Federal election setup

Lisa Raitt: Thank you for tuning in to The Raitt Stuff. I’m Lisa Raitt, former lawyer, former port airport CEO and former minister of Natural Resources, Labour and Transport. I’ve moved into the private sector here at CIBC Capital Markets as Vice-Chair of Global Investment Banking, but I’ve been witness to the interaction of public policy, politics and business over the past twenty five years and have a pretty good understanding of how decisions are made. On this podcast, I’m going to share my insights on current hot topics with the help of some guests along the way,

Lisa Raitt: Welcome to my inaugural episode and I’m delighted to be joined by CIBC Capital Markets Chief Economist Avery Shenfeld. Election speculation has hit fever pitch, and any minute now the Prime Minister could walk across the lawn at Rideau and ask the Governor General, Mary Simon, to dissolve parliament. Now, this week, we’ve seen three liberal members of parliament suddenly decide to indicate on Sunday that they aren’t going to be seeking re-election. There are no ministers that have events past Tuesday of this week. And articles have been written about whether or not the Governor General should give permission to the Prime Minister to have an election, and further Jagmeet Singh, the leader of the NDP, has written the Governor General saying we really don’t need an election right now. But it’s hard to ignore the amount of money that’s been announced by this government in the past couple of weeks and not think that perhaps there’s going to be an election. So it made a lot of sense to me that Avery Shenfeld did a piece this week talking about, is it on, is it not on? If it is on, this is what I think. And I’m delighted that he’s here with me today. So, Avery, thanks very much for joining me on the inaugural episode of The Raitt Stuff.

Avery Shenfeld: Nice to be here. My pleasure.

Lisa Raitt: Awesome. So the first thing that you talked a little bit about in your piece, Avery, that you published last week was about the polls. Can you give us a little bit of an overview of where you see the polling right now?

Avery Shenfeld: So I don’t obviously do my own polls, but we look at the CBC poll tracker, which is an amalgamation of a bunch of the polls, shows the liberals essentially right on the boundary of where they would have to be to win a majority. So they do translate some of these polls into seat counts and they show the liberals just on the other side of a majority. And obviously, if there’s a motivation for the election being called, that’s clearly one of them.

Lisa Raitt: Absolutely. And you mentioned some topics that may be coming up this election and more importantly, what it could mean to our clients. So you mentioned climate change. What’s your insight in climate change last time versus this time?

Avery Shenfeld: Well remember last time there was a huge division between what the liberals were proposing. They had a pretty clearly laid out plan. And I think a criticism of the conservatives in that election was their plan was a little vague. And obviously the conservatives are responding to that. They published a fairly detailed book of what their agenda looks like, aims at similar targets, treats the money being raised on things like carbon fees a little differently. But in the end of the day, I think it’s important to remember that the rest of the world is also going to dictate to Canada what we have to accomplish, because we’ve got the Europeans, for example, saying they’re going to impose carbon tariffs on stuff coming from countries that aren’t living up to what they’re going to do in Europe. The US is leaning towards the same sort of thing. So there’s really little choice amongst the major parties, but to have a plan that’s going to be effective in reducing carbon emissions.

Lisa Raitt: Yeah, and full disclosure, we’re actually recording this at 10:00 Eastern Standard Time on August nine. And this morning, the UN IPCC actually had a pretty scary report come out with respect to climate and what they are progressing. So I would assume that even more so, there’s going to be a focus on climate during this campaign.

Avery Shenfeld: The voters are clearly demanding that. It was a factor in the last election and I don’t think any party that really is going to be a serious contender across the country can afford to look light on the climate change file.

Lisa Raitt: Now, Avery, you know I’m a former conservative member of parliament and cabinet minister. And one of the things that happened when I was in cabinet is that Stephen Harper ran up some big deficits with Jim Flaherty as a result of the 2008 fiscal crisis that we experienced in the world. And we all kind of bit our nails and desperately wanted to get back to balance as quickly as possible and Joe Oliver brought us back to balance in that election prior to the 2015 campaign. Real big difference these days. Budget deficits, do they matter? What are you seeing? What are you thinking?

Avery Shenfeld: Well, at least politically, they don’t seem to matter in the sense that you don’t have any party in Canada saying that we should aim for a balanced budget in the first term of office. The Conservatives, for example, although they’ve been somewhat critical of the scale of budget deficits, are promising to balance within a decade. If you look at the last Liberal budget, they don’t go out a decade. They go at five years to get the deficit down to about 1% of GDP, which would be really similar to the track you’d be on if you were trying to balance in 10 years. And I think the parties are just reflecting voter sentiment. Voters don’t seem to care that much about deficits. I don’t think it’s fair to say that economists are not quite as worried about deficits as they were historically. Low interest rates certainly help make the future interest cost of this borrowing less scary, but that doesn’t take away from the fact that we can’t run deficits anywhere near what we’ve been running recently, and particularly at the provincial level, we need to get back on track because interest costs when provinces borrow, are a bit higher than the federal borrowing costs.

Lisa Raitt: You mentioned provincial. An issue that’s somewhat provincial, somewhat federal, but very important to all Canadians, of course, is pandemic. Coming out of the pandemic in terms of return to work, what it looks like, vaccination, vaccination passports. You mentioned it in your piece a little bit. Do you think that the pandemic is going to have an impact on the election?

Avery Shenfeld: Well, certainly if it continues to escalate, as it has in the last week or so, there will be questions about the wisdom of calling an election during a pandemic. Now, some provinces have had votes proven to be able to do that, but it will raise some questions there. I think the reality is, is that most of the issues surrounding the pandemic are provincial issues. And there’s lots of controversy over the different approaches being taken from Quebec on one side, for example, to Alberta, perhaps at the other end. And that will, I think, distract voters a bit from this federal election, because it really is the pandemic that is still at the top of the headlines. And the pandemic is largely a provincial policy issue. And so voters may be a bit distracted by that. It will reduce the ability of the federal parties to really cut through that news and get their messages out.

Lisa Raitt: It’s very true. Well, if we are on the precipice of an election, it’s thirty five days at the very least of people listening in on what the parties want. I hope, Avery, that I can count on you to come back and talk election with us as this may roll out in the future. And in the meantime, I want to thank you very much for your time. Much appreciated.

Avery Shenfeld: Happy to do that and I just reiterate that in the last election, markets didn’t move much during the campaign. And I think at this point we’re set up for a similar blasé response by financial markets to this election, giving all the attention on the pandemic itself.

Lisa Raitt: Excellent. Thanks very much, Avery. Now let’s just do a little bit of housekeeping here. For those who may not remember from the last time we went to an election, which was only two years ago, by the way, there are three things or four things to remember. First, the election has to be at least thirty five days. So whenever the Prime Minister decides to call it, there has to be at least a campaign for thirty five days prior to us having an election. So that has us looking at either September twenty or twenty seven as possible days for the general election. The second, not all ridings actually have a full slate of candidates. So there’ll be some scrambling from the parties to try to make sure that every single riding has somebody that’s carrying the banner for that party. This is not an easy thing to do. Some ridings are very much known as being a certain flavour of politics, and as a result, it’s hard to find a Conservative member or a Liberal member or an NDP candidate to put their hand up. Number three, possibly the most important, the Prime Minister has to make a case for an election, not only to the Governor General, but he also has to make a case to the electorate, because the very first question on day one when he goes to the microphone will be, Prime Minister, why did you call this election? And from there, the campaign will roll out. And the fourth one, which is just a little bit of an agenda issue, is without a call of an election. September 20th is actually the day that parliament is recalled and members have to be in their seats. So clearly, there needs to be a decision taken on election or no election well in advance of that. So let’s assume that we launch a campaign. The question at the ballot box is the most important piece of battle for the parties. All parties are going to strive to make their narrative the ballot box question, and you’ll see this come out through the materials that are going to be launched by all the parties. But if you were at a family or a neighbourhood barbecue this past weekend, or if you listened to Avery prior to us having this conversation, you probably would know that the most discussed issue right now is around a two headed beast. The first part is whether or not there should be mandatory vaccination in this country. And the second is whether or not there should be vaccination passports in the country and who should dictate these? What you’ll find and what you know is that everybody has an opinion and the motivation is very personal and it’s very real. And that makes it a volatile topic for any politician to be dealing with. Should the Prime Minister call an election? Well, I would say politically there’s no better time. But what is the risk of the electorate turning on you? And that’s the decision the Prime Minister is facing and will have to take. And we’re going to find out how he analyses the risk. Does anyone really know if there will be a call? Well yeah, there is one person who knows that there’s going to be an election announced in the coming days. It’s the company who does the wrapping of the Prime Minister’s tour bus. If the transport is ready to go, then Election 44 is on.

Lisa Raitt: Thank you listeners for tuning in. Now if you have any questions or comments or requests on topics to discuss, drop me a line at [email protected]. Your interactions will make this better. I’m your host Lisa Raitt and this is The Raitt Stuff and I’ll talk to you next week.

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