Trudeau wins historic third term, but without coveted majority
Prime Minister Justin Trudeau is poised to win a third term in a snap election but fall short of regaining the parliamentary majority he was seeking.
CTV News and the Canadian Broadcasting Corp. projected his governing Liberal Party will win a plurality of seats and form a minority government.
The projected result would leave Trudeau in power to pursue the most left-leaning agenda the country has seen in at least a generation. Even with a minority, the early results suggest the Liberals will have a stable government, which will allow Trudeau to continue with a big-spending agenda that’s largely backed by his government’s most likely partner, the left-leaning New Democratic Party.
Both parties also have campaigned, to varying degrees, on higher taxes for businesses and stricter emission rules for the oil and gas sector.
Trudeau’s Liberal Party was elected or leading in 156 of the 338 seats in the House of Commons, compared with 122 seats for the Conservatives under Erin O’Toole, according to results from Elections Canada at 11:40 p.m. Ottawa time. A party needs 170 seats to form a majority in the House of Commons.
The Bloc Quebecois, a party that runs candidates only in the French-speaking province of Quebec, was elected or leading in 29 ridings, and the NDP was also ahead in 29. The Green Party was leading in two.
The Liberal victory is a historic milestone for Trudeau, marking only the eighth time a Canadian leader has won three successive elections. Trudeau’s father, Pierre, also did it. It also represents a comeback of sorts for Trudeau, whose party was trailing in the polls midway through the five-week campaign.
Still, failure to secure a majority is a disappointing result for the Liberals. It’s the second time voters have denied this prime minister full control of the legislature, limiting his freedom to take big risks or govern unilaterally.
As a share of the vote, polls show the Liberals at 32.3% support and the Conservatives at 34.1% with 53% of the polls reporting.
Minority governments have become familiar to Canadians. The past seven elections have now produced five minority governments, lasting on average about two years. They’re popular because they require the participation of several parties to make laws.
But there’s a downside. Minority parliaments keep parties on constant campaign footing and give them less scope to consider long-term issues. In practice, that means politicians are wary of tackling big problems like Canada’s sagging competitiveness or slow transition toward a low-carbon economy.
There’s also an incentive to spend more, to accommodate priorities of other parties.
In the two years since Trudeau lost his majority in 2019, the Canadian currency has been the second-worst performer among G-10 currencies against the U.S. dollar. The country’s benchmark S&P/TSX Composite Index is up 25%, barely half the gain of the S&P 500.
Trudeau largely had control over the economic agenda last month before he called the election, with all three opposition parties at one point backing his emergency borrowing to pay for the Covid-19 response.
The Liberals passed a budget in April with C$140 billion ($110 billion) in new spending measures, with support from the New Democrats. Even the Conservatives largely supported the Liberal government’s pandemic support measures through much of last year.
The convergence on policy that lawmakers displayed in the last parliament spilled over into the campaign, with all parties promising more social spending and continued deficits to help the recovery.
But the prospect of the Liberals linking up with the NDP on policy could prompt an even more leftward shift. The NDP wants to raise tax rates on corporate income and capital gains, as well as on wealthy individuals.
Trudeau’s Liberals pledged to increase the corporate income tax rate by 3 percentage points on profit over C$1 billion. They’ve also said they would impose targets on petroleum producers every half-decade starting in 2025, to ensure the industry cuts emissions to reach net zero emissions by mid-century.
Trudeau’s victory amounted to a rejection of O’Toole, the Conservative leader whose gamble to move his party closer to the center with a moderate platform failed to win enough voters to offset losses to his right.
©2021 Bloomberg L.P.