Return to Parliament

The Top Line

Next week, MPs and Senators return to Ottawa for the Winter/Spring 2018 session of Parliament.

Over the last two years, the Liberal Government has focused on implementing many aspects of its Election 2015 platform.  However, it was also forced to spend a lot of political capital addressing issues and events that were not foreseen in 2015.  Most notably, Prime Minister Trudeau and his Cabinet have spent considerable time championing international trade due to the risk to Canada – U.S. trade and the near-collapse of the Trans-Pacific Partnership (TPP) spurred by the transformative election of U.S. President Donald Trump.

The coming session of Parliament will bring a slightly different dynamic to Federal politics. The next six months represent the final significant window of opportunity for the Government to focus on near-term priorities and contentious policy-making before thought and resources are increasingly dedicated to Election 2019.  During this time, stakeholders should expect the Government to prioritize its economic agenda (especially a focus on supporting technological innovation), passing the Federal carbon pricing backstop, overhauling the Federal relationship with Indigenous communities, and pushing the Senate to pass the legislation to legalize cannabis.

For the Opposition Parties, the coming months are an indispensable opportunity to effectively position themselves against the Government’s policies and to be seen as a creditable government-in-waiting.  To that end, the Conservatives will continue to criticize the Government on pocketbook and taxation issues, and will likely place renewed emphasis on the battle against carbon pricing.

For the NDP, Jagmeet Singh’s lack of a seat in the House of Commons is looking more and more like a major strategic challenge.  If the NDP opts not to find a seat for Mr. Singh this year, the Party and its leader will need to find creative ways to portray themselves as a progressive alternative to the Liberals.  One of the ways in which they are likely to do that is to partner with certain labour groups to oppose the ratification of the TPP.

Issues to Watch

With that context in mind, the following issues will be some of the key items on the Federal political landscape during the next six months.

Budget 2018

The annual Federal budget is typically tabled in late February or March.  In the lead-up to last year’s budget, the Government’s spending plans appeared to be boxed in by persistently low oil prices, a sluggish economic growth rate of 1.3%, and uncertainty about how President Trump’s policies would impact Canada.  One year later, the wild card factor of President Trump persists, but the economy is strong.  Paradoxically, the Federal Government’s bank account is quite tapped out, with the Liberals already committed to significant spending over the next decade and seemingly having no appetite to increase income or sales taxes.

As such, stakeholders should expect Budget 2018 to hew closely to topics that the Liberals already emphasized in their last two fiscal plans.  Investments in innovation, skills development, and science (informed by the Fundamental Science Review report), along with tweaks to Federal infrastructure spending, are expected to form the backbone of the budget.  As mentioned, the Government is unlikely to see tax increases as a palatable solution to its spending demands.  However, ‘recouping’ revenue by cancelling some targeted tax credits is possible.

Trade

The Liberal Party’s Election 2015 platform contained less than 400 words on the subject of international trade, the vast majority of which spoke to doing more business with the U.S. and Mexico.  Yet, trade has become a defining issue for the Liberals in government.  Within the first year of the Government’s mandate, Comprehensive Economic and Trade Agreement

(CETA) was failing at the finish line and President Trump’s trade skepticism had thrown the TPP and NAFTA into doubt.  CETA is now in place and the TPP is finalized and due to be signed on March 8, but NAFTA remains at risk.

In the next few months the tri-lateral negotiations on NAFTA will continue to be one of the Government’s highest priorities.  The negotiations resumed in Montreal this week and one additional round of negotiations will occur before the originally-planned deadline of March 2018.  This month, Global Affairs Minister Chrystia Freeland pledged to be “creative” during the remaining negotiating rounds and Prime Minister Trudeau professed optimism that NAFTA will survive, but the frank truth is that little common ground has been found on the most contentious issues, such as intellectual property, automotive manufacturing and dispute settlement.

Stakeholders should expect the negotiations to continue in some form after March 2018.  However, with Mexico’s Presidential Election and the U.S. midterm elections approaching in July and November respectively, the risk of the negotiations breaking down, at least temporarily, in 2018 is quite high.

Environment

Over the next year, Environment Minister Catherine McKenna is tasked with delivering on two major policies: a Federal carbon pricing backdrop and a Clean Fuel Standard.  In mid-January, the Government released draft legislative proposals and a regulatory framework for carbon pricing.  Stakeholder feedback on those items is due by February 12 and April 9, respectively.

The Federal backdrop would only apply in provinces that do not impose a comparable carbon pricing scheme by the end of 2018.  So far, Alberta, British Columbia, Ontario, and Quebec have done so, with Saskatchewan being the most vocal holdout.  However, carbon pricing in Alberta is likely to be eliminated if the United Conservative Party comes to power in that province’s 2019 election – a possibility which presents a looming jurisdictional battle for the Federal Liberals should they be re-elected in 2019.  In an interesting political challenge for the Liberals, opposition to carbon pricing has also emerged in Atlantic Canada, where every Federal riding is held by a Liberal, but where cash-strapped Provincial Governments have apparently calculated that their struggling economies and tax bases can ill-afford a new tax.  Any way you look at it, how the Liberals draft the carbon pricing legislation and then communicate that to voters this year is sure to influence the dynamic of Election 2019.

Meanwhile, though the national Clean Fuel Standard (CFS) has a lower political profile than carbon pricing, it remains a high priority for industry.  By Fall 2018, Environment Canada will develop the Gazette I regulations for the CFS, so the coming months are the final opportunity for stakeholders to significantly influence the structure of the Standard.

Social Policy

Measurable success on social policy issues is key to the Liberals being judged as having delivered on their ‘real change’ mantra and to the Party effectively positioning itself on the centre-left of the political spectrum for Election 2019.  In that light, stakeholders should expect the Government to emphasize social policy-making this year. Perhaps the most wide-ranging and transformative result of that dynamic is the creation of a new Indigenous Services Department.

Another item that is sure to be a priority is the mandated five-year review of the Copyright Act, which has profound implications for Canada’s research, educational and creative sectors.

In 2018, Indigenous Services Minister Jane Philpott will take on a higher profile in Federal policy-making as she pursues improved health and education outcomes for Indigenous peoples, better infrastructure for Indigenous communities, and a new fiscal relationship with Indigenous governments.

In a more low-key manner, the Liberals are also developing a Federal paternity leave framework, which will likely be announced this year.

Finally, legislation to legalize cannabis is at Second Reading stage in the Senate.  Getting Royal Assent for the Bill before Prime Minister Trudeau’s July 1, 2018 deadline will be a challenge, with opposition to legalization being expressed by Conservative Senators and the votes of Independent Senators often unpredictable.

What This Means for You

The Winter/Spring 2018 session of Parliament promises to be a busy time.  If President Trump triggers the six-month process to withdraw from NAFTA, it will also be a time of great economic uncertainty.

For stakeholders, the key takeaway is that the time to advocate for your policy goals is now.  Getting issues on the radar of the Government and making measurable progress is very possible during the next six months, but will become increasingly difficult thereafter as the dynamics of election campaigning take hold.

Finally, stakeholders engaged in lobbying should be aware that the new Commissioner of Lobbying will begin a mandated five-year review of the Lobbying Act this year and that the Lobbyists’ Code of Conduct is overdue for a mandated two-year review.  Issues addressed in those reviews could include gifting, the definition of ‘designated public office holder’, and the ‘cooling off’ period for elected officials and Ministerial exempt staff.