Canadians are currently processing what has been a truly remarkable election campaign.
The Liberal Party of Canada has emerged from apparent electoral oblivion to another minority parliament, picking up eight seats. The Liberals picked up seats across the country, but did particularly well in Greater Montreal where they captured seats previously held by the Bloc Québécois.
While the Conservatives failed to win an election after leading in the polls for nearly two years, they made major gains in popular vote and seat count. This new Canadian Parliament looks much more like a US-style two-party system, with the Liberals and Conservatives holding all but 30 seats.
Monday night was a particularly tough one for the electoral left. Amidst Conservative gains and a Liberal party that tacked to the right during the campaign, the NDP lost all but seven seats. Of particular concern for the NDP should be the losses suffered in heavily unionized parts of southern Ontario, a region that has long been a base of NDP support.
For Manitoba, the election priorities outlined by the Liberals on the campaign trail indicate some policy alignment with the Manitoba provincial government, which appears keen on federal support to expand infrastructure spending and programs such as $10 per day childcare. This should provide some fiscal assistance in these two areas of the provincial policy agenda.
But how this new federal government approaches social policy is an open question, receiving far less attention on the campaign trail. Growing rates of poverty, homelessness, and inequality since the pandemic have not disappeared as political focus has shifted towards Canada’s relationship with the US. Without attention to poverty and non-market housing, these issues will continue to grow, especially if Canada enters a major recession in the coming months.
Federal transfers will be maintained, but is that enough?
In their campaign platform, the Liberals committed to leaving equalization and federal health and social transfers untouched, as well as to protecting existing agreements around $10-a-day child care, dental care, and pharmacare.
Equalization and health and social transfers will undoubtedly be met with relief at the Manitoba Legislature, given the growing contribution these transfers have made to Manitoba’s budget over the last few years. Since 2016, Manitoba’s own-source revenue has been eroded by provincial tax cuts while major federal transfers have almost doubled on a per-capita basis (not inflation-adjusted). These trends have left Manitoba increasingly exposed to a decline in federal transfers. Questions remain over whether the increase in federal transfers over the last few years has been adequate to meet provincial service demand. However, despite calls for federal spending cuts from both the Liberals and Conservatives, it appears that the current transfer formula will be maintained, resulting in increased revenues for Manitoba over the next few years.
On child care, Manitoba agreed in March to extend federal child care funding to 2031. With this agreement in place and the dust from the federal election settling, this should provide the certainty required to invest in needed licensed, public childcare space expansion.
With all of this said, the incoming Liberal government’s campaign messaging was squarely focused on infrastructure investment, Canadian sovereignty and ‘supercharging’ economic growth. Enhancements to Canada’s welfare state received less attention. The urgent need to expand mental health care, addiction treatment, and primary care access has not gone away.
Can Manitoba capitalize on the “build, baby, build” agenda?
In his victory speech, Mark Carney promised federal infrastructure spending to “Build, baby, build”—a line he may have lifted from Manitoba’s finance minister during his budget release. Stacking federal infrastructure dollars on Manitoba’s capital spending commitments should help accelerate progress on the agenda of provincial infrastructure projects. However, it remains unclear whether the federal investment strategy will be implemented through public funding and ownership or whether Carney will adopt the Trudeau-Freeland model of leveraging private capital through tax credits and other forms of public-private partnerships. Across the country, the public-private partnership model has been plagued with delays and cost overruns, the exact issues this model was purported to solve.
Amongst Carney’s ‘Nation-building Projects’ is the construction of an east-west energy grid. The expansion of grid tie-ins could be a boon for Manitoba Hydro, which was recently directed not to renew U.S. contracts in favour of supplying provincial and territorial neighbours. Plans for a western grid connection to Saskatchewan have been in the works for years, which would connect Saskatchewan to Manitoba firm power and tie Manitoba into the wind-rich regions of southern Saskatchewan. Federal funding is needed to make this connection a reality.
In a bid to shore up Canada’s Arctic sovereignty, the Liberals have committed to building the Arctic economy through infrastructure projects, including commitments to northern sea ports. Premier Kinew recently floated the idea of a second port on Hudson Bay during a visit from European Union representatives last month. Ships can reach the major ports of Rotterdam in the Netherlands and Antwerp in Belgium more quickly from Hudson Bay than from many other North American ports, Kinew claimed. The Conservative Manitoba government had proposed such a project, potentially at the mouth of the Nelson River, to the end of a pipeline or rail line to transport potash and bitumen. Premier Kinew indicated a new port on Hudson’s Bay shipments would be “agricultural projects and critical minerals” from western Canada. However, questions remain from environmentalists over whether this port can be built in a way that protects marine habitats and without a heavy reliance on dirty fossil fuel exports that would turn it into a climate liability or stranded asset amidst the energy transition.
Housing, inequality, and poverty
The Liberal commitment to housing has energized some who are enthusiastic about the commitment to greater government involvement in housing development, streamlining of approval processes, and maintaining funding streams to subsidize housing development. The streamlining of approval processes, use of public land, and pre-approved designs have the potential to help non-profits, co-ops, and other non-market housing developers without deep pockets and expertise build housing faster. On the surface, this aligns with the Manitoba government’s commitment to end chronic homelessness. But the Liberal plan lacks a clear focus on social housing development for low-income households who are most vulnerable to losing their housing. The Right to Housing Coalition identified that Manitoba needs to build 5,000 units of non-market housing with rents capped at social assistance rates or 30 percent of household income to meet current needs. The province is making some progress on this target, but could move faster with federal support.
The focus on development also fails to address immediate needs to control rent increases, which could be achieved through a national rent control policy like the one used during WWII. Advocates are calling on all levels of government to make a substantial commitment to creating non-market, social housing to control rising rents and address homelessness.
Notably lacking from this election and the Liberal platform are commitments to address poverty or reverse income inequality. The Liberals’ commitment to reduce the lowest income tax bracket by a percentage point will disproportionately benefit higher earners while providing relatively little to low-income Canadians, thereby increasing income inequality. There is no mention of addressing child poverty by increasing income transfers and other social programming. Manitoba has consistently had extremely high child poverty rates. The Liberals’ tax cut proposal will cost $5.5 billion per year, about the same price tag as a program that could end child poverty.
