The election is over and the Liberals have secured their highest popular vote in decades. Their minority government appears to be stable for the near future, with Conservative leader Pierre Poilievre temporarily out of Parliament, the NDP temporarily without a leader, the Bloc Québécois planning to cooperate with the government for at least a year, and a majority of Canadians against another early election.
Prime Minister Carney has visited Washington with a negotiating team to meet with President Trump. Despite threats of new tariffs and more comments about annexation ahead of the meeting, Carney said the meeting was “constructive” and Trump described Carney as “a nice man“.
So have we entered calmer times? Or is this the eye of the storm?
Unfortunately, I don’t expect the calm to last. Despite the fact that the Liberals achieved a very high popular vote, their support is fragile. Diverse groups of voters, each with different concerns, projected their hopes onto the blank slate of Mark Carney during the election. But there are contradictions between the expectations of these groups, and it will prove impossible for the new government to satisfy everyone.
While nobody can predict exactly when or how things will unravel, I believe we can prepare ourselves by identifying some of the contradictions and how we can respond to them. In this post, I’d like to focus on three contradictions that I think are especially important.
Short-Term Trade War vs. Long-Term Relationship
We’ve been told repeatedly that our old relationship with the U.S. is “over”. But is that really true? I’m not convinced.
Our economic relationship with the U.S. isn’t an arbitrary political choice. It’s built on material facts, like our shared land border, our continuous coastline, the existing transportation infrastructure that connects us, and the existing production facilities on both sides of the border. None of this changes just because one U.S. President imposes tariffs.
If we make a permanent turn away from the economic relationship just because of Trump’s negotiating ploy, we’d be needlessly harming future generations.
And yet, the short-term pain from Trump’s tarrifs is too serious to be ignored. Incomes will be lost and our economic competitiveness will be damaged if the tariffs continue. Because of this, the government will feel pressure (and temptation) to respond in ways that produce a short-term political win, but are harmful in the long-term. Actions such as escalating the trade war, giving major trade concessions in exchange for lifting the tariffs, or committing to decade-long megaprojects that don’t fit our long-term needs would all be trading short-term pain for longer-term economic damage.
How should we respond? First, we need to understand that our economic relationship is actually with the American people as a whole, not the American government or the President. Our priority should be to continue pursuing arrangements with American businesses and communities that are beneficial to both sides.
Secondly, we need to resist the temptation to strike back in ways that are emotionally satisfying but don’t advance our goals.
Third, we need to exercise patience. Trump’s inner circle is ideologically committed to tariffs, but the U.S. business class is not. Trump has already blinked once when the stock market dropped, and can only continue his tariff strategy for so long. We should, of course, push for any short-term relief we can get without giving major concessions. But when it comes to major trade negotiations, we should be prepared to support our affected workers and wait Trump out if necessary while his advantage erodes.
Energy Superpower vs. Energy Reality
Carney’s promise to make Canada a “clean and conventional energy superpower” seemed designed to satisfy both the oil industry and people concerned about climate change. The Liberal platform was short on details, but to become a “conventional energy superpower” would mean either a further expansion of the oil sands, or a huge build of liquified natural gas (LNG) production.
The problem is, neither option makes sense as a long-term economic bet. Global oil supply will exceed demand by a “staggering” amount in only a few years. And even if we wanted to capture a piece of that shrinking pie, the oil sands aren’t much help to our economic sovereignty when a significant cut of the profits go to foreign owners. Nor will further developing the oil sands help us diversify our trading partners, considering that 97% of our crude oil exports go to the US.
Meanwhile, the case for building LNG is also very weak. Global supply is already more than meeting demand. When in-progress builds in other countries are taken into account, supply will exceed even the highest forecasts of demand within two years. Not only are other countries years ahead of Canada in development, geography allows them to offer cheaper prices as well. In other words, developing LNG in Canada means arriving late, to an overserved market, as a higher-priced option.
To become a “superpower” in producing a commodity, a country needs to be produce a large part of the world’s supply, it needs to sell to many buyers, the commodity needs to be in high demand, and it needs to be difficult to substitute. If any of these criteria are missing, you don’t have the economic leverage that would make you a “superpower”. Canada produces a lot of oil and gas, but it sells mostly to a single buyer, demand is beginning to decline, and substitutes are available. No amount of expansion will change these realities.
How should we respond? First, we need to speak from facts, not sentiments. We need to set aside the idea that economic decisions about oil and LNG have anything to do with patriotism, or with “respect” between different regions of the country. Turning down a bad investment is not a slap in anybody’s face. We also need to get past the idea that becoming an economic “superpower” is as simple as just approving every project on the table. If we want to afford the good investments, we have to turn down the mediocre ones. And finally, we have to set aside nostalgia. What made money in the past doesn’t always make money today.
Looking at the facts, the oil sands and LNG today are bad investments. They won’t make us a “superpower”, but could become a money pit.
Realistically, it doesn’t seem likely that Canada will become a “superpower” in clean energy and battery storage either—but these are at least rapidly-growing industries, where we have an opportunity to become an important player. Even better, we’ll have an opportunity to build the industry in ways that are more beneficial to working people in Canada. If we push to block the high levels of foreign investment, the concentrated ownership, the political interference and steamrolling of Indigenous rights, and the private/for-profit structure that have all afflicted the oil and gas industry, we might arrive at something that benefits everyone in Canada.
Housing Accessibility vs. Housing as Investment
Housing affordability was a top issue for younger voters, rivalling the tariff situation in importance. High entry prices are creating a divided society, with older generations holding a surplus of housing wealth and a younger generation unable to buy into the market. Younger couples are putting off life decisions such as having children, and are being forced into renting rather than building equity in an owned home.
This has created frustration, resentment, and hopelessness. These feelings do more than just drive people to vote for one party or another. They destroy trust in the political system as a whole, create social divisions, and erode people’s mental health. In other words, this has moved beyond being an economic issue to being a social issue.
The problem is, while there are many things the government could do to lower home prices… all of those things would lower home prices. And not everybody wants that to happen.
There are plenty of homeowners who want to hang on to their home’s inflated value, whether it’s because of debt pressure, retirement plans, or because they just made a massive effort to buy their first home at those inflated prices. However, setting individual owners aside, about half of the purpose-built rental units in Canada are owned by corporations and income trusts—in other words, by organized profit-making efforts. If the price of home ownership is brought down, rents will come down as well; lower rents means lower profits for these investors. In addition, these owners generally charge higher rents that individual owners, further pushing up housing costs. This situation will continue to get worse, as the proportion of mortgages being taken out by investors is increasing, while decreasing for first-time buyers.
How should we respond? First, we need to recognize that as a society, we can’t afford to have an entire generation locked out of housing. The country’s social fabric takes priority over anybody’s investments or profits. We also need to understand that nobody will end up poor or homeless because of a modest (10–20%) drop in home prices that made significant gains in the last five years.
Secondly, we need to understand the time scale of different solutions. There are many innovative ideas on how to fix housing in Canada, but many of them are mid-term or long-term changes. Asking people to wait five or ten more years before starting a family and starting to build equity isn’t an acceptable solution, especially under a minority government where long-term plans could be scrapped by an election. We do need to push for long-term solutions, but also for short-term relief.
Third, we need to reject the idea of making home ownership accessible by allowing people to go deeper into debt to buy a home. This creates future financial instability, and actually support higher prices by increasing demand.
Most importantly, we need a public dialogue about the very idea of housing as an investment. What’s happened to housing prices in Canada over the last two decades should not be seen as a surprise—it’s exactly what you should expect our current system to produce. If housing is a good money-maker, why wouldn’t wealthier individuals and for-profit corporations try to expand their holdings?
No matter how much we expand the housing supply, if we allow investors to buy most of it, we haven’t solved the problem. If we want to avoid dividing society into a class of renters and a class of investors, we need to consider fundamental changes to how housing works. Putting hard restrictions on for-profit ownership would be a start.
What Next?
If this had been a longer election, at a calmer time, the campaign would have included a deeper public discussion of these issues. Instead, these contradictions will emerge during the coming year, and may lead to another early election.
We can’t control that, but we can prevent politicians from manipulating us if we keep our focus on the big picture.
Over the coming year, we need to keep our long-term economic relationship with the American people in mind, make decisions about energy projects based on facts rather than sentiment or false hopes, and recognize the generational problem that has been created by for-profit housing.
We also need to stop waiting for politicians to tell us which solutions we have permission to choose. Difficult times require bold changes, but the political class is too financially entangled with the status quo to champion those changes. If we want these problems to be solved decisively, we need to inform and organize ourselves around our own ideas. I’ll be writing more about this in the coming weeks.
Saul Bottcher 
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