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The government promises $13B to Volkswagen and the opposition responds with ‘astonishing’ silence

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When the government promised on Friday to hand $13 billion to Volkswagen to build an electric-vehicle battery plant in southern Ontario, a keen observer of politics could easily imagine the forthcoming attacks from the major opposition parties.

The NDP could continue its populist crusade against wealthy corporations, shifting gears from attacking the billionaire Loblaw president Galen Weston Jr. and moving on to the newest example of alleged corporate welfare.

The Conservatives would surely attack the deal on free market principles, lecturing the government for picking winners and losers in the economy, and blowing up the federal balance sheet in the process.

As it turned out, keen observers could only imagine these critiques because they were never given voice in the House of Commons.

In the three question periods since the subsidies were announced, the Conservatives have held their fire. Conservative leader Pierre Poilievre focused mostly on the low-hanging political fruit, hammering the government on the ongoing public service strike and the simmering controversy around the Trudeau foundation and election interference.

The muted reaction amounts to either an all-party endorsement of the big subsidy or an admission that there’s no easy political hay to be made out of it.

“It’s the silence of the Conservatives and the NDP that really raised my eyebrow on this. It was leaked on Thursday and didn’t come up in question period at all. I couldn’t believe that no one brought it up. It’s astonishing,” said Aaron Wudrick, the director of the Macdonald-Laurier Institute’s domestic policy program, in an interview with The Hub.

Conservative MP Karen Vecchio, whose riding contains the site in St. Thomas, Ontario where the plant will be built, was given a firsthand example of the tricky spot her party finds itself in when Prime Minister Justin Trudeau ribbed her during his speech at the announcement on Friday.

“Karen, I’m glad to see you here and it’s great today that you and I at, least, agree on how much it matters to invest in Canadian workers,” said Trudeau.

“I’ll be direct and honest, you have some work to do to convince your leader, Pierre Poilievre, who thinks this investment is a waste of money,” said Trudeau.

Progressive Conservatives in Ontario have lined up behind it and Premier Doug Ford and Labour Minister Monte McNaughton both attended the announcement on Friday.

McNaughton, who has been courting workers in Ontario for his PC Party, wrote a personal reflection on Twitter about how important the subsidy was, especially because a Ford auto plant in the region had closed in 2010.

That closure was devastating to the community, wrote McNaughton.

“Being pro-worker means being pro-good jobs. Jobs where you can raise a family. Jobs with a retirement plan, or pension, and benefits. Jobs that build communities. Like auto jobs,” wrote McNaughton.

It’s a mistake, though, to view supporting this subsidy as ideologically inconsistent for conservatives, said Mitch Heimpel, the director of campaigns and government relations at Enterprise Canada, in an interview with The Hub.

“We’ll see a significant imprint from that company on the community. These larger manufacturers do more than just employ people. There’s a whole culture that gets created around it,” said Heimpel.

Conservatives should care just as much about the social fabric and small communities as the free market, argued Heimpel.

Wudrick worried about the consequences of the government providing financial incentives for smaller communities to put all their employment eggs in one basket.

“You’re setting them up for future hostage-taking. You’re setting these communities up to get mowed down in the future and I think that’s dangerous,” said Wudrick, who warned of a scenario down the road when Volkswagen threatens to pick up shop and move if it doesn’t get more government money.

The massive subsidy to Volkswagen provoked something of a rare moment, when credentialed experts were lining up, almost in one voice, against a government plan, a mirror image of the political response in favour of it.

An instant immune response arose from economists on both the Left and Right, questioning the wisdom of the plan.

Given Canada’s tight labour market, these subsidies won’t so much create jobs as shift workers around towards the higher-paying subsidized paycheques, wrote Stephen Gordon, a professor of economics at Laval University.

“Firms in Southwestern Ontario who can’t compete with the subsidised wages offered by Volkswagen will be the big losers here,” wrote Gordon.

Rob Gillezeau, a professor of economics at the University of Toronto, questioned the government’s math on how many jobs would arise from the plan, saying it was likely basing its case on “wildly flawed modelling from a bunk economic tool.”

“If the federal government wants to make some kind of national security or geopolitical case they should go for it because the economic rationale really isn’t there,” wrote Gillezeau.

With the Liberals and NDP working together, is it majority or bust for Poilievre?

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Since the Liberal Party and NDP agreed to a governance agreement last year that should extend the life of Prime Minister Justin Trudeau’s minority government, Conservative leader Pierre Poilievre has been laser-focused on the “costly coalition.

In fact, a drinking game based on that phrase in the House of Commons would inundate Canada’s emergency rooms and launch calls for domestic production of stomach pumps. On March 30 alone the phrase made 10 appearances in the parliamentary record.

And although the confidence and supply agreement between the Liberals and the NDP is driving the agenda on Parliament Hill, Poilievre may be looking ahead warily to the aftermath of the next election.

With the two progressive parties working so closely together, the Conservatives are starting to worry that winning the most seats in the next election won’t be enough to give them a chance to govern. The Liberals and NDP will have a constitutional right to test the confidence of the House and possibly keep governing.

That means if the Conservatives don’t win a majority they may not even get a chance at winning the confidence of the House.

“Constitutionally, that’s their right,” said an adviser in Poilievre’s office, who was speaking on the condition they not be named. “But we will go nuclear.”

There is an overwhelming feeling among Conservatives that any attempt by Trudeau to hold on to power after losing the seat count will go down poorly with Canadians, providing a political opening for Poilievre.

“There are very big political and public opinion factors at play here. There’s just a natural sense among people that the party that won the most seats is the party that should form the government,” said Dan Robertson, who was the chief strategist for the 2021 Conservative Party general election campaign and is the founder of Pathos Strategy.

“It’s easy to understand and it aligns with people’s sense of fairness,” said Robertson.

Recent polls show the Conservatives slightly ahead of the Liberals in the national popular vote which, on election day, would likely lead to a slim Conservative minority in the seat count. The 338Canada project, which creates election projections, currently places the Conservatives one seat ahead of the Liberals.

Cam Holmstrom, the founder and principal of Niipaawi Strategies and who worked for the NDP on Parliament Hill for nearly a decade, said the exact seat count will be vital and a lot will depend on which parties pick up the remaining seats. For example, in 2008, the Liberals and NDP tried to form a coalition with the Bloc Québécois to bring down Stephen Harper’s Conservative government, but the effort disintegrated quickly.

“We saw what played out in 2008. I would argue that if the Bloc had never been involved that probably wouldn’t have blown up the way it did. But still, you saw how the Conservatives went at it,” said Holmstrom.

Former prime minister Paul Martin resigned in 2006 after losing to Stephen Harper’s Conservatives, even though Martin could have theoretically cobbled together a governing arrangement with the NDP and the Bloc Québécois.

Holmstrom said Martin was brought down by the aftershocks of the sponsorship scandal, which made other parties less likely to want to work with the Liberals for fear of being tainted by the controversy. It’s not out of the realm of possibility for the current Liberal government to be brought down in a similar fashion, he said.

“So if that’s how it all goes down, I don’t think it kills off the idea of ever working together again, but I think that kind of puts an end to it for that moment,” said Holmstrom.

If the NDP declines to work with the Liberals again, it would give the Conservative Party a free run at forming a minority government. One Poilievre adviser noted that while the Liberals have been working with the NDP, the Conservatives have developed a strong working relationship with the Bloc Québécois, which could be useful for Poilievre in maintaining the confidence of the House in a minority Parliament.

According to people close to both parties, the supply and confidence agreement has proven even more successful than many expected.

It has provided NDP leader Jagmeet Singh with at least one big policy win, a $13 billion dental care program, along with giving the Liberal Party a relatively tranquil House of Commons that happily pushes along the government’s agenda.

In politics, though, that’s no guarantee of future success.

“There are things out there that are really going to test that, like how the government reacts to foreign interference from China. If there isn’t a public inquiry that comes from (Special Rapporteur) David Johnston I don’t know how politically it can keep going,” said Holmstrom.

The uncertainty of the situation means all the major parties will have to be nimble, especially as the next election day nears.

“You get a sense very quickly at the end of the campaign whether a minority situation is in play or not. And so naturally, you start thinking about it,” said Robertson.

There was a moment during the 2021 election when both Conservative leader Erin O’Toole and Trudeau realized that, barring any unforeseen surprises, a majority government was likely out of reach for both parties.

Although they were consumed with the day-to-day of the election, the O’Toole campaign reached out to some of former U.K. prime minister David Cameron’s staffers for advice on what to do if the seat count put them in an awkward position. In 2010, Cameron had sealed an extraordinary agreement to govern as a coalition with the Liberal Democrats.

With these situations shrouded in uncertainty and the stakes high, Cameron’s advisers said the best path is to form a rough plan, and then move as quickly as you can after the votes have been counted.