Canada’s Liberal party says budget of ‘sacrifice’ needed to avoid recession
Canada’s ruling Liberal party says a “sacrifice” budget is needed to counter both a trade war with the United States and a protracted cost of living crisis that threatens to plunge the country into recession. But a failed vote in parliament on the budget could plunge the country into another federal election in the coming weeks, with opposition parties signaling they will not support prime minister Mark Carney’s fiscal plans.
The country’s finance minister, François-Philippe Champagne, will unveil a spending plan on Tuesday that his government signals will include both large deficits and spending cuts. Very few details were leaked ahead of the announcement; This will mark the first comprehensive look at how Carney plans to avoid a recession while Canada is locked in a trade war with its biggest economic partner, the United States.
In recent months, the White House’s aggressive protectionist measures have negatively impacted Canada’s automotive, metals and forestry industries. To cushion the effects, Ottawa has pushed the country into a tougher fiscal situation by turning to tax cuts and bigger defense and infrastructure spending to help struggling companies.
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In Canada, the federal budget is a vote of confidence; So once tabled as law, a lost vote would likely trigger the collapse of the liberal minority government and plunge the country into its second federal election in less than 12 months.
The Liberals have 169 seats and need to find another party or at least three more MPs to vote with them to pass the budget. Alternatively, six MPs could choose to abstain, lowering the threshold required for the budget to pass. But these MPs will have to answer to voters why they did not voluntarily participate in an important vote on the country’s economic future.
Opposition parties have expressed skepticism about the budget, variously suggesting that it goes too far in spending or falls short of needed investment.
In a speech to students at the University of Ottawa last month, Carney warned that “we will not transform our economy overnight; it will take sacrifice and time,” adding that his government will “work tirelessly to reduce waste, increase efficiency and make thoughtful, transparent decisions.”
“We will not play games. We will not waste time. We will play to win by betting on Canada and Canadians,” he said.
Conservative leader Pierre Poilievre pounced on this speech, calling it a “sacrifice speech” and claiming the Liberals were trying to force Canadians to accept “a permanent decline in our quality of life.”
The Liberals have accused opposition parties in recent weeks of demanding fiscal and policy concessions and warned the party, which has a strong minority in parliament, that it would not support any ultimatums in exchange for votes.
In late October, government house leader Steven MacKinnon said Poilievre was trying to hold a “Christmas election” to dispel questions within the Conservative Party about Poilievre’s future.
Carney, a former central banker of both Canada and Britain but a political novice, met with leaders of the Conservatives, Bloc Québécois, New Democrat and Green parties to outline his government’s priorities and persuade them to provide support. Neither gave any public support to the Liberals.
In a post on social media Monday, Carney said his “number one focus is on getting Canadians back in control” by reducing dependence on the United States and doubling exports to other countries; It’s a move that will require citizens to make “tough” and “responsible” choices.
Champagne will introduce the budget to the House of Commons just after 4pm ET on Tuesday. Debates will follow the budget announcement for four days, and voting is scheduled for November 17.
