Strong growth, but uncertainty ahead
In its latest (October 2017) economic outlook, the IMF estimated that Canada’s GDP will grow 3 percentage points in 2017, the highest of the G7 countries. Projections for 2018 are somewhat lower. Yet, at 2.1%, the IMF’s 2018 growth forecast for Canada is topped only by its forecast for the United States. Justin Trudeau and his cabinet can thus expect a solid economy for the second half of their term in office. Whether the situation south of the border is detrimental or beneficial to Canada has yet to be determined. On the one hand, trade with the United States will be negatively impacted if NAFTA renegotiations fail. On the other hand, a number of initiatives proposed by the Trudeau government, which are designed to attract investment and simplify the hiring of high-skilled foreign labor, will likely benefit from the Trump administration’s protectionist stance. The country’s ability to absorb people from diverse cultures will help mitigate the growing gap in the prime working-age population, although it is important to note that recent immigrants do not fare as well in Canada’s job market as Canadian-born workers.
Key financial plans
Many items on the government’s policy agenda are still pending and some may face serious obstacles. Two of the government’s signature projects, the Canada Infrastructure Bank and the Invest Canada Hub, are not yet up and running. The Canada Infrastructure Bank, which aims to attract private investment for public infrastructure, has been criticized for a lack of transparency and concerns were raised that it has the potential to increase overall costs to taxpayers while privatizing the most high-return, low-risk infrastructure assets. There have been very few details released on the Invest in Canada Hub, but some worry it may not be able to attract substantial investment under excessive regulatory provisions.
Trump threatening to scrap NAFTA
NAFTA talks are currently at an impasse and delays are expected due to what senior officials have called “significant conceptual gaps.” President Trump threatened to scrap NAFTA in the event that a deal is not reached. With the United States as Canada’s largest trading partner, a lot is at stake.
Bill C-59 is the Liberals’ response to the controversial Bill C-51 passed by the Conservatives. However, civil rights organizations have voiced their concerns about the excessive powers of security agencies and information sharing that will remain. It is unclear if the government is planning to revise the bill, but if the issues are not addressed the legislation is likely to be challenged as unconstitutional.
Transparency, accountability are
One of the aspects that set Trudeau apart from his predecessor in the election campaign was Trudeau’s pledge to lead a more open, transparent and accountable government. However, despite significant changes in the day-to-day transparency of the Prime Minister’s Office and departmental mandates, the issue remains fundamentally unresolved. Planned legislation to reform access to information (Bill C-58) has been heavily criticized as “a step backward” and may undermine the government’s credibility regarding key issues. Similarly, after the Liberals formally abandoned electoral reform, advocacy groups called on the Ethics Commissioner of Canada to rule on whether Prime Minister Trudeau’s decision violated ethics codes. A formal investigation into the matter would be damaging to the government’s image and public trust.
First Nations policies remain major challenge
Improving the well-being of First Nations in Canada remains a major challenge for the government. The Liberals reinstated previously frozen funding for First Nations, but it will be years before the effects of this are measurable. Many of the government’s promises remain unfulfilled, such as ending the boil water advisories on reserves by providing clean water within five years. Implementing the U.N. declaration will require substantial restructuring of departmental mandates to ensure that policymaking respects indigenous rights, which may not be desirable from the perspective of bureaucrats.
Sufficient time, resources for further gains
Although the Liberals under Trudeau have moved forward in several areas of sustainable governance, there is still plenty of room for improvement as well as the potential to regress. Initiatives that address overdue institutional reforms, which were once praised, have resulted in inadequate legislation or have been abandoned. Success will depend on whether economic policy ideas (particularly with respect to infrastructure investment and innovation) have the desired effect and whether the government can revisit institutional change without getting caught up in controversies over minor policy proposals. With two years left before the next election and the economy humming along strongly, the Liberals should have enough time and resources to deliver on their more ambitious projects.