Five Things You Need to Know About Canada’s October Election

Canadians head to the polls on Oct. 19 for the 42nd time in the country’s history.

Prime Minister Stephen Harper faces the fight of his political life, with his Conservatives deadlocked in the polls against the left-leaning New Democrats and the centrist Liberals.

Here are five reasons you should care about the outcome:

The Incumbent

On the world stage, Harper champions budget austerity within the Group of Seven, often pitted against the U.S., and is one of the fiercest critics among western leaders of Russian President Vladimir Putin.

Opponents say Harper’s fractious relationship with President Barack Obama has hindered the approval of TransCanada Corp.’s Keystone XL pipeline project, with environmentalists accusing him of moving Canada in the wrong direction.

A victory in October would make Harper, 56, the first Canadian prime minister in more than a century to win four consecutive elections, and would entrench his agenda of cutting taxes, promoting the commodity sector and reducing the reach of the federal government.

The Socialist

Harper’s chief rival is Tom Mulcair, a 60-year-old lawyer who leads the New Democrats, a party with socialist roots that broke through in the 2011 election and now has a chance to take power nationally for the first time.

Mulcair became leader in 2012 and spent much of the previous parliament as Harper’s interrogator, with his cross examinations of the prime minister earning him accolades and a nickname: “Angry Tom.”

The party’s Achilles heel is economic credibility. The Conservatives will attack Mulcair as hostile to the nation’s oil industry and a free-spending, risky leader at a time when the country needs Harper-style fiscal discipline.

The Heir

For more than a century, Canada’s Liberals were the party to beat. Harper has chipped away at that dominance since he took power in 2006, reducing the Liberals to just 34 seats in 2011, the least ever.

For salvation, the party turned to Justin Trudeau, 43, the son of one of the country’s iconic prime ministers, Pierre Trudeau. His support has whipsawed, soaring soon after he became party leader in 2013 before plunging this year to third place. Harper has attacked Trudeau -- the youngest party leader by more than a decade -- as unqualified.

Now Trudeau faces a daunting task: He must counter the attacks, revive his poll numbers and win back ground from the NDP. Some fear failure would marginalize the centrist party for good and fuel American-style polarization of the political system between the right and the left.

The Economy

The election campaign kicks off with an economy ravaged by falling crude prices. Gross domestic product shrank for the past five months as the oil shock widens, while a rebound in exports has failed to materialize, leading the country’s central bank to cut interest rates for a second time in July. The downturn is undermining Harper’s credentials as a strong economic steward.

Conservatives say growth will rebound in the second half, and the job market is still strong. The opposition claims the weakness highlights the need to move away from Harper’s economic agenda and toward more activist government.

Markets

Investors may be concerned with a change in government or an unstable minority in which no party can unilaterally push through its agenda.

The Canadian dollar was one of the worst performing currencies in the month leading up to the 2011 election, and the country’ stock market also underperformed, amid worries at the time the NDP would form a minority government.

An NDP victory in the 2015 vote “would not be viewed as a loonie-friendly event,” David Rosenberg, chief economist at Gluskin Sheff and Associates, wrote in the Globe and Mail newspaper July 23. The currency is already down 11 percent this year on the oil shock.

The day after the NDP won power at the provincial level in oil-producing Alberta earlier this year, the Toronto Stock Exchange’s energy index dropped 2.5 percent.

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