Canada’s governing Liberals, led by Justin Trudeau, hold a minority in Parliament, requiring support from at least one other party to pass any legislation. Canada’s ostensible social democrats, the New Democratic Party (NDP), claim to hold the balance of power.
Without backing from the Conservatives or the Bloc Québécois, the NDP are the most likely allies for Trudeau to proceed with a progressive agenda — but do they even have a plan to propose?
This isn’t the first time this has happened. In the fall of 1972, Trudeau senior, Pierre Elliott, led a Liberal minority government, backed by the NDP’s David Lewis. Lewis and his party had campaigned on ending corporate welfare, naming and shaming Canadian branches of companies — like Shell and General Electric — that took advantage of state subsidies and tax loopholes. Lewis argued that the public’s generosity to capital in this arrangement was an awful deal for working people: they suffered from higher unemployment and personal taxes while companies enjoyed every perk.
Pierre Trudeau had initially been elected on the promise of making Canada a “just society,” and Lewis’s continued exposure of corporate welfare damaged Trudeau’s claims to represent the general interest of Canadians.
Lewis’s campaign was in part a response to the general sense of unfairness among the Canadian electorate that had been growing in the mid-sixties. In 1966, a Royal Commission proposed taxing capital gains at the same rate as waged or salaried income, arguing that “a buck is a buck.” Trudeau Sr had rejected the proposal, fearing it would disincentivize private investment.
The inflationary trend of the early 1970s would hammer working-class Canadians. Food prices rose 20 percent in 1973, and inflation resulted in a reduction of real wages by 2 to 3 percent a year. Corporate profits over the period, however, more than doubled. Exacerbated by the energy crises of the 1970s, the Canadian economy was quickly undergoing a transformation that transferred more and more wealth from working people to corporations.
Canadian economic nationalism and concern over US control of the economy characterized the political mood of the 1970s. Two important concessions resulted from the NDP’s propping up of Trudeau Sr’s Liberal government over 1973–74: the creation of Petro-Canada, and the creation of the Foreign Investment Review Agency (FIRA).
Petro-Canada is directly related to the 1973 OPEC crisis. With crude prices spiking by 300 percent and more radical voices calling for nationalizing the oil industry, the minority Liberals were threatened with parliamentary defeat by the NDP unless they moved to protect consumers and set up a publicly owned petroleum company. In late October 1973, Trudeau’s government accepted an NDP motion calling for the creation of a national oil company. By 1975, the Petro-Canada Act was passed. Established with $1.5 billion in capital and with preferential access to debt capital as a state-owned company, it was used by the government to pursue policy goals: to explore frontiers in oil and gas exploration that conventional producers were hesitant to invest in.
FIRA was formed largely as a result of concern over the influence of foreign (read: American) business in the Canadian economy and the long-term consequences such a presence could have. In some industries, Canadian ownership was nonexistent, and control was overwhelmingly held by US investors. A branch-plant economy had developed, where production in Canada for Canadian markets was coordinated, planned, and researched in US-based corporate parent company headquarters. As a result, Canada saw limited investment in the research, development, and technological sectors that typically accompany homegrown industry.
FIRA would end up screening foreign acquisitions of Canadian businesses, making recommendations to the government based on factors like employment and technological development, and scrutinizing the degree of Canadian participation in management.
Both Petro-Canada and FIRA have suffered from the neoliberal onslaught that would follow in the years that followed their creation. Petro-Canada saw the government slowly sell off its majority share and was ultimately privatized in 2004. FIRA ended up approving most of the applications it received, and after pressure from the business lobby and conservative politicians, was re-tasked with promoting and facilitating investment in Canada. Finally, under the so-called Progressive Conservatives, it was renamed Investment Canada in 1985.
In 1973, the NDP threatened to topple a government unless it created a state-owned oil company and screened foreign investment to protect domestic priorities. Can today’s NDP claim to make demands that are anywhere near as robust?
The Harder They Trudeau, the More the NDP Demurs
The Canada Emergency Response Benefit (CERB), a $2,000 per month support, has cushioned many Canadians from the worst of the pandemic’s impacts, but dangers still loom on the horizon. Emergency supports are being wound down, and Canadians are facing a somber labor market. Eviction bans are expiring in several provinces, and the country’s real estate bubble might burst.
While Canadians saw their jobs and incomes evaporate, Canada’s top billionaires saw their net worth expand by 9 percent over the first three months of the pandemic. Against this stark backdrop, the Canadian government saw fit to enact a business subsidy: the Canada Emergency Wage Subsidy (CEWS). The program is effectively trickle-down economics on steroids, directly providing cash to businesses, with virtually no attendant labor protections, and was endorsed across the political spectrum: the business lobby, labor unions, and the NDP pushed for it. How credible can the NDP be if it’s willing to directly line the pockets of business?
In the run-up to 2019’s federal election, the NDP campaigned on a wealth tax of 1 percent on all assets (including real estate) over $20 million. This proposal polls very well, but is timid compared to those put forward in the United States by Senators Elizabeth Warren and Bernie Sanders. The NDP renewed its calls for a wealth tax this summer, prompting the business press to respond with arguments that such a tax would be quite unnecessary.
What’s more, Trudeau’s 2019 election platform promised to expand Canada’s health care coverage to include a national pharmacare plan. So far, the details have been vague. The NDP, meanwhile, campaigned on universal pharmacare, dental care, mental health care, as well as eye and hearing care.
Will the NDP threaten to topple the government on either issue? The prospects for that are dim and a testament to how much the party and the political context have changed since the last time a Trudeau was in power.