Canada’s federal election results are in and yielded a Liberal minority win, as had been suggested by polls and prediction models over the final week of the campaign.

But it should be noted, there had been considerable volatility over the short campaigning period. At the beginning of the campaign, a Liberal majority had seemed possible. Towards the middle of the campaign, a Conservative minority had seemed possible. But in the end, it was back to the status quo.

And, as we look at the seat distribution right now, it’s very similar to how it was before the election. And so we can say Liberals have tentatively gained 1 additional seat to 158 seats. Conservatives have tentatively lost 2 seats to 119. There’s been a slight gain for the Bloc; a slight gain for the NDP. But really, almost precisely status quo, not just in the minority government, but in terms of how every party just about has fared.

I should acknowledge counting continues, and so there were more than a million mail-in ballots that could not legally be counted until after the election was closed. It’s also a more complicated process than for other ballots because the counters need to ensure these people didn’t also vote in person. And so it’s a cross-checking process and will take some time. And so, we can’t say we have the numbers precisely down, but it does seem fairly firm that it’s a Liberal minority.

It should be noted, it was a closer race than you would think, on the basis of that seat distribution, the 158 to 119 seats. In fact, the Conservatives, for a second straight election, won the popular vote, in this case, by a pretty sizable 2 percentage points. It’s actually a bigger Conservative popular vote win than the 1 percentage point win from last time, but clearly not enough to pick up the most seats.

And so the way to think about that is that the Liberals have a much more efficient distribution of votes across ridings. They win ridings by 51%. The Conservatives win by 70% and 80%. And so they’re just able to capture fewer seats with a similar number of votes.

So with that Liberal minority now locked in, I guess the question is, what has changed from a policy and a political perspective. And so one comment would simply be that this, of course, extends the theoretical Liberal mandate by an extra two years, so it’s back up to a potential four-year mandate. Of course, we don’t really know what kind of policies might be implemented in years three and four, and it’s hard to say how priorities might evolve. So not a lot of precision we can offer from that perspective.

And, of course, being a minority government, there’s also the possibility of another election in a few years, well before those four years are up. So not a lot of precision on that. We can say that a minority government is not exactly an unfamiliar format in the sense that five of the last seven Canadian governments have been minorities. The Liberals, for that matter, weren’t exactly limited over the last six years of their reign. It was a majority government for them over the first four years. It’s since been a minority quite nicely supported by the NDP. And so they’ve had fairly close to free reign throughout.

Nevertheless, the campaign has unearthed additional promises from the Liberals and, in general, more expansive promises with visions of a bigger government. And so an extra $78 billion have been committed over the next five years. There would still be a deficit even in year five, a fairly substantial one of $32 billion.

And at this point in time, as much as it makes us a little bit squeamish to see deficits run into the future and debt loads accumulate, it has to be acknowledged that in a world of ultra-low interest rates, bond markets are not complaining at this point in time. And so that doesn’t seem to be a constraining factor at this exact juncture.

In terms of specific policies, well, some are continuing to roll out previously announced programs, maybe most prominently the $10-a-day childcare across the country. The Liberals plan to maintain most pandemic support programs for longer. There is a plan for a new program to subsidize tourism and cultural events.

And then moving beyond the pandemic, quite a lot for the housing file. And so plans to limit foreign ownership, an anti-flipping tax, more construction pledged. Cheaper mortgage insurance for people buying homes also pledged. And so a mix of factors that would boost supply but also, in some cases, boost demand. We can say that there is also a tax-sheltered savings account envisioned to help people save up for down payments.

And then moving beyond housing, a little bit of something for almost everyone. There is expanded income support for low-income workers. There’s a more generous GIS program for low-income seniors. Easier repayment or assistance access for those with federal student loans. And so quite a lot of spending going in quite a lot of different directions.

We can also say a higher tax rate has been proposed for large banks and insurers and so of some negative consequence to those sectors. And, of course, a continuing and a doubling down on green initiatives. And so, the Liberals will continue to raise the carbon tax each year as they have to meet green and climate change commitments. And they’ve made further promises to reduce emissions in certain sectors in the years and decades ahead.

Maybe one thing missing that many economists at least would like to have seen but didn’t feature all that centrally is there really wasn’t all that much on investments, on productivity-enhancing measures, on things that would help the economy grow more quickly and more sustainably than it otherwise might have.

Now I should say that elections rarely result in a sudden or large deviation in the economic trajectory. I think that’s true again today. This one is no different.

Arguably, the most important of the new promises isn’t one of these new items being committed but rather a preexisting plan to run immigration somewhat hotter over the next few years. And really, that’s one of the biggest drivers of faster economic growth. Immigration was limited during the pandemic. The Liberals plan to catch up over the next few years. That may well push the economy forward more quickly than it would have been.

Though I should emphasize, the most relevant consideration for the economy continues to be the pandemic recovery itself, emerging from those restrictions, which has less to do specifically with government policy.

And then to finish on the financial market side, I can say the financial market response has been fairly muted so far. That makes sense. It was not a great surprise in terms of the outcome and, in significant part, just a continuation of what existed beforehand. It is a large government approach, and so that is a continuation as well. It was the Conservatives really who had the more unusual and, in some cases, impactful proposals, but of course, they don’t get to deliver their agenda at this juncture.

Let’s recognize as well that financial markets are somewhat less partisan than commonly imagined. They’ve done, for example, in the U.S., well under both Donald Trump and Joe Biden in recent years, and those two couldn’t be much more different. There isn’t reason to think the story will be all that different in Canada. Yes, there are proposed targeted corporate tax hikes. And yes, some of the green initiatives do adversely affect some corporate sectors, but the economy should still move forward fairly well, which is quite an important consideration as well. But in end, again, a very familiar-looking government for the years ahead.

Thank you.