Canada is the latest country to hold elections, with Canadians casting their vote on Monday in the Federal election. After just returning from a trip to Toronto, it was impossible to escape the media coverage. Aside from the excitement of the Toronto Blue Jays making the conference final of Major League Baseball, for the first time in 23 years, the media was dominated by political party ads. It was interesting to hear Canada’s political leaders promote their manifestos. Different accents, but the same promises!
The incumbent conservative government, led by Stephen Harper, is under pressure from the Liberal Party – led by the younger and more charismatic Justin Trudeau – who are expected to win the most seats. As with other elections, the issue of growing inequality has fuelled support for opposition parties, with Trudeau looking to tax the 1% in favour of promoting a stronger middle class. The more socialist New Democrat Party is also in the mix, making it unlikely that the Liberal Party will be able to win the 170 seats needed to form a majority government.
In terms of financial markets, a majority government is preferred because it brings greater certainty. For a country that is technically in recession, two consecutive quarters of negative GDP growth, hurt by falling commodity prices, a strong government is needed now more than ever. The Bank of Canada will be poised to react to any negative fallout when they meet on Wednesday, with two rate cuts made already this year.
One soundbite that seemed to stick in my head was from the Liberal leader Justin Trudeau: “In Canada, better is always possible”. A political and economic system that empowers people to better their own circumstances should be the focus of every government. However, too often the debate is focused on wealth distribution rather than more efficient capital allocation to create a more equal platform for people to do better. Finding that balance while still promoting economic growth is the Holy Grail.