liberals have been focussing on during the last year-plus will shape the political discourse during a potential election and when Parliament reconvenes in the Fall. As more people are vaccinated and the economy reopens further, the range of issues on the policy agenda will broaden, the political pressure points on the Government will change, and any election campaign would be about more than COVID-19 alone.

As such, in addition to preparing for potential election advocacy, stakeholders should take the summer to consider how the reopening of our economy and society will change the political and policy environments in the months ahead and how that will, in turn, impact government relations.

June Politics and Legislating

This month, the Government prioritized Bills C-30, C-12, C-10, and C-6 for debate and passage to the Senate. Combined, those Bills illustrate the current political priorities of the Liberals. The Bills each address a topic – respectively, COVID-19 and the economy, the environment, the cultural sector, and LGBTQ+ rights – that the Liberals view as key differentiators from and wedge issues against the Conservative Party.

Indeed, the Prime Minister and his Cabinet have recently pointed to those issues to draw distinctions with the Conservatives. They have also spoken increasingly of dysfunction in Parliament, blaming the opposition. That rhetoric is the foundation of Liberal election messaging. While the Senate will sit beyond Friday to pass all of those Bills, expect the topics of that legislation to figure prominently in election campaigning, should it occur.

Looking Ahead

The political and policy landscape is already shifting as the severity of the COVID-19 pandemic eases in Canada. A new or returning government in the Fall will likely perceive itself as being largely out of the crisis-response period of the pandemic and closer to ‘normal operating procedure’. During a potential election later this year and during the Fall Parliamentary session, the following issues will figure more prominently in political discourse and impact Federal policymaking.

Near-Term

The following issues stem from temporary policies that will need to be addressed during the Summer and that will likely be mostly resolved prior to an election, should one occur.

  • Re-opening the border: As of today, the Canada-U.S. border is closed to non-essential travel until at least July 21 and there are no public plans to open Canada to international tourism. As more people are vaccinated and Canada’s travel and tourism sector faces another summer of closures, the pressure on the Government to loosen those restrictions will increase. With an election likely in the coming months, expect the Government’s decisions on this issue to closely track public opinion polling on how open the border should be.
  • The Future of COVID-19 Programs: Budget 2021 proposed to extend the Canada Emergency Wage Subsidy, the Canada Recovery Benefit, the Canada Emergency Rent Subsidy and lock-down support until at least September 25 and potentially until the end of November. The extension is conditional on Bill C-30 passing into law, but that should occur. However, a looming September expiry of those benefits means that the governing Liberals and the opposition parties will have to signal over the summer if they intend to extend the programs again or allow them to end. The Liberals will be pressured by the parties to their left to extend the programs. And how and if the benefits are extended will be a major point of debate on the campaign trail, with the Liberals likely arguing that a Conservative government would end the programs in short order.

Late 2021 Issues

The following issues are more pronounced challenges than the foregoing and may point to longer lasting problems. As such, stakeholders should expect them to remain largely unaddressed until the later half of 2021, at which time the new or returning government will be pressured to offer solutions.

  • Deficit and Debt: In responding to the COVID-19 pandemic, the Liberals ran up record deficits, increased the national debt, and unmoored Federal spending from traditional fiscal guardrails. While most Canadians felt in crisis and COVID-19 was spreading widely, few people questioned those decisions. But, as policymaking returns to normal, the Government will be pressured to return the Federal budget closer to balance, whether through tax increases, reduced program spending, measures aimed at growing the economy faster than the debt, or a combination of those options. But, all of those options entail substantial policy trade-offs and will each attract political criticism in some way.
  • Labour Shortages: As the economy continues to reopen, a number of sectors, from construction to hospitality, are complaining about struggling to attract workers. By the Fall, a new or returning Government will need to decide if that is a temporary challenge, resolvable by employers offering higher wages and the end of COVID-19 programs, or if it is a structural problem. Notably, the Bank of Canada’s Spring 2021 Business Outlook Survey traced the labour shortage to pre-pandemic factors. Structural corrections, like more immigration, more incentives for skills training, and more flexibility for businesses to bring specialized workers from other countries to Canada, all come with financial and political costs for the Government to navigate.
  • Inflation: Canada’s Consumer Price Index rose 3.6% in May on a year over year basis, prompting many commentators to express concern that inflation may become a significant factor in the Canadian economy for the first time in decades. While Bank of Canada Governor Tiff Macklem has stated that he expects rates to stabilize at around 2% (right in the middle of the target 1-3% range), if inflation remains above 3%, the Bank may be forced to raise interest rates to get inflation under control.  While the Bank makes monetary policy decisions independent of Government, significantly increasing interest rates would be politically unpopular, particularly at a time when many Canadians are highly indebted. Already, Conservative MPs are highlighting the increased cost of living – for everything from lumber to coffee – in their partisan communications, indicating that this is a winning issue for the opposition.
  • Housing: The national average selling price for existing homes in March 2021 was about 32% percent higher than in March 2020 – an almost entirely unforeseen development during a global pandemic. The media is already covering the issue of housing affordability extensively. And since millennials are now the biggest block of voters in Canada – a block that gets even bigger if you include Generation Z – this issue is sure to have political repercussions. To date, all of the Federal parties have taken a “wait and see” approach to this issue, talking in broad generalities about the importance of housing affordability while not offering specific solutions (many of which would cost current home owners). That status quo will not be politically tenable during an election or in the longer term.

What This Means for You

Assessing all factors – including the current political discourse, public polling on both political approval and handling of the COVID-19 pandemic that is mostly very favourable to the Liberal Party, and ongoing preparations by all of the parties for an election – TSA concludes that a Federal Election in the coming months is all but certain. As such, stakeholders should consider the coming weeks to be potentially the final opportunity to present issues for inclusion in the election platforms. TSA can connect you with the stakeholders working on those platforms and help you develop an election advocacy strategy.

More broadly, stakeholders can effectively prepare for the Fall Parliamentary session by considering how the political and policy context will have changed by then. For example, how will funding requests or proposals for major new programs be perceived at a time when a new or returning Government may be fighting inflation and seeking to bring the Federal budget closer to balance? Or, will a new or returning Government be more open to business-friendly policies in order to jump-start post-pandemic economic growth? TSA can help you develop a longer-term advocacy plan for all eventualities and election outcomes.

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