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Inflation Concerns Underpin Bear Steepening

--Conservative Van Loan Says Trudeau, NDP Have Incentives To Avoid Snap Election
By Greg Quinn
     OTTAWA (MNI) - Canadian Prime Minister Justin Trudeau has a good chance of
staying in power for a while despite being reduced to a minority government
Monday if he can appeal to three opposition parties on major votes, former
Conservative House Leader Peter Van Loan told MNI.
     Trudeau's Liberals will likely win early backing from the New Democratic
Party by offering programs such as an expanded public drug care plan, Van Loan
said. Later on, Trudeau can also turn to the Bloc Quebecois or even his main
rivals in the Conservatives led by Andrew Scheer on a case-by-case basis, he
said.
     "They have got a lot of room for maneuver there," Van Loan said of the
Liberals in a phone interview Tuesday. "It's a good position for them, I think,
strategically."
     Trudeau in the next few weeks must turn from losing his majority to
planning a Throne Speech laying out major priorities and crafting spending plans
that, if defeated, could trigger a snap election. The NDP don't have the money
to force another election anytime soon and the Liberals need to rebuild momentum
after losing seats and the popular vote to the Conservatives, Van Loan said.
     While minority governments rarely survive a regular four-year term, Trudeau
can probably win confidence votes if any of the main opposition parties support
him. The Liberals won 157 of 338 seats in the House of Commons, short of a
majority of 170. The NDP has 24 seats, the Bloc 32 and the Conservatives 121.
The Liberals took the most seats even with 33.1% of popular support lagging the
34.4% won by the Conservatives. 
     The Liberals in the Throne Speech want to "come out looking strong and
confident so that the public expectation is they are around for a long time,"
Van Loan said. That could touch pharmacare or another policy initiative "that
makes it look like they are a government of action."
     Pharmacare will pose a challenge for the Conservatives who shy away from
big government programs, said Van Loan, who helped schedule votes in a minority
government under Stephen Harper, because "it's a tough problem to stand
against."
     The Liberals "know that being that efficient with their vote the second
time around would require a good measure of luck, so they have a lot at risk,"
Van Loan said. For the NDP, "they have their own self-interested reasons to give
themselves time to raise money that make it a little bit difficult for them to
hang the threat of losing a vote and going back to the electorate over the
Liberals." 
     The Liberals and NDP could also cooperate on pledges to reduce consumer
phone and internet bills, Van Loan said. Opposition leaders have also signaled
they support a new tax on large foreign internet companies, and for household
tax cuts. No major party has called for eliminating budget deficits within the
next four years.
     Another catalyst for snap elections in the past, a change of opposition
leadership, doesn't appear likely either. The NDP's Jagmeet Singh held on to
more seats than expected and the Bloc's Yves-Francois Blanchet outperformed.
Scheer's Conservatives also picked up seats even as he failed to beat a weakened
Trudeau. 
     "He's got some things to point to as forward progress," said Van Loan.
"He's got to be able to carve that alternative of what a Conservative government
would be doing instead (of the Liberals) strongly in the next few months."
     "It has the potential to be a stable minority," he said.
--MNI Ottawa Bureau; +1 613-314-9647; email: greg.quinn@marketnews.com
[TOPICS: M$C$$$,MC$$$$,MX$$$$]