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Canada’s ruling Liberal party has said a budget of “sacrifice” is required to confront both a trade war with the US and a protracted cost of living crisis that threatens to push the country into a recession. But with opposition parties signalling they won’t support the fiscal plans of the prime minister, Mark Carney, a failed parliamentary vote on the budget could plunge the country into another federal election in the coming weeks.
The country’s finance minister, François-Philippe Champagne, will on Tuesday unveil a spending plan his government has signalled will include both steep deficits and spending cuts. Few details have leaked ahead of the announcement, which will mark the first substantive look at how Carney plans to avoid a recession while locked in a trade war with the US, Canada’s biggest economic partner.
In recent months, aggressive protectionist measures from the White House have battered Canada’s automotive, metals and forestry industries. To blunt the effects, Ottawa has turned to tax cuts and larger defence and infrastructure spending to help struggling companies, pushing the country towards a more challenging fiscal position.
In Canada, a federal budget is a confidence vote, meaning once it is tabled as legislation, a lost vote would probably trigger the collapse of the minority Liberal government and plunge the country into its second federal election in less than 12 months.
The Liberals hold 169 seats and need to find another party, or at least three other lawmakers, to vote with them to pass the budget. Alternatively, six lawmakers could choose to abstain, lowering the threshold needed for the budget to pass. But those MPs would have to answer to constituents why there were voluntarily absent from a crucial vote over the country’s economic future.
Opposition parties have expressed skepticism towards the budget, variously suggesting it goes too far in its spending, or falls short of the investment needed.
In a speech to students at the University of Ottawa last month, Carney warned that “we won’t transform our economy overnight – it will take sacrifice and time,” adding his government would “work relentlessly to cut waste, improve efficiency, and make thoughtful, transparent decisions”.
“We won’t play games. We won’t waste time. We’ll play to win – by betting on Canada and Canadians,” he said.
The Conservative leader, Pierre Poilievre, pounced on the address, calling it a “sacrifice speech” and claiming that the Liberals were attempting to get Canadians to accept “a permanent reduction in our quality of life”.
The Liberals have spent recent weeks accusing opposition parties of demanding fiscal and policy concessions and warning the party, which holds a strong parliamentary minority, will not support any ultimatums in exchange for votes.
In late October, the government house leader, Steven MacKinnon, said Poilievre was trying to engineer a “Christmas election” in order to distract from questions within the Tories about Poilievre’s future.
Carney, a former central banker of both Canada and the UK but a political novice, has met with the leaders of the Conservatives, Bloc Québécois, New Democratic and Green parties to lay out his government’s priorities and coax out support. None have issued any public support for the Liberals.
In a post on social media on Monday, Carney said his “number one focus is to put Canadians back in control” by reducing reliance on the US and doubling exports to other nations – a move that will require citizens to make “difficult” and “responsible” choices.
Champagne will introduce the budget in the House of Commons just after 4pm ET on Tuesday. Four days of debate will after the budget announcement, with a vote scheduled for 17 November.
