Crisis? What Crisis.

Our nascent political drama hit a speed-bump this morning as Governor-General (GG) Michaelle JEAN agreed to prorogue Parliament until Jan 26 2009 so the Conservatives will not have to face an immediate non-confidence motion in the House from the newly formed opposition Coalition of Liberals, NDP and Bloc Quebecois. By agreeing to this break, the GG is allowing the Conservative Government the time to properly prepare their Budget response to the Global Economic Meltdown.

The opposition rebellion was ignited when the Conservatives embedded what was seen as a gratuitous insult to the Opposition on an uncontroversial Confidence motion following the Dec 2 Fiscal Update. This clause would have revoked the existing $2 per voter Election grant to Political Parties. Without this funding, the Liberals, NDP and BQ would be technically bankrupt as they rely heavily on those funds to run their election campaigns. The Conservatives are philosophically opposed to the idea, but they also have the luxury of strong financial support from party members1. It was a serious strategic error for Mr. HARPER not to have anticipated the oppositions outcry from such a provocative move.

Once opposition gelled HARPER quickly backed off and removed the offending clause. (Personally I think he might have indicated a less radical solution like phasing out funding over 2 years or perhaps adding a formula where the government would equally match personal contributions.) However the Opposition parties were not so easily placated. Their outrage transmuted into dissatisfaction with the Fiscal Update and defeating it became the object of their dissent. The Liberals charged that the Conservatives "lack of crisis measures" was tantamount to macro-economic negligence and mis-management. The fact that the Conservatives were rushing to bring out such a "Stimulus Budget" after the Xmas Break on Jan 27, 2009 was impatiently brushed aside as "too little, too late". Faced with the realization that bringing down the Government on a Non-Confidence motion would plunge the country into another election - which would be electoral suicide for whomever initiated it - the Opposition Parties accepted that they would have to mobilize the Coalition to be allowed to Govern.

Mr. HARPER's fatal error became the pretext for the Opposition Parties to advance to a Governing Coalition, although perhaps a little prematurely. A remaining challenge for the Coalition is to transition from their lame duck leader, M. Stephane DION to a new Leader to be selected in the May 2009 Leadership Race. It is unlikely that the GG would appoint a Governing Coalition led by an outgoing, lame-duck leader and a yet-to-be-determined Leader. But certainly, she would prefer that to another General Election.

We know now that the Coalition (the Liberals 77 seats, NDP 37 seats and BQ 49 seats = 163 vs Conservatives 143) has been in the works for some time. Perhaps with indecent haste the 3 Opposition Parties all signed the formal terms of the Coalition Agreement (which governs allocation of cabinet positions, voting rules, dispute resolution procedures etc.) The Coalition has agreed to maintain unity for at least 2 years before triggering another Election.

For our financial markets, this 7 week break from political theater will be a blessing as the news in that time will be unremittingly depressing. Yet domestically, our banking system is probably the most sound in the world right now. Our real problem will be to survive the drop in demand for many of our commodities at once, and the severe depression griping our main trade partner the USA.

Therefore, if the Coalition can hold together until a new Liberal Leader is selected - they may get the chance to govern.

Here are videos of both HARPER's Address and DION's response.





[Update: 2008DEC08 Stephane DION has stepped down as Liberal Leader and now Liberals must rapidly select a new leader before January 26 when Parliament reconvenes and the Conservative government "Stimulus Budget" is expected. Without a Liberal Leader the "Coalition" will not be given the chance to form a government after a non-confidence motion. I predict some Liberals would rather cross the floor to join the Conservatives or become Independents than join such a "Menage a Trois" with the BQ or NDP. Endgame approaches.]

Footnotes:
1) It was expected that the next allocation of Party Financing would total $30 million to be split between the various parties according the their share of popular vote. Liberals $10 million, Conservatives $7.7, NDP $4.9, BQ $2.6 and Greens $1.8.

2) In the Dec 2006 Liberal Leadership Race, these were the Candidate Expenditures.

Name	$Total	%Donors	Rank
BENNETT, Carol	$ 255,000	69%	2
VOLPE, Joe	$ 768,000	51%	5
RAE, Bob	$3,000,000	72%	1
KENNEDY, Gerrard	$1,425,000	48%	7
IGNATIEFF, Micheal	$2,316,000	65%	4
FRY, Hedy	$ 195,000	14%	11
HALL-FINDLEY, Martha	$ 423,000	38%	8
DRYDEN, Ken	$ 650,000	32%	9
DION, Stephane	$1,882,000	50%	6
BRISON, Scott	$ 593,0000	67%	3
BEVILAQUA, Mario	$ 700,0000	21%	10