Key Challenges

Minority government reelected
In September 2021, Canadian voters cast their ballots in the midst of a pandemic and with many wondering why the election was even being called. The reelected minority Liberal government now faces some of the greatest challenges since the Great Depression.
Economy rebounding
On the economic front, the current environment is very uncertain. While Canada’s traditional strength around macroeconomic stability has served the country well in the pandemic providing fiscal room for emergency measures, the federal deficit has now increased to 47.5% of GDP. Moreover, even though the economy had begun to rebound, the new Omicron wave has precipitated new closures. The government will need to steer a clearly designated path with well-defined indicators that can deliver on the 2026-27 debt reduction plan and that can effectively target where income and business supports may be needed. As for Canada’s relationship with the United States, this has stabilized after the renegotiation of NAFTA but frictions around trade – and American sourcing – remain.
Dissatisfaction in the West; Quebec still a source of tension
Two sources of territorial tensions in the federation will need to be carefully managed. The first is so-called Western alienation (feelings in Western provinces, most importantly Alberta, that their interests are not looked after in the federation), which has experienced a strong revival in recent years due to the Alberta government considering that other partners in the federations are hurting its economy by preventing the development of pipelines to take the province’s oil to the Canadian East and West coast so it can be exported to Europe and Asia. The Alberta government holding a referendum on the equalization program with the declared intention on gaining leverage for negotiations with the federal government aimed at getting a “fairer deal” has failed to gain substantial public traction, and Alberta’s issues should continue to be managed within the country’s intergovernmental networks. The second source of tension is Quebec. Although the push for independence is the weakest it has been for over 60 years, nationalism is still very much present and secessionism can be reignited by a perceived slight on the part of the rest of Canada. Quebec’s Bill 21, which bars public employees from wearing religious symbols is very popular in the province but has been widely denounced in the rest of the country, with several mayors of major Canadian cities announcing they will support court challenges. Canadian political actors should refrain from such actions, especially considering that the Quebec government has already invoked the so-called notwithstanding constitutional clause that will allow the legislation to survive any court decision.
More ambition on climate policy needed
The importance of climate change as a major policy issue continues to grow, particularly in light of the natural disasters of 2021. While the government has been successful in implementing a national carbon tax requirement and revamping the environmental assessment act, it still is far from meeting its Paris climate accord targets, and even further from the path needed to reach its commitment of zero emissions by 2050. The country’s economic dependence on natural resources is no small obstacle to moving forward.
First Nations relations still unresolved
Improving relations with First Nations and other Indigenous groups once again constitutes a fundamental and unresolved challenge for the government. There has been some progress in terms of water infrastructure as well as in the recent $40 billion commitment to right the past, egregious wrongs of welfare for Indigenous children. However, many of the government’s promises remaining unfulfilled. The reconciliation with Indigenous peoples on the basis of a nation-to-nation approach promised by the federal government has involved many symbolic gestures but it has been difficult to operationalize in public policy. A broad array of socioeconomic indicators – income, health, housing – continue to show the deep inequities that persist for Indigenous peoples.
Rethinking innovation policy
Innovation also poses a key challenge: R&D investment remains low; the transfer of research into commercialization remains problematic; and, in large part, Canada has not turned what is a relatively thriving ecosystem of small and medium-sized enterprises into large global firms. The government needs to undertake a robust assessment of past measures versus impacts and forge a path forward with definitive goals and realistic measures for success.
More funding for healthcare needed
In the context of the pandemic, the healthcare system is stretched well beyond capacity, with a backlog of surgeries and severe shortages in nursing staff. There is also a need for standards for elder care congregate settings. Meeting challenges on healthcare and elder care will require an injection of funding of at least in the CAD 1 billion range and necessitate flexible approaches that can respect provincial authorities in these fields.
Gaps in sustainability
In summary, the look ahead for the Trudeau government’s third term contains considerable risk. The government must deal with the frayed relationship with the Western provinces and, as usual, manage Quebec carefully while maintaining the confidence of the House of Commons in a minority situation. Overall, the Liberal government’s initiatives have moved Canada toward sustainable governance in many areas – and they certainly have been critical in weathering the pandemic – but there are still large gaps that need to be filled in order to achieve long-term sustainability. In this minority context, the Liberals and some of the opposition parties will have to rise above partisanship in order to pass enduring reforms yielding long-term benefits.

Party Polarization

Policymaking capacity despite polarization
Canada is a parliamentary democracy, and its first-past-the-post electoral system has historically generally produced a parliamentary majority for the winning political party, which is further strengthened by strict party discipline. In these circumstances, the governing party can implement its policies irrespective of polarization and opposition by other parties. Minority governments have been more frequent occurrences in the last two decades, and they tend to not last the usual four-year term. Although coalition governments are not formed in these situations, the governing party still manages to pass legislation with the support of at least one opposition party. At the same time, cross-party cooperation is hindered by one of the strictest party disciplines in the world. Members of parliament almost never vote against party lines, and party leaderships maintain strict control over speech content and committee work (Marland, 2021).
Four major parites
Federal politics has been dominated by the Liberal Party of Canada (LPC) (Johnston, 2017), a centrist, “big tent” party (Carty, 2015). The Conservative Party of Canada (CPC) sits on the right. In comparison to the LPC, it is more supportive of the oil industry, less aggressive in its climate change targets, more concerned with deficit and public debt, and opposes stringent gun control. On the left is the New Democratic Party (NDP), which supports more significant social spending and advocates for all minorities, including Indigenous peoples, members of the LGBTQ+ communities, and racialized Canadians. The Bloc québécois (BQ) supports the independence of Québec but, short of this goal, seeks to protect and increase the autonomy of the province. (Score: 9)
Alex Marland, Whipped. Party Discipline in Canada. UBC Press: 2021.

Richard Johnston, The Canadian Party System. An Analytical History (Vancouver: UBC Press, 2017).

Kenneth Carty, Big Tent Politics. The Liberal Party’s Long Mastery of Canadian Political Life (Vancouver : UBC Press, 2015).
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