Canada’s ruling Liberal Party has said a “sacrificial” budget is required to confront both a trade war with the United States and a prolonged cost-of-living crisis that threatens to push the country into recession. But with opposition parties signaling they will not support Prime Minister Mark Carney’s tax plans, a failed parliamentary vote on the budget could plunge the country into another federal election in the coming weeks.
The country’s Finance Minister, François-Philippe Champagne, will unveil a spending plan on Tuesday that his government has said will include both steep deficits and spending cuts. Few details have leaked ahead of the announcement, which will mark the first substantive look at how Carney plans to avoid a recession while locked in a trade war with the United States, Canada’s largest economic partner.
In recent months, aggressive protectionist measures from the White House have hit Canada’s automotive, metals and forestry industries. To mitigate the effects, Ottawa has turned to tax cuts and increased spending on defense and infrastructure to help struggling businesses, pushing the country into a more challenging fiscal position.
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In Canada, a federal budget is a vote of confidence, meaning that once introduced as legislation, a lost vote would likely trigger the collapse of the minority Liberal government and plunge the country into its second federal election in less than 12 months.
The Liberals have 169 seats and need to find another party, or at least three other lawmakers, to vote with them to pass the budget. Alternatively, six lawmakers could choose to abstain, lowering the threshold needed for the budget to be approved. But those parliamentarians would have to answer to voters why they voluntarily absented themselves from a crucial vote on the country’s economic future.
Opposition parties have expressed skepticism toward the budget, variously suggesting that it goes too far in its spending or falls short of the necessary investment.
In a speech to students at the University of Ottawa last month, Carney warned that “we will not transform our economy overnight; it will take sacrifice and time,” adding that his government would “work tirelessly to reduce waste, improve efficiency and make thoughtful and transparent decisions.”
“We will not play. We will not waste time. We will play to win, betting on Canada and the Canadians,” he said.
Conservative Leader Pierre Poilievre attacked the speech, calling it a “sacrificial speech” and claiming that the Liberals were trying to get Canadians to accept “a permanent reduction in our quality of life.”
The Liberals have spent recent weeks accusing opposition parties of demanding fiscal and political concessions and warning that the party, which has a strong parliamentary minority, will not support any ultimatums in exchange for votes.
In late October, Government House leader Steven MacKinnon said Poilievre was trying to engineer a “Christmas election” to distract from questions within the Conservatives about Poilievre’s future.
Carney, a former central banker of Canada and the United Kingdom but a political novice, has met with leaders of the Conservative, Bloc Québécois, New Democrat and Green parties to outline his government’s priorities and build support. None have expressed any public support for the Liberals.
In a social media post on Monday, Carney said his “main goal is to return control to Canadians” by reducing dependence on the United States and doubling exports to other nations, a move that will require citizens to make “difficult” and “responsible” decisions.
Champagne will present the budget in the House of Commons shortly after 4 pm ET on Tuesday. Four days of debate will follow the budget announcement, with a vote scheduled for November 17.