Another Canadian Election

 

It is election day and from the looks of the current polls, no party has overwhelming support.  As we’ve said before - markets care more about the trajectory of the Canadian economy than they do about the party in power. 



 
Understanding that, BMO Economics have pointed out a few pieces of the major party platforms that could have an impact.

Party Platforms: Major Economic Issues -  from BMO Economics

Budget deficit: The Liberals’ 2021 budget pegged the deficit at $154.7 billion, or a still-hefty 6.4% of GDP, followed by deficits north of $50 billion in the following two years.  While fiscal upside is likely built-in thanks to a firmer-than-projected economy (especially in nominal terms), election promises may eat into much of it.  The Conservatives and NDP have not costed their proposals but are not shy about spending.
Health care: Understandably, health care is top of mind for many voters right now.  All three parties have targeted faster vaccine access, with the Conservatives and NDP calling for additional investments into domestic production.  The Conservatives are promising to boost annual growth of the Canada Health Transfer (to the provinces) to at least 6%, while the NDP continues to push national pharma care.
Child care: Both the Liberals and NDP are targeting a $10/day subsidized child care program.  The Conservatives are instead proposing to cover up to 75% of child care costs by converting the Child Care Expense deduction into a refundable tax credit.
Housing: All three parties address affordability with both demand and supply-side policies.  In particular, they all target non-resident owners and promise additional (new or repaired) housing units.
Taxes: The 2021 budget didn’t include any major tax changes.  The Conservative platform includes many incentives to boost the recover, largely targeted at near-term investment and hiring, in additional to some populist measures aimed at vacation and retail spending.  The NDP’s proposals target higher-income earners and corporations.
Environment: Climate remains a key plank in each platform.  The Liberals and NDP are largely sticking with the current carbon tax system, while the Conservatives have proposed that the money from the carbon pricing goes into personal savings accounts.
 
  
Once we know the outcome of the election it will be easier to comment on specific policy propositions and how they could impact Canadian investors.  To that end, BMO Economics and the BMO Portfolio Advisory Team are hosting a client call on 21Sept21.  Feel free to reach out to us if you’d like the call or replay details,