Canadian Election Post-Mortem
October 15, 2008
The Stephen Harper-led Conservative Party won 143 seats,16 more than it had before but short of the 155 needed for a majority in Canada’s 308-seat parliament. The Tories did a little better than expected despite an 8-seat pick-up by the left-leaning New Democratic Party and a better-than-expected showing in Quebec by Bloc Quebecois, the pro-independence regional party which added one seat to its former 50-seat total in the province. However, with 38.1% support in Quebec and thus well short of a majority, the chance of another separatist referendum continues to fade away. The Conservatives benefited from an opposition spread over four parties, the Liberals with 29.1% of the national vote, Parti Quebecois (10.0%), the NDP (17.5%) and the Green Party (6.8%). Canadian politics remains regionally fractious. The Conservatives took 76% of seats west of Ontario, 48% of the seats in Ontario, but less than 19% of the seats allocated to the Maritime provinces and Quebec. The distribution by economic class resembles that in the United States, and the Conservatives hold similar positions to the U.S. Republican Party in the areas of taxes, regulation, social issues and the environment.
The remarkable thing about Harper’s victory is that Canada’s economic performance had deteriorated since the Conservatives were elected initially in January 2006. Real GDP expanded in this period at an annualized rate of 1.7%, slightly more than a percentage point under trend, and the latest year-over-year growth rate was only 0.7%. Consumer price inflation averaged 2.7% per annum, above the target of 2.0% despite cuts in the national sales tax, and the latest on-year CPI change was +3.5%. The Toronto TSE-300 stock index as of 18:10 GMT today has lost 26.5% since Harper called elections on September 7th and 19.7% since he was elected. The Canadian dollar had dropped 10.4% since September 7th and 3.1% on balance since Harper took power. Canada’s long string of consecutive budget surpluses, the envy of the G-7, remains intact and over ten years long, but it is now being seriously challenged. Under Harper, Canada has taken a hands-off approach to the global credit crisis, and the Liberals made an issue of that, promising an activist style to safeguard Canada from the jolt that may hit the U.S. economy as well as the recent plunge of many commodity prices.
The biggest losers of this election were the Greens, who set a new record for highest popular vote without winning a single seat in parliament, and the Liberals with a record low share of the popular vote and a 26% decrease in their seat total. Opinion polls had suggested the Liberals might do better than they did and that the Conservatives would do worse than they managed to do. In Canada, there will be government continuity going forward. Perhaps the main value of this vote is as possible information related to the U.S. election. If Canadian patterns follow suit, Obama will not draw as well as opinion polls suggest at McCain’s expense. We’ll know that answer in three weeks.
Tags: Canadian Dollar
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