Does Trudeau’s Resignation Impact The Real Estate Market

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio.

[00:00:12] On December 29th, 1983, Pierre Elliott Trudeau took what would become known as his historic walk in the snow through the streets of Ottawa.

[00:00:25] During this solitary winter stroll, he made the momentous decision to step down as Prime Minister of Canada after 15 years of leadership.

[00:00:34] The walk would become a powerful symbol in Canadian political history, a moment of quiet reflection that preceded a significant change in our nation's leadership.

[00:00:45] Now, 40 years later, his son, Justin Trudeau, appears to have taken his own metaphorical walk in the snow, announcing his resignation as Prime Minister.

[00:00:56] Like father, like son, both Trudeaus chose to step aside when they felt their time had come, though under markedly different circumstances.

[00:01:04] While Elder Trudeau departed, kind of more at a time of his choosing, the younger Trudeau's exit comes amidst exceptionally challenging pulls and mounting political pressures, especially including pressure from his own party.

[00:01:16] Today, we'll explore this pivotal moment in Canadian politics, examining the parallels between father and son and what this transition means for the future of Canada.

[00:01:27] And obviously, from a lens of economics, real estate and, of course, housing.

[00:01:32] So, if you haven't guessed, today we are going to be discussing Justin Trudeau's somewhat surprising resignation announcement.

[00:01:39] Some are even calling it the walk in the snow part two and what it means for the Liberal Party as well as the broader Canadian political landscape and a potential election this year.

[00:01:51] That's right, Dan. We'll be looking at the potential successors to Trudeau, whether it's Chrystia Freeland, Mark Carney or Sean Fraser.

[00:01:59] First, we'll discuss if any of them have a shot at keeping the Liberals in power or at least saving some of their seats.

[00:02:07] Then we will dissect what their policies might look like when it comes to the biggest election issue this year, which I expect that we're going to have a housing election, maybe not a carbon tax election.

[00:02:20] I think this will be primarily focused around housing.

[00:02:22] And remember, we heard it here first, the housing election.

[00:02:26] So, after that, we'll go on to evaluate Trudeau's record on housing and see which of his plans actually materialized.

[00:02:34] And with the election now on the horizon, we'll also compare other parties' housing platforms because given the polls, not only Pierre Polyev's Conservatives, but the Bloc Quebecois and the NDP are having some political influence.

[00:02:48] Current polling suggests a massive drop for the Liberals, maybe one of the biggest nosedives we've ever seen in Canadian politics.

[00:02:56] Yikes.

[00:02:58] Yeah.

[00:02:58] And finally, we'll be wrapping up by talking about the political business cycle, how this moment in time compares to that of the 1990s and why issues like inflation and capital gains tax might be front and center again.

[00:03:16] So, Dan, let's get started.

[00:03:18] So, it's been nearly a decade since Justin Trudeau rose to power with promises of real change.

[00:03:23] Over the years, he's governed through multiple crises, most notably the COVID-19 pandemic, and championed a lot of progressive agendas from climate action to gender equity.

[00:03:32] But the polls have shifted dramatically, and it appears that those issues are not as important to Canadians as things like the affordability crisis, the economy, and the housing market.

[00:03:43] Yeah, absolutely, Dan.

[00:03:44] Again, the Liberals are facing what could be called the steepest decline in polling we've seen for a governing party since the progressive conservatives' downfall back in 1993.

[00:03:56] Now, one can't help but reference his father's famous walk in the snow speech when Pierre Elliott Trudeau resigned.

[00:04:04] It only adds to the symbolism of everything we are witnessing right now.

[00:04:09] Now, Trudeau said he will stick around until a new leader is chosen, and then he will fade into the background.

[00:04:16] So, the question is, as he does that, because it sounds like, and based on polls, you know, his approval rating is pretty low.

[00:04:22] The majority of Canadians might be kind of happy about that.

[00:04:25] But the bigger question is, who takes over?

[00:04:27] I mean, Freeland was kind of the natural one, but she is no longer deputy prime minister, because if she was, and he mentioned this during his speech, he would have, you know, gladly handed it over to her.

[00:04:37] And I don't know if maybe he kind of pulled her down with the ship with that one, basically saying, you know, can't be her because that's more of the same.

[00:04:44] But, you know, she is known for steering the economy during the pandemic in the last couple of years, which is perhaps maybe not a good thing to be known for.

[00:04:53] Mark Carney, the former governor of both the Bank of Canada and the Bank of England, rumored for years to be eyeing a political run.

[00:05:02] And now, I mean, kind of whispers are that he's been quietly courting liberal MPs for support and pushing for this resignation to take place.

[00:05:10] The others could be Sean Frazier, the current minister of housing, who just stepped down relatively younger, kind of seen as part of the Liberal Party's new guard and maybe a little bit tarnished by his association and friendliness with Trudeau, given that Trudeau's approval rating is like I could definitely see him having an honest run in the future.

[00:05:29] But I don't I think right now it's just too, too, too soon.

[00:05:32] It's just it's a it's too much baggage around this election.

[00:05:36] Right.

[00:05:36] Right.

[00:05:37] Melanie Jolie is one that I think not a lot of people are talking about.

[00:05:41] And I was out with a couple of guys in the Canadian real estate space last night for dinner.

[00:05:46] Ben Rabideau and Ron Butler were there and and actually Mark Morris as well.

[00:05:51] Absolute beauty.

[00:05:52] The and they were talking, you know, talking about Melanie Jolie, current current minister for foreign affairs, strong ties in Quebec, which could help liberals maintain crucial support in that province and also sell a lot of memberships, which is what like.

[00:06:05] That's how the leadership is chosen, right, is through the selling of memberships.

[00:06:09] People might remember this from when Pierre was doing his leadership run.

[00:06:13] But you can't win an election without Quebec, really.

[00:06:16] And right now is more important than ever with the Bloc Quebecois being such a strong party.

[00:06:22] Yeah, no, you're totally right, Dan.

[00:06:24] Now, if you look at conservative strategists, many seem especially wary of Mark Carney with his background in central banking, as you mentioned, Dan, and global finance having played significant roles in two central banks.

[00:06:39] Carney could lend the liberals a certain economic credibility that maybe they've been lacking, especially with the ongoing affordability and inflation issues.

[00:06:50] But Freeland has a deep experience in that cabinet.

[00:06:53] And Fraser's star is definitely more on the rise.

[00:06:57] So it's really anyone's guess which way the liberals will go.

[00:07:02] Oh, it is interesting in regards to Freeland because I feel like her and Fraser probably saw this coming when they stepped down just a few days ago.

[00:07:10] And, you know, I think this is a sign that maybe either of them, they would have done that to have the ability to launch a leadership race, right?

[00:07:20] So they might be gunning for his position.

[00:07:22] I do think both of them struggle with a bit more of a guilt by association with Trudeau.

[00:07:28] And I think Jolie has that challenge as well.

[00:07:30] And I think that, you know, the party will really be looking for somebody to compete with Pierre on creating a message that resonates with young people that, hey, we understand the economy.

[00:07:42] Because I don't think people really would believe most members of the existing liberal party if they said that because they just haven't really communicated with their actions or their messaging.

[00:07:51] I think a lot of people just feel left out by what the liberals have done with the economy in Canada.

[00:07:59] And that's why I think Carney seems like the most likely to me.

[00:08:02] Yeah, he does.

[00:08:03] And again, with his background in central banking and global finance, you know, he would be able to put on that new face that maybe people are looking for.

[00:08:14] He seems to be the only one that the conservatives are, I don't know if afraid of, but maybe kind of concerned about.

[00:08:20] He seems to be the only potential real threat, but I'm still not sure that he could actually win an election for them.

[00:08:28] Yeah, I agree with you there.

[00:08:29] I think he's obviously powerful, but I don't think he could win it.

[00:08:33] And maybe that's actually like the better thing for Canada.

[00:08:37] I mean, like, I don't think anybody could win it for the liberal party right now.

[00:08:40] I honestly don't.

[00:08:41] I don't think I don't even think like you get them.

[00:08:43] You can have like Justin Bieber or like, you know, or somebody, you know, like Celine Dion run really like honestly, like, but I think people don't trust.

[00:08:49] Like celebrities in politics anymore, you know?

[00:08:52] So I think the interesting part is he would be he would be a really good opposition leader, especially on the housing file and economics.

[00:09:01] Someone with that deep of an understanding of central banking and that how that system works would likely have a lot more pragmatic fixes to some of the spending and inflationary pressures that we have today.

[00:09:14] Yeah, no, agreed.

[00:09:15] And whereas if, let's say, Fraser, Jolie or Freeland ended up winning, I would assume housing policy would be very similar to the, you know, current state that we're in of Trudeau's policy since they were likely part of the team creating it.

[00:09:33] So on that note, Dan, let's let's jump over to housing policy.

[00:09:38] Yes.

[00:09:39] So housing became one of the signature promises of Trudeau's platform.

[00:09:43] Let's quickly run through what the liberals said they would do and how much of it they actually delivered.

[00:09:48] All right.

[00:09:49] And we've covered this on the show before initially when this plan came out, right?

[00:09:52] The core of their plan was creating a home buyer's bill of rights, which included things like banning blind bidding, guaranteeing a legal right to a home inspection, establishing full transparency on sale prices, requiring real estate agents to disclose conflicts of interest and setting up a publicly accessible beneficial ownership registry.

[00:10:19] They also proposed ensuring mortgage deferrals up to six months in certain life events and requiring lenders to act in borrower's best interest.

[00:10:27] So, I mean, all pretty reasonable, all pretty good stuff there, right?

[00:10:32] I mean, home inspection, transparency on sales prices, conflicts of interest.

[00:10:37] This is pretty standard and good stuff, in my opinion.

[00:10:41] But what actually happened?

[00:10:42] Yeah, they also promised to combat rent evictions by deterring unreasonable rent hikes.

[00:10:47] We just did a full episode on rent evictions.

[00:10:50] But the idea was that landlords would have to disclose the original rent before and after renovations with a proportional surtax if the increase was deemed excessive.

[00:10:58] So how much of this actually happened?

[00:11:01] Yeah.

[00:11:02] So, well, look, some progress was made.

[00:11:05] That's a long list of things to get done.

[00:11:08] But some progress was made, especially around the beneficial ownership transparency.

[00:11:12] The federal government did start implementing a national registry, though it's still in its early stages.

[00:11:20] Now, as for things like banning blind bidding, that's primarily a more of a provincial issue rather than a federal run.

[00:11:29] And progress has been pretty slow or inconsistent at best across the country.

[00:11:36] Yeah, now, CREA did release an open bidding option.

[00:11:40] And the province of Ontario also introduced a new act called Tressa in an attempt to make open bidding possible as well.

[00:11:50] So, CREA, we did an episode on blind bidding versus open bidding.

[00:11:54] But they had this thing called Open Offers Pilot Project on Realtor.ca.

[00:11:59] Doesn't seem to be making that much progress.

[00:12:01] No, agreed.

[00:12:03] Yeah, I remember that episode because I remember us having to do research about Australia and almost the auction style bidding.

[00:12:11] I still think we need that.

[00:12:11] Canadians would love.

[00:12:12] I mean, housing is already our national sport.

[00:12:14] You might as well make it a spectator sport.

[00:12:15] Yeah, let's get some more entertainment value out of this thing.

[00:12:20] Now, look, a national legal right to home inspections, that's a good one, right?

[00:12:25] I mean, Dan, we both know how helping investors across the country and anyone from first-time homebuyers to all the way up to sophisticated investors.

[00:12:34] We know how important home inspections are.

[00:12:36] And we know that a lot of people got really screwed when they decided to skip that once integral part of the home buying process back in the COVID era.

[00:12:46] So a national legal right to home inspection, I believe you and I have been talking about this for years on the show.

[00:12:52] But unfortunately, that also hits provincial walls.

[00:12:55] There's been talk, but really no unified enforceable national standard put into place.

[00:13:03] Yeah, for sure.

[00:13:03] I think the provincial piece is really interesting when you think about Bloc Quebecois getting more and more seats and becoming potentially one of the bigger parties in the next election.

[00:13:14] Because at a minimum, I mean, obviously, it would kind of lead the separatist movement and head in that direction.

[00:13:20] We'll discuss that a little bit.

[00:13:21] But it could also really push for more and more control at the provincial level, which means things like this could end up being maybe more achievable.

[00:13:31] And you could see a much higher degree of political influence at a provincial level.

[00:13:36] Pierre probably would be pushing for that as well in the shrinking of the federal government.

[00:13:40] I guess finally, while mortgage deferrals got a big spotlight, obviously, during the pandemic, it was more of a short-term crisis response measure than the permanent policy the liberals had hinted at.

[00:13:49] But there are things like they released the Canadian Mortgage Charter, which is another episode that we did last year, which basically adds a bunch of protections in for consumers regarding – well, basically, like if you're in financial stress, it's call your bank because they have to do a lot of things legally to help you.

[00:14:11] Not financial advice.

[00:14:14] Actually, I guess that would be financial advice.

[00:14:16] Call your bank.

[00:14:17] Yeah.

[00:14:17] And look at – and it's a similar story on renovations, right?

[00:14:21] Most policy tools there lie within the provinces.

[00:14:27] Again, the federal government could use tax levers, but really nothing's fully materialized yet.

[00:14:34] So overall, it's good intentions, but it's kind of a mixed record when we look at what actually took place and how many of these policies were actually enacted upon.

[00:14:46] Yeah.

[00:14:47] Yeah.

[00:14:47] So let's just run through a list just to make sure we catch everything.

[00:14:50] So they implemented the two-year foreign buyer ban.

[00:14:54] They just extended it for another two years.

[00:14:56] They started the Housing Accelerator Fund, which was a 2022 budget where they're basically paying municipal governments to get housing supply built.

[00:15:05] They created the tax-free first home savings account, which we've done a full episode on.

[00:15:10] They continued national housing strategy and investments.

[00:15:13] They increased the CMHC pool, Canada Mortgage Bond pool or issuance by 50%, I think, $20 billion.

[00:15:22] Which we did an episode on.

[00:15:23] Yeah, they added $20 billion in liquidity and that's obviously mostly going through CMHC's MLI Select program.

[00:15:31] They added an anti-house flipping tax.

[00:15:34] They did the tax on – or sorry, they discussed an anti-house flipping tax.

[00:15:37] They discussed or added the layers of taxes on – or tax limitations, let's call it, on Airbnbs, non-conforming Airbnbs.

[00:15:46] So, you know, I would say not a – I think a lot of it's just like too little, too late because like most of these policies are going to benefit like if they have an impact, which they should.

[00:15:59] Housing is such a long-run thing, right?

[00:16:02] And so, most of these policies, like we won't actually see them show up as valuable for the market or the housing affordability for like two, three years, right?

[00:16:16] Yeah, exactly.

[00:16:16] I mean, just like all the data that we collect or the data that we read from, you know, the reports, it's just standard in housing, right?

[00:16:25] This stuff takes time.

[00:16:27] It's a big, slow-moving vehicle.

[00:16:30] I will say one thing, Dan.

[00:16:32] With all these policies and all the changes, man, it has been a good time to have a podcast on housing because there has been a lot of material to cover.

[00:16:39] Yeah, they've made it very easy for us.

[00:16:41] Okay.

[00:16:41] So, talk to me about some of the housing platforms of other political parties and what we're kind of seeing in this upcoming election that we're going to have.

[00:16:51] Yeah.

[00:16:51] So, Pierre Polyev's conservatives, barring any major disaster, are the most likely to win the election.

[00:17:00] They have pledged to reduce red tape, incentivize municipalities to build more quickly and lean on market-based solutions.

[00:17:07] Polyev often talks about tying federal infrastructure dollars to housing approvals, taking a stick approach rather than a carrot.

[00:17:12] Rather than paying municipalities to build housing like the National Housing Act approach that the liberals have put in, they would withhold the funding and transfer payments until municipalities hit minimum targets.

[00:17:22] So, basically the opposite.

[00:17:24] I mean, kind of the same thing, but on the other end.

[00:17:27] He also talked in that Jordan Peterson interview about smaller government, which could mean less bureaucracy, less red tape, but also austerity, like we've talked about on the show,

[00:17:38] and potentially triggering or worsening Canada's potential recession, which I don't think he'll have an issue with because for the first year or maybe two years, he can kind of blame it on Trudeau.

[00:17:50] And they likely will.

[00:17:52] I think that would be the politically prudent thing to do.

[00:17:54] But look, I'm all for smaller government, but I will be the first to admit it is incredibly painful for us to get through the process of shrinking a government,

[00:18:05] especially after the majority of job creation over the last couple of years was public sector.

[00:18:11] So, there's a lot of public sector fat that needs to be carved out.

[00:18:15] That's a lot of people without jobs.

[00:18:17] You add that to a market that's already struggling, an economy that's already struggling.

[00:18:22] And it's not hard to imagine a scenario where this looks pretty ugly for Canada, right?

[00:18:28] Yeah.

[00:18:29] I mean, I completely agree.

[00:18:31] I think, as Pierre said, you know, he gets the hangover.

[00:18:36] And I think he will certainly be needing some electrolytes to get through this one.

[00:18:41] You know, Dan, I don't know if you've had a chance to watch that full interview or not.

[00:18:45] It's been viewed tens of millions of times.

[00:18:49] And full disclosure, you know, I'm not a diehard fan of either of these gentlemen.

[00:18:55] They're both extraordinary intelligent, which is very apparent in that interview.

[00:18:58] The best thing I found about that interview was some of the stuff about the economy, right?

[00:19:03] What Pierre was saying about free enterprise and cutting red tape and the overall bull case for Canada.

[00:19:10] That was the stuff that really got me fired up because, you know, I'm an optimist McPherson.

[00:19:15] I like to focus on the potential of, you know, the good outcomes that we could have here.

[00:19:25] And, man, there's a lot of them, right?

[00:19:27] I mean, as you said, it's going to probably get worse before it gets better.

[00:19:32] You know, there's a lot of people that are not going to be happy with some of the actions that need to be taken to get back on track.

[00:19:40] But overall, I thought the interview was very well done.

[00:19:44] And, you know, I kind of I would call it a fair play interview.

[00:19:48] It wasn't just them sitting there bashing current leadership.

[00:19:52] It was there saying, hey, look, yes, we blatantly found ourselves in a bit of a pickle here.

[00:19:59] And it's going to take a while to get out.

[00:20:00] And here are some of the things I'm going to do to get out of it.

[00:20:04] So it got me excited, especially hearing the, you know, the kind of economics of it, how he plans to do things like cut GST on housing, cutting the red tape, increasing the availability of permits and changing zoning.

[00:20:19] And, you know, again, that stick mentality with municipalities, all that stuff was exciting to hear, especially from a real estate investor perspective.

[00:20:29] I think he gets the housing file, too.

[00:20:31] Like he was on he was Harper's housing minister.

[00:20:33] So he's obviously pretty, pretty close to this.

[00:20:36] And I think he was shadow housing minister for a while as well.

[00:20:38] So he was the critic, the one who is kind of challenging the policy.

[00:20:41] So he really has spent a lot of time thinking about housing and good probably.

[00:20:46] That's what I think that that's what we need right now.

[00:20:48] Like, I really do feel this is the housing election.

[00:20:50] Like bar none, there's no bigger issue that Canadians are facing right now.

[00:20:53] That is what they want.

[00:20:54] And that's what I think it will be the deciding factor.

[00:20:58] And he is is talking better points than than any competitor on the housing file.

[00:21:04] I wonder to me about I will.

[00:21:06] I'll jump over to block in a second here, Dan.

[00:21:09] But I'm just wondering how long do you think it is until we see, quote unquote, the housing election and in, you know, other articles.

[00:21:16] If that's if we're coining that term on on this podcast episode here, which will be out Friday, January.

[00:21:23] What is this Friday, January the 10th?

[00:21:27] OK, so talk to me about the block here.

[00:21:30] So let's focus on the autonomy of Quebec wanting federal funding, but without the conditions attached.

[00:21:37] Now, Quebec has already has a robust rent control and other measures.

[00:21:41] So the block will argue for more power in provincial hands.

[00:21:44] And frankly, they probably should.

[00:21:46] Their housing crisis is not nearly as bad as the rest of Canada.

[00:21:50] And Dan, we know this because we just covered the CMHC rental report and we saw that both Quebec City and Montreal had built an enormous amount of purpose built rentals far more than any other major city here in Canada.

[00:22:05] Yeah, no one could argue.

[00:22:07] I mean, they do kind of have a bit more of a like a European influence and much higher rentership, more comfortable with renting and like, you know, just culturally.

[00:22:16] And I think the other piece is that they have they're the only province that can kind of regulate their immigration.

[00:22:22] And so they their demand curve has been a lot lower than the rest of Canada, I would say.

[00:22:27] The jump over to the NDP.

[00:22:29] They tend to champion things like, you know, social housing projects.

[00:22:32] I think they would want more government or state involvement in housing, co-op housing, stricter protections for tenants.

[00:22:39] We could probably expect them to discuss proposals for taxing property speculators and corporate landlords more heavily.

[00:22:46] Yeah, I think that I mean, who knows at this point, because they're kind of just yelling about stuff and not actually.

[00:22:53] I think that they've kind of abandoned their mandate of being the working working people's party.

[00:22:57] I've not seemed kind of politically misguided since the liberals went further left and started invading in their in their base, I think, a little bit.

[00:23:04] Lots of yelling going on in the House these days.

[00:23:07] And look, if the polls are to be believed, the liberals might actually find themselves scrambling to stay ahead of the NDP and the bloc in Quebec.

[00:23:16] Some polls even show the liberals could be dropping to the third or even the fourth place nationally, which is, if you look in not so recent history, a pretty shocking turn of events.

[00:23:28] Yeah, I don't know if I would like I think the polls reflect that, but I don't necessarily know if that's actually what will happen.

[00:23:35] I think the liberals run a great campaign and I think that they're going to get probably more votes than people expect of them.

[00:23:40] Yeah, I completely agree.

[00:23:42] Especially if they install like a car knee or something like that and can could buy back some of that credibility.

[00:23:48] Like, yeah, I think I don't know.

[00:23:50] I mean, regardless, this even if even if what I just said is correct, they this will probably be the steepest decline ever for a modern Canadian governing party.

[00:23:58] Very reminiscent of 93 when the PCs under Kim Campbell went from majority government to just two seats, which is crazy.

[00:24:05] That might be the actually the worst one.

[00:24:07] Yeah.

[00:24:08] Now, most folks don't expect liberals to tumble quite that dramatically, but the numbers are pretty dire.

[00:24:14] I mean, look at the chart that you've got up right now, Dan, it's it's clear that Canadians are looking for alternatives and conservatives, NDP or even block in Quebec are are there to, you know, usher in any new members.

[00:24:28] And even if the liberals can't win, installing someone like Carney now could be an attempt to maintain at least their official opposition status, which would be crucial for influence in parliament.

[00:24:37] And they would really need that to get, you know, to even have a chance after four years.

[00:24:42] I do think like based on what I'm seeing, I mean, you see it constantly in Canada.

[00:24:46] We literally just go from eight years of liberal to eight years of conservative, to eight years of liberal, eight years of conservative.

[00:24:51] Like it's same as the US, right?

[00:24:52] Pendulum swinging.

[00:24:54] Well, yeah, it's the political business cycle, right?

[00:24:55] Which we'll talk a little bit about.

[00:24:57] But basically all that is, is you have leftist politicians who create inflation and then you have rightist politicians who destroy inflation and you just keep going back and forth.

[00:25:04] But even if, even if the liberals can't win, I still think that that Carney piece, that, that influence in parliament is going to be kind of crucial.

[00:25:13] And it seems like Trudeau's MPs are eager to get rid of him because of that, because they realize that it means that even their seats are at risk because frankly, they're being interpreted as supporting him by helping him stay in power at this point.

[00:25:25] Yeah, yeah, exactly.

[00:25:27] And I'd argue that having someone like a Carney as opposition leader could actually be beneficial for Canada if we end up with a conservative government, which seems to be the likely case, right?

[00:25:38] His deep economic expertise and central banking experience would make him an effective contributor to government policy, especially around housing and monetary issues, which have been some of the biggest issues kind of haunting Canadians for the past several years.

[00:25:54] You know, it really goes to, we had a really great question from one of our members in our realist community, Dan, which was who in Canadian politics is actually has a good business background.

[00:26:04] And, you know, this gentleman definitely does from, from an economic understanding point of view.

[00:26:12] So, you know, the, the more intelligent the opposition is, the likely, the harder the people in power are going to have to be and have to work, right?

[00:26:23] We want smart people on both sides because we, we need them to be challenging one another.

[00:26:28] That's just better for everybody.

[00:26:30] Well, I think it helps like to progress the policies, right?

[00:26:33] Like again, with Pierre as leader of the opposition now challenging a lot of these, these policies and making sure that they're well thought out, et cetera.

[00:26:40] I mean, Carney would be a great role for that because he gets the, he gets the other side of the, of, of, of how things work.

[00:26:47] He gets the, the monetary policy side, right?

[00:26:49] I think he, you know, from a character perspective, he's probably the only person who could help restore faith in the liberal party because he's such a big departure from their recent image.

[00:26:59] After years of what many people saw is basically, I think ideologically driven policy and kind of economic management as a back burner issue.

[00:27:06] Having someone with credentials on the economy, a former Bank of Canada governor, former Bank of England governor, extensive private sector experience.

[00:27:15] I think that that could bring back a lot of the voters.

[00:27:18] Like I think people will be surprised at how well the liberals do in the polls if Carney gets in because it could bring back a lot of those voters who have lost confidence in the, in the party's economic competence.

[00:27:29] Yeah, you're right.

[00:27:31] I mean, he's almost like, I don't want to say anti-Trudeau, but maybe like opposite of, of Trudeau in terms of background.

[00:27:39] I would say he is like he's super qualified.

[00:27:40] Yeah, exactly.

[00:27:41] And, and well, critics often painted the current leadership as being out of touch with economic realities.

[00:27:49] Carney brings serious financial and economic policy chops to the table, right?

[00:27:54] This guy knows what he's talking about.

[00:27:56] Look at his resume, the kind of expertise that could be exactly what the liberals need to rebuild that credibility that they've probably lost on the economic front, especially on issues like inflation and housing affordability.

[00:28:09] Yeah.

[00:28:10] Yeah.

[00:28:10] And I think, you know, based on, again, some of the people that I've spoken to who, you know, would have been liberal voters, but are feel, feel like kind of the party has left them because, you know, of Trudeau's leadership.

[00:28:21] I think he could pull a lot of those defectors back to the party potentially.

[00:28:25] So.

[00:28:25] Yeah.

[00:28:25] And then maybe they realize that this election is unwinnable.

[00:28:31] They want him there for four years and they try to win the following election.

[00:28:34] Right.

[00:28:35] I, I just don't know if I can see Carney giving up like, you know, 20 million of current salaries to be the opposition leader for four years, but I don't know.

[00:28:44] Maybe I'm wrong.

[00:28:45] Maybe he's a generous guy.

[00:28:46] Yeah.

[00:28:47] I like, I mean, then people could never argue that he's not like actually doing public service, which is.

[00:28:51] That is, that is public service for sure.

[00:28:57] I guess there's another huge potential implication that we, we kind of touched on, but didn't really fully discuss.

[00:29:03] But like, so even though the block from a popular vote perspective is kind of lower that they could potentially have a lot of seats and potentially even be looking at an opposition, which would be unprecedented.

[00:29:16] Yeah.

[00:29:16] Right.

[00:29:17] The last time Quebec separatism gained this much momentum was during the 1999 referendum, which came down to just 54,288 votes.

[00:29:28] It's a margin of 1%.

[00:29:32] Now with the block potentially securing the second highest seat count, we could see a push for sovereignty.

[00:29:38] Unlike anything we've seen in Canadian history.

[00:29:42] And Dan, Pierre in his, in his Peterson interview addresses this directly.

[00:29:47] And he is well aware of this as a potential threat.

[00:29:50] And he's basically saying, I've got to make the economy good enough that the Quebec separatist movement realizes that, hey, the economy is going to be great again.

[00:30:00] Maybe, maybe we shouldn't leave.

[00:30:02] Well, I think that if you, you know, if you really look at it, like the last with the liberals potentially falling to third or fourth place.

[00:30:12] And again, that's what polling saying.

[00:30:14] I would be very surprised if that actually happened at the polls this year.

[00:30:18] But third, I can see fourth seems a bit extreme.

[00:30:22] Yeah, but there really wouldn't be a strong federalist party to counter that narrative if, if, I mean, so Pierre really has a big job of unification.

[00:30:30] I'm glad I didn't, I didn't get a chance to listen to the entire interview yet.

[00:30:32] So I'm glad he did mention that in that, that discussion.

[00:30:35] But this is a scenario that could fundamentally reshape Canadian Federation, which is a very eerie overtone when you consider Trump talking about Canada becoming the 51st state right now.

[00:30:45] And let's not like really forget about the strategic importance of Quebec to Canada's economy and trade.

[00:30:51] The St. Lawrence Seaway is absolutely crucial, right?

[00:30:55] It is our gateway to the Atlantic for inland provinces.

[00:30:57] Without Quebec, Canada would lose direct maritime access to its industrial heartland.

[00:31:01] The Great Lakes St. Lawrence system handles over like $100 billion in trade annually.

[00:31:06] Wow, crazy.

[00:31:07] Yeah, I mean, obviously we can't do this episode without talking about Trump and his nonstop rhetoric about the 51st state, which obviously he was blasting out as soon as Justin Trudeau resigned.

[00:31:20] And, you know, fascinating about the power of Quebec there.

[00:31:24] And you're right, Dan, Montreal and Quebec City are both vital ports without the St. Lawrence provinces like Ontario would have to route everything through American ports, giving the U.S. enormous leverage over Canadian trade more so than they already have.

[00:31:39] And it would fundamentally alter Canada's economic sovereignty.

[00:31:43] So really scary thought there.

[00:31:45] Yeah, for sure.

[00:31:46] While we're talking about the Quebec sovereignty, we're, you know, we're not just discussing cultural or political implications.

[00:31:53] We're talking about Canada's viability as a trading nation, right, with that port exposure.

[00:31:59] So the stakes couldn't be higher.

[00:32:01] Yeah, you know, it's fascinating how much of this political upheaval traces back to inflation and the cost of living crisis here in Canada.

[00:32:10] The Liberals found themselves caught in a very economic vice grip that they pretty much couldn't escape.

[00:32:16] Yeah.

[00:32:17] Yeah.

[00:32:17] And people are struggling to afford groceries, housing, you know, when their mortgage payments have doubled.

[00:32:23] It creates a perfect storm of voter dissatisfaction.

[00:32:26] That's your political business cycle, right?

[00:32:28] They create the inflation.

[00:32:29] It pisses people off.

[00:32:30] And then they, you know, this knight in shining armor comes in to destroy the inflation.

[00:32:36] The Liberals spending during COVID might have been necessary at the time, but it certainly contributed to that inflationary pressures.

[00:32:42] Exactly.

[00:32:43] And that's where that political business cycle you just mentioned, Dan, becomes really interesting.

[00:32:48] Typically, governments try to spend their time to create good economic conditions right before an election.

[00:32:57] But with inflation running hot, the Bank of Canada's aggressive rate hikes and global uncertainty,

[00:33:04] the Liberals had a hard time following the traditional playbook of the political business cycle.

[00:33:11] Yeah.

[00:33:12] And I think, you know, right now they're kind of being pushed to tighten spending when typically they would want to open the taps where, you know,

[00:33:22] they really want to be able to spend heading into an election, make people happy with them.

[00:33:25] And I think that they kind of did that with a lot of the hiring last year.

[00:33:29] But they're really swimming against the political business cycle and voters notice.

[00:33:34] The political business cycle, by the way, suggests that governments often ramp up spending or cut taxes right before an election hoping to win support.

[00:33:40] But the Liberals are dealing with stubborn inflation, rising interest rates and overall global uncertainty.

[00:33:45] So it's a very difficult position for them to be in to be capable of doing that.

[00:33:49] Thank you for that Dan Finition right there on the political business cycle.

[00:33:53] And you're right.

[00:33:54] We are in a place where housing costs are through the roof.

[00:33:58] If you haven't noticed, we've been talking about it for years.

[00:34:01] Rents are overall much higher.

[00:34:03] Mortgages are tougher to service on an individual and household basis.

[00:34:08] And historically, recessionary or high inflation environments don't treat incumbents, i.e. conservatives right now, too kindly.

[00:34:18] Think of the early 1990s or the late 1970s where voters often punish the party in power.

[00:34:24] So Dan, take me back to your favorite decade, the 1990s.

[00:34:29] Yeah, the 90s saw ballooning deficits, high unemployment, major political realignments.

[00:34:34] The Liberals under Jean Chrétien brought in a new wave of deficit reduction measures.

[00:34:40] Now we might see the Conservatives or maybe a rebranded Liberal Party under new leadership try to position themselves as being champions of fiscal responsibility.

[00:34:47] Yeah, and look, capital gains inclusion rates, for instance, might have become a hot topic again.

[00:34:53] And some are talking about using changes to the capital gains on housing investment properties to stabilize or even try to attempt to cool the market a little bit.

[00:35:04] It's a bit of a throwback to an era when government used these levers to manage real estate speculation.

[00:35:12] It is fascinating from my perspective because in the 90s, you saw the capital gains inclusion rate go up once under the Liberal government and then a second time under the Conservative government.

[00:35:22] Actually, it might have been Conservative first and then Liberal, but it was hiked twice, once by each party because they needed the money.

[00:35:29] And this is one of the things like a lot of people think.

[00:35:31] I'm going to get to another very interesting piece about what's happening with the capital gains inclusion rate.

[00:35:35] But, you know, a lot of people are saying, oh, Pierre would tear that up right away.

[00:35:40] And I'm thinking he's going to need all the income they can get.

[00:35:43] I mean, yeah, OK, if he's going to shrink the government and lay off a bunch of people, yeah, it'd be maybe a different story.

[00:35:47] But if he doesn't do that, then they will need as much income as they can get.

[00:35:54] And I think capital gains is an easy place to do it because the housing market's been massively inflated and you need to tax some of those gains back out.

[00:36:00] Not that I think, not that I'm a fan of it, but that's, I think it's the political move there.

[00:36:04] For sure. And those, but those, you know, theoretical mass layoffs in the public sector, that's not just, that's not going to just happen immediately, right?

[00:36:12] Like that stuff takes time and it's not going to, you know, it's easy to say something like that in theory.

[00:36:19] And in reality, it's a lot harder to execute because you're going to have a lot of angry public sector people.

[00:36:24] For sure. Back on the capital gains piece, there's an interesting thing with Trudeau's progiation of parliament that he's proposed,

[00:36:31] which is basically that it would delay the implementation of a proposed capital gains tax that was set to take effect.

[00:36:38] Right?

[00:36:39] Yeah, that was great. I saw you post that on Instagram the other day and everyone was hearing it being like,

[00:36:44] Dan finally has some good news for us.

[00:36:46] Yeah. Yeah.

[00:36:47] I mean, it is funny because I think a lot of people are confused because they, like nobody really knew whether or not the CRA was even operating on these.

[00:36:57] But yeah, I don't know. Explain prorogation maybe for our listeners here.

[00:37:01] Yeah, of course. My pleasure. So, prorogation is essentially hitting the pause button on parliament.

[00:37:09] It ends the current session clearing all legislation that hasn't passed while keeping the government in power.

[00:37:17] Yeah. And it's important to note that while the prime minister can request a prorogation,

[00:37:21] it technically requires the governor general's approval, which is the king's representative in Canada

[00:37:25] and having the constitutional authority to grant or deny this request.

[00:37:28] So, though in practice the governor general typically follows the prime minister's advice,

[00:37:32] it's rare for them to refuse such requests as it would trigger kind of a constitutional crisis.

[00:37:39] And I think we've got enough crisis on our hands already.

[00:37:42] The last controversial prorogation was probably back in 2008 under Harper.

[00:37:48] And the key impact here is that when parliament is prorogued, all unfinished business dies in the order.

[00:37:54] So, basically, I think they threw out like 270 bills or they would be so billed.

[00:37:58] Yeah, it was crazy. Table Salt on X actually did a great post on this where you can start to go through all the things,

[00:38:06] all the bills and everything.

[00:38:08] And I guess I love that term, all the unfinished business, right?

[00:38:13] Yeah, I think that it's a weird place to be for the country heading into the election.

[00:38:18] I think that it's especially weird for us to not have basically a government for the first two years or two months of a Trump administration.

[00:38:26] Like literally...

[00:38:27] Not good.

[00:38:27] It's not good.

[00:38:28] Yeah.

[00:38:29] Yeah, it's like really, really bad.

[00:38:31] And I think Canadians are more politically aware than ever.

[00:38:33] And they are holding people like Trudeau and Singh accountable for a lot of this because like Singh delayed the...

[00:38:40] Like he could have done his vote of non-confidence at any point.

[00:38:44] Then he chose to do it over Christmas because they were basically adjourned, right?

[00:38:49] And they would resume in January.

[00:38:51] And now Trudeau's done his resignation, which delays it even further.

[00:38:54] So all they're doing here is kind of delaying it to put it...

[00:38:57] Basically putting their own party and their own interests ahead of the country, which...

[00:39:01] I mean, look, we need a leader when Donald Trump takes office in the US.

[00:39:05] Like that would be a pretty helpful thing to do is have an actual government that's working in session with a leader, right?

[00:39:12] Like those, you know, especially if we're going to get tariffs.

[00:39:13] I love that that's too much to ask.

[00:39:14] Yeah.

[00:39:15] Like it's pretty basic requests from a first world country in the G7, you know.

[00:39:19] Yeah.

[00:39:20] And so I think that like, I mean, time is really the essence for these folks.

[00:39:24] But I mean, at a minimum, like we'll have an election by October.

[00:39:28] I think most people are anticipating an election by April, but they basically have however many days to do their leadership race.

[00:39:32] And then let's see what happens.

[00:39:34] So I guess, you know, the capital gains tax changes obviously didn't receive royal assent.

[00:39:41] So that's why they've been held up here.

[00:39:43] But where does the rest of this leave us?

[00:39:45] Like Trudeau's resignation sets the stage for a major reshuffle in the Liberal Party, obviously.

[00:39:49] Probably a complete rebranding of the Liberal Party.

[00:39:52] Really, if you get somebody like Carney at the top there, housing is going to be the biggest ballot box issue from my perspective.

[00:40:01] And I think we've seen the Conservatives, NDP and Block all making moves to capitalize on the Liberal slump in that regard.

[00:40:06] Yeah.

[00:40:07] Yeah, absolutely.

[00:40:08] You know, questions remain like, will Christy Freeland carry on the legacy and try to steady the ship?

[00:40:13] Or does she turn the party over to the more business savvy solution being Mr. Carney?

[00:40:20] Or maybe they pass the torch to the more younger rising star, Sean Fraser, who we've actually had the pleasure of interviewing on this show.

[00:40:28] Him, as well as opposition, Shadow Housing Minister Scott Aitchison.

[00:40:34] Great episodes if you haven't heard those.

[00:40:37] One thing's for certain here, Dan.

[00:40:38] The race to find Trudeau's replacement will be intense.

[00:40:42] And the stakes for the party and for Canada at this point are huge.

[00:40:48] Yeah, so that's it for today's episode.

[00:40:49] Thanks for joining us for this deep dive into Trudeau's resignation, his government's housing record, and the electoral strategies of each party going forward.

[00:40:57] It's definitely going to be an interesting year.

[00:40:58] That it is, my friend.

[00:41:00] Be sure to subscribe to the podcast.

[00:41:03] And if you're feeling friendly, please leave us a five-star rating or a written review on Apple Podcasts.

[00:41:10] If you have the show, we'll be back soon with more analysis as we always do.

[00:41:14] Until next time, my name is Nick Hill.

[00:41:17] And I'm Dan.

[00:41:19] Stay informed and engaged, folks.

[00:41:20] Catch you next time.

[00:41:21] The content of this podcast is for educational and informational purposes only.

[00:41:25] It is not intended as financial, legal, or investment advice.

[00:41:28] Always consult a qualified professional for advice tailored to your unique circumstances.

[00:41:33] The views expressed are those of the hosts and guests and do not necessarily reflect the opinions of affiliated organizations.

[00:41:40] Daniel Foch is a real estate broker licensed with Valerie Real Estate Inc.

[00:41:45] Website is Valerie.ca, V-A-L-E-R-Y.ca.

[00:41:49] And a member of the Canadian Real Estate Association, the Ontario Real Estate Association, and the Toronto Real Estate Board.

[00:41:57] Nick Hill is a mortgage agent and partner at OWL.

[00:42:00] Mortgage license number 10317.

[00:42:04] Agent license M21004037.

[00:42:09] Agent license M21004037.