21 October 2015
by John Kehoe

Canada election result to be felt in Australia

Canadians voted a new centrist government to power and dispatched Prime Minister Stephen Harper's Conservatives after almost a decade of rule, in a transformation that will knock on to Australian politics and business.

The leader of the new Liberal government in waiting, Justin Trudeau, has pledged to take more aggressive action against climate change, scrutinise the Trans-Pacific Partnership trade deal and terminate Canada's air bombing mission against Islamic State in Iraq and Syria.

"Canadians chose change, real change," Mr Trudeau told ecstatic supporters in his victory speech in Montreal on Monday night, speaking in French and English.

Mr Trudeau, a charismatic political scion, inherits a resource-rich economy that slumped into technical recession in the first half of the year due to the tumbling crude oil price. Canada, like Australia, is grappling with potential house price bubbles in Vancouver and Toronto due to ultra low interest rates, record household debt and a deluge of Chinese buyers.

Midway through counting around midnight in Canada, the Liberals had picked up185 of the 338 lower house seats to be on track to unexpectedly claim a majority.

The Conservatives were on 102 seats and left-leaning New Democratic Party on a disappointing 40 after leading the polls in the early weeks of the campaign and previously being tipped to play kingmaker in an anticipated minority government.

In a concession speech in the western city of Calgary, an upbeat Mr Harper told supporters he accepted the Liberals' victory, while talking up his record of balancing the budget, cutting taxes, signing free-trade agreements and keeping Canadians safe. He will stand down as party leader.

Mr Harper, who learned how to woo "battler" voters from Australian prime minister John Howard and was a staunch ally of Tony Abbott on climate change scepticism, was denied an historic fourth election win.

On climate change policy, Mr Trudeau, 43, has said "Canada needs to have a price on carbon", even though it is a big mining and energy exporter like Australia.

Ahead of the international climate change conference in Paris in November, the Conservatives had planned to moderately lower carbon emissions by 30 per cent by 2030, on 2005 emissions levels, similar to the 26-28 per cent goal set by the Abbott government.

Mr Harper, first elected prime minister in February 2006, argued it would be "crazy economic policy" to cut emissions from the crude oil sector and praised Mr Abbott for abolishing the "job killing" carbon tax.

The ascension of Mr Trudeau, a former school teacher and son of 15-year prime minister Pierre Trudeau, may make Australia's carbon emissions reduction commitments look relatively modest.

The Canadian economy is a potential benchmark for Australia, due to its similarly large dependence on natural resources and comparable population of 34.6 million people versus 23.9 million.

Mr Trudeau's climate policy is yet to be fully detailed and will rely on the provincial governments to meet national emissions targets, but he is widely expected to set more ambitious goals.

Rob Silver, a Toronto-based corporate affairs partner at Crestview Strategy and who is married to Mr Trudeau's campaign chair, said: "On climate change going to Paris, I think there will be more engagement and clear shift for a more positive, pro-active approach."

"If I'm an Australian with resources investments, in mining or oil and gas, I think it will be a little more balanced but not in a scary way."

BHP Billiton and Rio Tinto are among Australian mining companies invested in Canada. BHP was blocked by the Harper government from buying Potash Corp of Saskatchewan for $US38.6 billion in 2010.

Confronting a stumbling economy due to the oil price swoon, Mr Trudeau has vowed to double infrastructure spending to $C10 billion a year and tip the budget into deficit.

The planned investment in roads and other assets through public private partnerships may open opportunities for Australian infrastructure companies including Transurban and Macquarie.

The Liberals have stated they support free trade to boost the economy and will take a "responsible approach to thoroughly examining" the TPP. But Mr Trudeau has attacked the Harper government for not revealing the "secret" details before election.

As part of the 12-country accord concluded this month, Mr Harper agreed to a modest opening up of the protected dairy sector to farmers from Australia, New Zealand and the US and lowered barriers for foreign-made cars.

Eurasia Group senior analyst Corey Boles said Mr Trudeau would likely allow a ratification vote on TPP. "He hasn't specifically pledged to do so, but the Liberal Party has traditionally been supportive of free trade agreements," Mr Boles said.

In line with Australia, Canada joined the US-led coalition fighting against Islamic State in the Middle East. Mr Trudeau has said he would withdraw fighter jets from the battle and instead commit more Canadian troops to train Iraqi security forces.

Mr Harper was emboldened to take part in the bombing campaign after Jihadist-inspired terror attacks against Canadian soldiers on home soil last year.