In less than a month, members of Parliament will return to the nation’s capital from their summer vacations and settle back into the routine of passing legislation, holding committee hearings and meeting with lobbyists and industry representatives.
The fall session is always a busy time, with MPs eager to get back into the Ottawa swing of things. With all the political snickering happening on Twitter these days, one might even assume MPs are getting antsy to come back to Ottawa.
Given that it’s been three years since the Trudeau government took office, a throne speech is a possibility. It’s definitely something that has maintained a prominent place in the dead-of-summer rumour mill, especially now that the prime minister has ruled out the possibility of a snap election this fall.
One thing that is pretty much guaranteed, pending some unexpected legislative action, is an economic update from Finance Minister Bill Morneau.
In the past, the fiscal update has sometimes been glossed over — earning a headline or two for a couple days before the political calendar or political issues take over.
Most of the attention in Ottawa these days is on the North American Free Trade Agreement. With Mexico and the United States currently engaged in a series of bilateral discussions, not uncommon for trade negotiations, concerns and fears about Canada being left out of the deal have dominated news coverage and coffee shop chatter.
The fall economic update? Not so much chatter about that.
The thing is, with so much investment uncertainty and political parties trying to differentiate themselves a year out from an election, the fall economic update could likely send a number of important economic and political signals.
The Trudeau government has not yet responded to Trump’s overhaul of the American tax system.
Morneau has said if he determines a response is needed, it will be included in the fall economic update.
Canadian companies are worried they will lose investments to competitors south of the border. Meanwhile, the U.S. tax changes have also led to complications for dual citizens, many of whom now face a hefty tax bill.
Drawing and maintaining investment in Canada is critical if the country is to continue seeing a strong economic balance sheet, particularly in the current trade context.
Companies need to be able to attract talent and find new ways to innovate. A weakened dollar, while certainly helpful given Canada’s dependency on exports, can only counter other economic threats for so long.
The economy is also always a pillar in any federal election. Political parties want to be able to position themselves as the group of elected officials who can create jobs and ensure the country has the fiscal resources needed to support whatever policy actions they’ve campaigned on.
This time around there’s also the “Trump factor.” Canada has so far successfully maintained a united front when it comes to the ongoing NAFTA renegotiation, with people of all political stripes working together to defend Canada’s interests.
That’s unlikely to change.
However, how Canada’s tax system and financial policy are designed to respond to the Trump administration’s tax changes is very much a domestic issue — one that, should Ottawa fail to address the business community’s concerns, could allow for some targeted criticisms against the Trudeau government without jeopardizing NAFTA.
There’s no question it’s been a rocky ride for Morneau, one that has required the Trudeau government to invest a lot of political capital into helping him maintain his position on the government’s front bench.
Justin Trudeau clearly has confidence in him. His decision to keep him in cabinet reflects that.
If Morneau’s fiscal update doesn’t deliver what the business community wants and reassure everyday Canadians who are nervous about Canada’s relationship with the U.S., the Liberals will need to find a way to ensure he doesn’t become a political liability, again.