Federal Confidence and Supply Agreement

The Top Line

This morning, the Federal Liberal Party and the NDP announced a supply and confidence agreement. The agreement, which is meant to last through June 2025, should ensure that the Liberals govern until that time (unless the agreement is voided by either party). The agreement commits the two parties to prioritize and collaborate on many policies in the subject areas of: Healthcare, affordability, climate change and job creation, workers, taxation, and democratic reform (not including changing the electoral system).

In the Westminster system of government, confidence and supply agreements are “… limited co-operation arrangements between political parties guaranteeing support for a minority government on parliamentary votes that are critical to the survival of the government”, in return for which the supporting party (or parties) receives policy and procedural commitments or concessions from the governing party1.

Under the agreement announced today, the Liberal Party commits to govern through June 2025, without proroguing Parliament or triggering an election, while the NDP commits to support the Government on all confidence votes, including the next four budgets and all budget implementation legislation.

The most important aspects of the agreement for government relations are that it will stabilize the inter-party dynamics of Parliament and offer political certainty and cover on key policy issues for the governing Liberals – ultimately providing stakeholders more stability for advocacy planning over the coming years.

With this agreement in place, the Liberals can be aggressive about advancing policies that are likely to encounter strong opposition from the Conservative Party (e.g., the proposed cap on oil and gas sector emissions). And, since there is substantial policy agreement between the Liberals and the NDP, the Government can be ambitious in policy areas (e.g., climate change, affordable housing, and reconciliation) that were already Liberal priorities. So, the agreement has not substantially changed the policy priorities of the Government – though it will increase the focus on the topics identified in the agreement. On that note, the biggest of a few Liberal concessions to NDP policy priorities are the commitment to develop national pharmacare and dental care programs during this mandate.

Today’s agreement gives the Liberals stability to govern for a four-year term while presiding over transformative expansion of Federal programs and services (e.g., increasing the carbon tax and implementing National childcare, pharmacare, and dental care programs). For the NDP, it offers a chance to help shape those programs, and, from its perspective, get credit from voters for that during the next election.

A Deeper Dive

House of Commons Procedure

It’s important for stakeholders to understand what this agreement is not. It is not the foundation of a coalition government (e.g., there won’t be any NDP Cabinet Ministers), the NDP is not obligated to vote with the Government in every instance (although they must do so on confidence votes), and the Liberals can pursue policies that the NDP opposes without risking the NDP’s support on confidence votes. As such, Parliament will continue to function in a minority context, with the NDP acting as an opposition party in day-to-day legislating.

Importantly, however, the agreement commits the two parties to identify legislation to expedite through the House of Commons, including by extending sitting hours or imposing closure on debate. During the last Parliament, the Liberals had difficulty agreeing with the opposition parties about House procedure, so legislation was routinely delayed by opposition procedural measures and filibustering. Today’s agreement, with some discretion by the NDP, will allow the Government to avoid those kinds of standoffs, which should increase the amount of legislation that this Parliament passes.

Budget 2022

Budget 2022 will be tabled in April, likely during the first week of the month. Today’s agreement impacts the budget in several ways. Most notably, it commits the Government to developing a national dental care program that will cover those under 12 years of age as of 2022 and those under 18 years of age, seniors, and persons living with a disability as of 2023 (and then expand to cover everyone by 2025). The Government will likely have to allocate substantial funds in Budget 2022 to fulfill that pledge. Furthermore, the agreement commits the Government to re-investing in healthcare and passing a Canada Pharmacare Act by the end of 2023, two items which will also require large budget allocations in 2022 and/or the coming years.

Even with the expected winding down of some or all COVID-19-related programs, that new spending will require tradeoffs in other areas or increased Federal revenues. On that front, Budget 2022 should include the surtax on big banks and insurers that the Liberals proposed during Election 2021, since that pledge is also in the agreement. The Government can now take a longer-term view on revenue and spending, having negotiated stability for the next four budget cycles, but managing the fiscal framework will be an enormous challenge for the Liberals – especially given the uncertain economic circumstances and pressure to spend from the NDP.

What This Means for You

This agreement is in many ways an extension and formalization of the collaboration by the Liberals and the NDP during the last session of Parliament.

And, in the broader context, confidence and supply agreements are increasingly common in Canada and other Westminster jurisdictions, including in British Columbia (2017 – 2020), the Yukon (ongoing), the United Kingdom (2010 – 2015 and 2017 – 2019), Ireland (2016 – 2020), Wales (2016 – 2017 and ongoing), and New Zealand (2014 – 2017 and 2017 – 2020).

Generally, those agreements have been stable. However, at times, they are voided by one or both parties, such as in British Columbia (BC) in 2020. There is nothing legally binding about today’s agreement, and either the Liberals or the NDP could void it at any time. Ultimately, public opinion about violating the agreement is the main limit on either party doing so – which may not be much of a deterrent. For example, some have argued that the BC NDP violated its confidence and supply agreement with the BC Green Party in 2020, but the NDP subsequently won a majority government.

In that context, stakeholders should consider that there is now a relatively stable context for long-term advocacy planning and execution. However, it is not the same level of stability as a majority government.

To manage the agreement, the Party leadership teams will meet regularly and the NDP will have better access to public service policy briefings. As such, stakeholders should consider the NDP to be a higher priority advocacy target than it was yesterday. Conversely, those advocating for policies that don’t align with the agreement may need to re-assess their approach.

Finally, the agreement also provides stability to the Federal political parties. For the Conservatives, that means a chance for their new leader (to be chosen in September) to establish themselves. For the NDP, it means a longer fundraising timeline for the next election. For the Liberals, it offers Prime Minister Trudeau plenty of time to decide whether he will lead the Party into the next election. While only he knows the answer to that question, the agreement ensures that he could be Prime Minister for 10 years, which is a key benchmark for joining the group of long-tenured Prime Ministers.

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1 https://www.instituteforgovernment.org.uk/sites/default/files/publications/IfG%20Insight%20Confidence%20and%20Supply%20final.pdf

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