Events Leading to the Liberal - NDP Coalition Agreement

Feature by Jay Makarenko || Dec 18, 2008

On December 1, 2008, the Liberal Party of Canada, the New Democratic Party and the Bloc Québécois officially signed an agreement to defeat the Conservative minority government led by Prime Minister Stephen Harper. Under this agreement, the Liberals and NDP agreed to form a coalition government, which would be supported by the Bloc. What led to the signing of this coalition accord? The following article provides an overview of factors and events surrounding the signing of this agreement, including the broader political and economic context, the coalition partners’ rejection of the Conservative economic and fiscal update, the negotiation of the agreement, and the Conservative response to the coalition threat, including its decision to seek a prorogation (or “temporary suspension”) of Parliament from Canada’s Governor General until January 2009.

Coalition in the Broader Political and Economic Context

It is important to note the broader political and economic situation in Canada leading up to the signing of this out-of-the-ordinary agreement.

Since 2004, the federal parliament has been in a perpetual state of minority governments, an interesting paradox in Canadian politics. Minority governments tend not to be viewed as positive or good for the long term — particularly from the perspective of Canada’s major political parties, which tend to look beyond minority governments to winning majorities and defeating governments. This tendency lends itself to a very hostile situation in Parliament, in which political parties view one another not as partners for cooperative governance, but as staunch competitors for political power that will attempt to create and exploit weaknesses in their opponents in order to win the ultimate prize of majority government.

Writing in mid-December 2008, it’s fair to say that concern over the Canadian and global economies increased considerably beginning in September 2008 — both with Canada’s leadership, and abroad. Of considerable worry has been the unfolding economic downturn in the United States, Canada’s largest trading partner, which officially entered into a recession, and the potential impact of said developments on the manufacturing sectors of central Canada and resource sectors in Western Canada. This, in turn, has made the economy a central issue in Canadian politics, and a key area of government public policy.

The Conservative Government’s November Economic Update

Within these broader political and economic contexts, the catalyst for the coalition agreement was the Conservative minority government’s economic and fiscal update, which it released on November 27, 2008. Titled Protecting Canada’s Future, the update outlined the Conservative government’s short-term strategy for dealing with the economic slowdown and projected drops in government revenue.

Within the economic and fiscal update, three policy initiatives, in particular, were deemed unacceptable by the opposition parties. First, the Conservative government elected not to introduce any new spending measures to stimulate the economy, choosing instead to rely on past tax reductions and infrastructure spending programs. Citing the soundness of Canada’s financial institutions and the relatively strong financial positions of Canadian households, corporations, and governments, the Conservative government argued these tenets of Canada’s economy were sufficient to ensure the economy remained stable. The Liberals, New Democrats, and Bloc Québécois rejected this premise, arguing the Conservatives had failed to appreciate the severity of the economic slowdown. Moreover, they asserted the federal government should implement an aggressive economic stimulus package, which would include broad new spending measures to encourage employment and economic activity.

Second, the Conservative government announced it would legislate a ban on strikes by public service employees until 2010-11. The government argued this measure was necessary to ensure the financial health of the federal government, as it would control labour costs during the projected period of reduced government revenues. The initiative, however, was strongly opposed by the New Democratic Party, a strong supporter of worker rights, and a party with strong ties to Canadian unions and labour organizations.

Third, the Conservative government announced it would eliminate public financing for federal political parties. Canada’s current election financing laws severely restrict donations to political parties from certain interest groups, such as big business and labour, with the purpose of limiting the influence of these groups on political parties. Since they were implemented in 2002-03, these restrictions have had the greatest impact on the Liberal Party and the New Democratic Party, whose traditional sources of revenue were large donations from big business and unions respectively. The Conservative Party, by contrast, receives the bulk of its financing in the form of small donations from individuals, leaving it less affected by the restrictions. To compensate for the loss of revenue, however, federal law allows political parties to access public funds in support of their election activities. These public funds represent a large portion of New Democratic Party and the Bloc Québécois’ revenues (and to a lesser extent, those for the Liberal Party).

The Conservative government argued the elimination of public funding to political parties was necessary for the financial health of the federal government, as it would save approximately $30 million. Moreover, the government argued that such a course of action would be of symbolical importance, as political parties would be “tightening their belts” in difficult economic times. The opposition parties, by contrast, asserted the measure was an attack on Canadian democracy. The elimination of public funding, it was argued, would financially cripple the opposition parties, while leaving the Conservative Party relatively unscathed. Considering the importance of money in running effective campaigns during elections, the opposition parties argued that this would have given the Conservatives an unfair advantage in the next federal election.

Negotiating the Liberal-NDP Coalition Agreement

Immediately following the release of Conservative government’s economic and fiscal update, the Liberals, New Democrats, and Bloc Québécois publicly denounced the government’s proposals, focusing on the three policies discussed above. The New Democrats and the Bloc, moreover, indicated they would vote against the government’s update when it was introduced in the House of Commons.

Under Canada’s parliamentary system, defeat of a government money bill, such as the economic and fiscal update, would result in the fall of the government. Normally, this would lead to the calling of an election. However, Canada’s parliamentary system does allow the Governor General of Canada to ask another political party to form a government. In anticipation of this possibility, the three major opposition parties, the Liberals, NDP and Bloc, began negotiating to form a coalition government to replace the Conservatives.

While the precise nature of these negotiations has remained private, it is suspected that negotiations first began between the leaders of the New Democratic Party and the Bloc Québécois, and focused on the issue of whether the Bloc would support a possible Liberal-New Democratic coalition. As a Quebec-based party driven by the goal of achieving sovereignty for the province, it was agreed that the Bloc would not sit in any future coalition government. The party’s support, however, would be necessary to ensure the coalition could maintain the confidence of the House of Commons. On November 28, 2008, the Liberal and New Democratic parties entered into formal negotiations on a coalition agreement. These negotiations were originally conducted by former party leaders Jean Chrétien (Liberal) and Ed Broadbent (New Democrat), and were eventually extended to include the existing party leadership at the time, Liberal leader Stéphane Dion and NDP leader Jack Layton.

Key issues in the negotiations included the question of who would become prime minister; how key cabinet positions would be divided between the Liberals and NDP; particular policies a potential coalition government would pursue; and how long all three parties were prepared to support such an arrangement.

On December 1, 2008, the Liberals, the NDP and the Bloc formally announced the signing of two coalition agreements. They submitted a letter to the Governor General of Canada, asking her to consider the coalition as an alternative to calling an election if the Conservative government was defeated. The coalition partners further announced their intention to introduce a vote of non-confidence in the House in order to trigger the fall of the Harper Conservative minority government.

For more information on the structure of the proposed coalition government:

Conservative Responses to the Coalition Agreement

Between November 28 and December 1, the Conservative government significantly altered its position, as first established in its November economic and fiscal update. It dropped the proposed elimination of public funding of political parties, as well as the ban on striking by public servants. Moreover, it indicated that it might be open to implementing an aggressive economic stimulus package to address the concerns of the opposition parties regarding Canada’s economic fortunes.

Even with these concessions, the coalition partners (at least initially) remained committed to defeating the Conservatives and forming a new government. In justifying their position, the coalition partners stressed their general lack of confidence in the Conservatives as a governing party and the need for a change in government in order to bring decisive action on the economy. The Conservatives, in turn, charged the coalition partners with using the economic difficulties as a smokescreen for a bid to take power.

The Conservative government’s economic and fiscal update was to be put to a vote in the House of Commons on December 1, 2008, at which point the coalition partners could — and indicated they would — have defeated the legislation and caused the fall of the government. The Conservatives, however, decided to delay the vote by a week, until December 8.

Over the course of the week, both the Conservatives and the coalition partners engaged in broad media campaigns in an attempt to gain the support of Canadians. The Conservatives worked to undercut the legitimacy of a possible coalition government, emphasizing its dependence on the Bloc Québécois (a Quebec sovereignist party), and arguing that stability, as opposed to a change in government, was vital to Canada at a time of economic crisis. The coalition partners, by contrast, pointed out that the Conservatives had struck an agreement with the Bloc in 2004 to form a coalition government if the Liberal minority government at that time was defeated. Moreover, the coalition continued to publicly question the Conservatives economic leadership, pointing to the fact the party had changed its economic policies radically in less than a week, and did not seem to have any definitive direction as far as guiding Canada through its economic difficulties.

With the coalition holding together and poised to defeat the government, on December 5, 2008, Conservative Prime Minister Stephen Harper took the extra-ordinary step of asking the Governor General to prorogue Parliament. To “prorogue” Parliament is to discontinue a session of Parliament, and is a mechanism that has traditionally been used to end a session after Parliament has completed all its work. In this case, however, Prime Minister Harper employed such a measure at the beginning of a session, largely before Parliament had even begun its work, and, arguably, for the implicit purpose of temporarily denying the coalition partners an opportunity to defeat the government. The Conservatives asserted that proroguing Parliament was necessary in order to give Members of Parliament a pause to calmly review recent events. The coalition partners, by contrast, contended the Conservatives were circumventing the democratic process by denying the right of Members of Parliament to defeat the government.

In the end, the Governor General accepted Prime Minister Harper’s advice, that proroguing Parliament was indeed a necessary course of action to take, and officially discontinued the session of Parliament. As such, Parliament will resume sitting on January 26, 2009, with the Conservative government set to table a budget in the House of Commons on January 27. Upon resumption of Parliament and the tabling of the budget, the coalition partners will have a new opportunity to defeat the Conservatives and possibly form a new government.

For more information on the how the coalition can form a new government: