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This minority government is no stranger to the financial markets

The financial markets have easily figured out this election result.

Minority governments per se are nothing to fear, especially when public finances are in solid shape and there is a popular all-party consensus against returning to the bad old days of big deficits. And this particular minority government is one the markets know well.

Besides, the economy is ramping up nicely after a spell of sluggishness, companies are adapting to last year's rise in the Canadian dollar better than expected and the Bank of Canada is providing plenty of support to domestic growth through low interest rates. There's not much a minority Parliament can do to upset that trajectory.

Ho hum, went the muttering on trading desks, where there is far more interest in what the U.S. Federal Reserve Board will say today when it begins to raise its interest rates again. The Canadian dollar barely budged yesterday.

Companies are perhaps a little more nervous, especially those that regularly commit huge sums to large long-term investments and like stability. This includes firms in the energy industry and construction, where public infrastructure projects are a source of business.

Majority governments are easy to lobby, and once persuaded, can make meaningful commitments. Minorities force companies to extend their efforts to more parties and the public at large, whose support for one kind of spending over another might be important.

But minority governments can be creative and courageous exercises in governance that are capable of producing some very fine outcomes. Medicare and the Canada Pension Plan, social programs that have cut the cost of doing business in Canada, were both products of a Liberal government under Lester Pearson that ran the country with a minority for five years in the 1960s.

They are tougher to run than majorities, because minority governments require far more sensitivity to alternate viewpoints. But that forces them to accept compromises that reflect a much broader consensus in the country, not a bad thing for a party supported by fewer than four in 10 Canadians.

This need not preclude the ability to act boldly. Joe Clark's short-lived 1979 minority government was a failure, but did not shy away from daring measures. John Crosbie's short-term-pain-for-long-term-gain budget was nothing if not brave. Had Mr. Clark been able to count votes and get that budget passed, the country might have been spared a 15-year rise in government debt that finally required very painful action to reverse.

That said, Prime Minister Paul Martin will need great agility to accomplish anything substantive.

Issue by issue, bill by bill and vote by vote, he must find at least a couple of dozen MPs from other parties willing to support any initiative that requires passage by the Commons. But they need not be the same MPs each time, so all the talk of a de facto Liberal-NDP coalition is simply off track.

Federal Liberals long ago mastered the art of tacking left or right depending on the issue and the public mood. Depending on whether he needs support for measures that are more liberal or more conservative, Mr. Martin can seek support from New Democrat and Bloc Québécois members for the former and from Conservative members for the latter.

It will require great skill and deft political management to pull off such manoeuvres regularly, and give this government any kind of longevity. It is, however, doable.

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