What Lies Ahead for 2015? A federal election - sooner than you think and a budget that will have a pretty thin surplus.

By Ray Rivers

December 26, 2014

BURLINGTON, ON.

Canada faces an important federal election this year. There will be clear choices for the voters because the philosophies of the Liberals and Conservatives are so different. The NDP has been an effective opposition, but few Canadians are convinced that the party has much to offer, and expect the NDP to almost certainly fall back to its traditional third place standing.

The Harper government introduced a fixed-date election law back in 2007, which ordinarily would mean an election be held on the 3rd Monday of October this coming year. But a debate is emerging about whether the PM will go to the voters earlier, arguably breaking his own law in the interests of political expediency.

Driving that speculation is consideration of Canada’s external rather than internal environment. I’’m not talking about ISIS, Iran and North Korea. These are merely distractions from the important global geo-political conflict – the one looming in eastern Europe. Vladimir Putin’s latest aggressions have plunged the world back into cold war mode with a potential for much more significant consequences.

Mr. Harper was foremost among world leaders in condemning Putin’s actions. And he will find enhanced electoral support among Ukrainian Canadians for his strong stand, much as he has found among some Jewish voters, who support his one-sided pro-Israeli policies. But it is the economic consequences of this conflict which will determine his timing on the election.

Pipes waiting for US government approval before they can be buried and used to carry oil from the Alberta tar sands.

It’s mostly all about oil prices. The Saudis and Americans are flooding the market with cheap oil, Russia’s main export and the basis of that nation’s economic strength. Since the price of oil has fallen to less than $50 per barrel, the Ruble has been cut in half and the country is now facing a major recession. In this way, oil pricing has turned out to be even more effective than sanctions at hurting Putin’s Russia, though neither appear to be able to curb his aggressive tendencies

Harper government waits patiently for some movement on the Keystone pipeline that is supposed to carry oil from Alberta to US markets.

Canada’s economy is also dependent on oil prices, though to a lesser extent than Russia. Since becoming PM, Harper has made the export of oil the central pillar of his economic policy, while jeopardizing our agriculture sector through new trade initiatives, and virtually ignoring Canada’s industrial base. Labelled the ‘Dutch Disease’, we have watched manufacturing and other industries in Ontario and Quebec die-off as oil exports lifted our loonie, thereby making Canadian goods and services less competitive globally.

Having cut corporate and other taxes, the federal budget has become more reliant on oil patch revenues than ever. And it was income from oil that was going to take Canada into the ‘black’ just in time for the PM’s 2015 budget. But, now, that is unlikely to happen, and the longer oil prices stay depressed, the bigger the deficit we can expect in 2015.

Harper has put a lot of his eggs into demonstrating his prowess at managing the economy, so showing up at election time with a big deficit in the basket is not what he wants. The betting is that he’ll call a spring election rather than risk facing the public come October when he is deeper in the red.
A spring election would also keep him ahead of the investigations into Senate-gate (Duffy, Wallin). And the Tory election machine is reportedly better funded, staffed and organized than either of the opposition parties. So why not?

Lower oil prices are good for consumers, the folks voting, balanced budget or not. It’s no secret that contented voters often share their good will by voting for the status quo. After-all, when you can put the savings from that last fill-up towards your child’s new I-Pad life looks more pleasant.

Harper’s throw-back social policies (mandatory jail, drugs, prostitution) or his assault on the environment (environmental assessment, Fisheries Act, Climate Change) may seem more academic than material when gas prices are lower and the man in charge seems to look like he knows what he is doing.

The situation in Europe seems relatively stable, if uncertain, but it could change rapidly as these things do sometimes. Recall how nobody expected the first world war to last very long – but it did. And Mr. Harper has cultivated a ‘tough guy’ image which would benefit him were we suddenly thrust into some kind of serious conflict over there.

The truth is that Canada has been criticized by NATO for underspending on its military and has cut defence spending even more – in order to achieve what now appears to an elusive balanced budget. And perhaps, in a time of war, people might reflect on just how poorly this government treats our veterans in need.

So it sure looks like a spring election is in the cards this New Year. Have a happy New Year however you decide to cast your ballot.

Background links:

Fixed Elections Law   Russia Conflcit   Dutch Disease

Ray Rivers writes weekly on both federal and provincial politics, applying his more than 25 years as a federal bureaucrat to his thinking. Rivers was a candidate for provincial office in Burlington where he ran against Cam Jackson in 1995, the year Mike Harris and the Common Sense Revolution swept the province.

Ray will be having his Christmas Dinner in an airport somewhere as he wings his way to New Zealand where he will vacation, ponder and continue working on his second book,  His regular column will appear every second week; in between will be a short photo essay on life on the other side of the world.