Making sense of the Liberal-NDP supply agreement

Late on the evening of March 21, CBC broke the news that the leadership of the two parties had reached an agreement that would see the NDP support the Liberal government to keep it in power until 2025 in exchange for a commitment to act on key NDP priorities.

How does it work?

The agreement is not a coalition, which would involve having NDP MPs sit in Cabinet. Instead, the deal, known as Delivering for Canadians Now, A Supply and Confidence Agreement, lays out the parameters for legislative collaboration over a three-year horizon:

• It will allow four budgets to be presented by the government.
• The NDP agrees to support the government on confidence and budgetary matters—notably on budgetary policy, budget implementation bills, estimates and supply.
• The Liberal Party commits to govern for the duration of the agreement.
• The NDP would not move a vote of non-confidence, nor vote for a non-confidence motion during the term of the arrangement.
• Quarterly leader-level meetings, regular House of Commons leadership meeting, and monthly “stock-take” meeting by an oversight group made up of staff and politicians.

The deal, not without precedent, is completely informal and will last only so long as it is judged to be beneficial to both parties. As circumstances change and new crises emerge, it is easy to imagine this marriage of convenience coming apart as easily as it came together.

Why a deal?

The deal may allow Prime Minister Justin Trudeau to cement his legacy as one of the most progressive Canadian leaders in a generation. If the deal lasts until 2025, Mr. Trudeau will have been responsible for implementing a carbon tax, a national day care system, a national pharmacare regime and dental coverage for all Canadians. Even if the Conservatives reclaim government in 2025, some of the policies will be so entrenched that repealing them may prove too politically unpopular to achieve.

However what’s good for the Prime Minister’s legacy may not be ideal for his party or his successor. By 2025, Justin Trudeau will have been governing for a decade—well past the expiration date of many politicians. Despite his own pronouncements, speculation is rife that this deal signals that the Prime Minister is preparing to stand aside. His successor may inherit popular policies, but they may also inherit a spent government—both fiscally and from a policy perspective.

The Liberals have gained certainty—and a pair of scissors with which to cut the second opposition Bloc Québécois out of the equation—but what have Jagmeet Singh and the NDP gained? On Twitter, Mr. Singh explained that “New Democrats will always use our power to make life better for Canadians. Tommy Douglas did it with Medicare. Jack Layton did it with affordable housing. Now we're using our power to deliver the biggest expansion of health care in a generation—with dental care and pharmacare.”

But did the NDP really need to dance with the Liberals in order to achieve these gains? After all, legislation can be passed without supply and confidence agreements. The national daycare system announced by the Prime Minister ahead of the 2021 elections is a case in point. While the deal will allow Mr. Singh to rightfully take credit for some of these progressive achievements, it does comport some risk. If Canadians fail to see the NDP’s hand in these policies, it may end up strengthening the Liberals’ grasp on the progressive left. Worse still, a deal with the Liberals will be anathema for many New Democrats. Mr. Singh must convince his party’s rank and file that the juice is worth the squeeze. One thing is certain: if this manoeuvre fails to generate electoral gains, Mr. Singh will almost certainly be ousted as leader of the NDP.

Initial conservative reaction from Interim Leader Candice Bergen and leadership candidates has been very critical, not least because the agreement largely fails to address inflation and rising costs of living.

The agreement signifies that the next head of the Conservative Party will remain leader of the government-in-waiting for a longer period than previously expected, thereby reducing the need for a candidate who already sits in the House.

What does it mean for you?

Clients operating in the healthcare, pharmaceuticals, and dental space should be aware that this places several of the Liberals’ pre-existing commitments, including universal pharmacare and improvements to long-term care, on a fast track to completion. It also allows the NDP to pass dental care, one of their key priorities.

Clients operating in construction, housing, and infrastructure should also note that the deal calls for an extension of the Rapid Housing Initiative—a pandemic-era plan to help create affordable housing units and new rentals—for another year, past the sunset date of March 31, 2022. The parties also pledged to implement a Homebuyer’s Bill of Rights and offer a one-time $500 top-up of the Canada Housing Benefit. The deal also includes the creation of new home energy efficiency programs.

Energy and natural resource clients should be aware that, if anything, this agreement only strengthens the government’s resolve to accelerate the energy transition. It calls for creation of the Clean Jobs Training Centre to support workers retention, redeployment and training, the implementation of “Just Transition legislation”, and a plan to phase-out public financing of the fossil fuel sector. The deal was enough for Conservative leader Candice Bergen to deplore “the decimation of Canadian oil and gas and LNG.”

When asked whether the NDP’s opposition to increased military spending will block him from quickly increasing Canada’s defence spending to 2 per cent of GDP as other NATO allies are doing, Mr. Trudeau explained the agreement does not preclude the government from seeking support from the other parties for policies that the NDP cannot endorse.