Yesterday, Canada’s 23rd Prime Minister, the Right Honourable Justin Trudeau, and the new Liberal cabinet formally assumed its duties after being sworn in at Rideau Hall. This took place after the Governor General accepted the official resignation of outgoing Conservative Prime Minister, Stephen Harper, and formally marks the start-date of the new government.
The new Prime Minister kept true to his pledge to make the cabinet both diverse and gender-equal. A number of historic firsts should be highlighted. This is the first time a son of a former Prime Minister (PM) has assumed the same office; and the first time the cabinet – made up of 30 Members of Parliament (MPs), not including the PM – has achieved gender parity.
Featuring a mix of experienced party stalwarts as well as many new faces, the PM can continue to claim credit for his pledge of change he campaigned on, while being able to obtain reliable and seasoned counsel from former ministers and long-serving MPs. Selecting his cabinet members was a herculean task. In close consultation with his key transition team members, the selection of the cabinet had a pool of 183 successful Liberal candidates from which to choose.
Key returning ministers
As noted, the new PM can rely on a set of experienced hands. The appointment of former Liberal and Official Opposition leader Stéphane Dion in foreign affairs signals a more technocratic approach to managing Canada’s partnerships abroad. It also implies a less partisan focus on a number of key foreign policy areas, particularly with respect to the Middle East and China. The Dean of the cabinet, and now Minister of Public Safety and Emergency Preparedness (the Canadian equivalent of Homeland Security), will be Ralph Goodale. A former Minister of Finance, who served as an MP under the PM’s father in 1974, will manage Canada’s security portfolios. He will be tasked with revamping the controversial anti-terrorism legislation, Bill C-51, introduced under the previous government, and coordinating Canadian efforts against the Islamic State. John McCallum has been selected as Minister of Immigration, Refugees, and Citizenship. A minister in two previous governments, he will be tasked with fulfilling the Liberal Party pledge to bring in 25,000 Syrian refugees by this year’s end. Other challenges will include overhauling the Temporary Foreign Workers Program, a measure that had been popular with the Canadian resource sector but less so with the public.
Accomplished fresh faces
Out of the 30 cabinet members, 18 appointees are newly-minted MPs, and two are relative newcomers. They may be legislative rookies, but many are leaders in their own right. Accomplished author and journalist Chrystia Freeland has become Minister of International Trade. She has stated that free trade is a key factor in middle class prosperity – a centrepiece of the Liberal Party election platform. This implies the new government will not change course on the Trans-Pacific Partnership (TPP) trade agreement. Bill Morneau, a well-respected millionaire, philanthropist and former Bay Street executive, has become Minister of Finance. He will be lauded by the business community and is credible enough to move ahead on more “leftist” elements of the Liberal economic plan. That means justifying an increase in the highest personal tax bracket and running budget deficits to cover large increases in infrastructure and stimulus spending. Lawyer Catherine McKenna, also a former UN peacekeeping negotiator, has assumed the role of Minister of Environment and Climate Change. The mere inclusion of “Climate Change” in her title shows the new government plans to aggressively tackle environmental issues. This means intense carbon reduction targets and strengthening the regulatory regime with respect to government-mandated environmental review processes.
Swift return to Parliament
The new cabinet met for a number of hours yesterday, and thereafter indicated they will quickly restart the legislative calendar. This makes sense if they are serious about following through on their campaign pledges. House Leader Dominic LeBlanc stated Parliament will resume December 3, 2015. That means a Speech from the Throne would take place the next day, announcing the government’s priorities and legislative agenda. During this time the government will likely attempt to pass provisions related to their middle income tax bracket decrease, while also raising taxes on those who earn CA$200,000 or more, and provide emergency funding for the Syrian refugee crisis.
Conclusion
A significant change in tone in a number of policy areas creates the impression that the business and investment climate may face some challenges. Not necessarily. The resources sector should not panic. The Liberals have repeatedly stated stronger environmental protection can go hand in hand with the exploitation of Canada’s abundant natural resource and extraction sectors. The renaming of the Federal Aboriginal Affairs department to Indigenous and Northern Affairs does not imply a more onerous regulatory regime with respect to land rights, but does promote a more collaborative tone and reset in relations. Pipelines will be approved and built. That being said, it is likely a key economic centerpiece of the previous government will be dealt a blow. Keystone XL will most certainly be rejected, but the Americans will be sensitive to the timing of the announcement so the new government will not be disadvantaged too much. In our view, Keystone would only be salvageable if the Trudeau government came up with truly historic and ambitious climate change reduction measures to provide President Obama enough cover to justify approval with his own key constituencies. Very unlikely. Finally, it was noted the TPP will be approved and generally championed. What remains to be seen is how the Liberals will disclose any side-deals (a process that clarifies bilateral matters between two countries that do not affect the rights and obligations of the other TPP parties), that took place under the previous government. These could become controversial because they were likely concluded in private and without consultation with certain sectors (i.e. dairy, auto, trade forestry).
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