TL;DR: What To Expect From The Canadian Elections, Price Of Posting, And Love That Equity From Popeyes?
Here’s what you need to know…
Last week, Canadian Prime Minister Justin Trudeau triggered the official launch of Canada’s 2019 federal election, which will finally put to test how lasting Trudeau’s historic come-from-behind win in 2015 was. For those who don’t live in “the North,” the ramifications of the campaign’s October 21 outcome will be a key factor in anticipating developments for policy issues ranging from energy and the environment to trade.
To get up to speed on the Canadian election and what it could mean for industry, we’re turning TL;DR over to Delve Senior Research Analyst Michael Oberman, who led research for the Conservative Party of Canada and also has advised a number of provincial conservative parties.
- How We Got Here: Trudeau’s Liberal Party of Canada has improved its polling over the past six months and is now about even with the opposition Conservatives, but it was not long ago that Trudeau and the Liberal Party seemed politically “invincible” after ousting the long-tenured Conservatives. That changed with a disastrous (to put it mildly) India trip that saw Trudeau widely mocked – both for his cartoonish costume changes and for almost inviting to one of the trip’s official dinners a man previously convicted for the attempted assassination of an Indian cabinet minister in the 1980s. Then, this year’s allegations that Trudeau and his aides attempted to interfere in a criminal prosecution against Montreal engineering company SNC-Lavalin Group further wounded the Liberal government. While the scandal has dominated headlines since its inception, no criminal wrongdoing has yet been confirmed. Nonetheless, with the recent surge in his party’s polling, it remains to be seen if Trudeau will be one of Canada’s most resilient politicians since, well…his father.
- The “Anyone But Establishment” Vote: In 2015, Trudeau benefited immensely from the so-called ‘Anyone But Harper’ vote, which saw a substantial number of Canadian voters shopping around for which party was best suited to defeat Conservative Prime Minister Stephen Harper after nearly a decade in power. This time, Trudeau may find himself the victim of a similar kind of ‘anyone-but’ vote movement that captures the public’s dissatisfaction with establishment parties. Like the rest of the Western world, Canada is not immune to the growing rise in populism, or at least anti-establishment sentiments. With the Green Party of Canada in its strongest position federally ever (despite gaffes by its leader Elizabeth May), it may end up playing spoiler and in turn hold the balance of power in a hung-parliament. Should that come to pass, expect more pressure to make progress on policies such as free post-secondary education, sustainable jobs, and climate change.
- A Political Climate For Climate Politics: Enabling the rise of the Green Party is the growing stature of climate change and the environment as political issues. Trudeau has firmly staked his re-election in part on his government’s carbon tax policy, and a general image of being an environmentally responsible leader (in reality, the results are more mixed). Even the Conservative Party of Canada released a climate plan that would force high emitter companies to pay into a fund for green technology. For an explanation of these developments, look to a July 2019 Forum Poll that found the environment as the top priority of 26% of voters. To keep from losing support to other left-flank parties such as the Greens and New Democratic Party (NDP), which is a social-democratic party that is to the left of the Liberals and has never been in power at the federal level, Trudeau will need to win this environmentalist policy “arm race.” In fact, he recently promised a single-use plastic ban if re-elected, and by all estimates, more environmental policies will come as his platform is released.
- What About USMCA? Given that Canada’s economy would suffer ten times as much as that of the U.S. if NAFTA disappears, it’s not surprising that ensuring a renegotiated trade pact was a key priority for the Trudeau government. For now, ratification of the USMCA is held up by the U.S. Congress, rather than any intransience on Canada’s part. And while the Conservative Party complained about Trudeau’s concessions on USMCA, party leader Andrew Scheer has been clear he supports the final draft. The NDP was, unsurprisingly, far more critical of the deal, though it is almost certainly bluster: Jagmeet Singh, the NDP leader, attended an event celebrating the renegotiated deal. As for the Green Party, its leader also congratulated Trudeau on securing a deal, while simultaneously complaining about his concessions. Ultimately, the importance of trade with the U.S. is too significant for Canada to expect any of the major Canadian political parties to play with matches around that powder keg (especially with President Trump in The White House).
There is only a short timeframe of about one month until voters go to the polls, which means developments will move fast as parties make their cases to the public and attempt to out-maneuver and outsmart one another. If you are concerned about how your business interests from energy to trade and more could be impacted by the Canadian election, the team at Delve can help increase your understanding of the operating landscape – before politics become policies.
News You Can Use
LOVE THAT EQUITY FROM POPEYES?
A frenzy across America unfolded as Popeyes released a fried chicken sandwich in hopes of rivaling Chik-fil-A’s beloved version. This one menu addition created a social media battle between fast food chains, insanely long lines that sometimes turned political, and a spotlight on fried chicken sandwiches both from national chains and even local ones. Only 15 days later, Popeyes announced it would halt sales of the sandwich, having already gone through the entirety of its September inventory.
Behind this impressive rise in popularity stands a private equity firm. In 2017, Popeyes was acquired by 3G Capital-backed Restaurant Brands International (RBI), one of the world’s largest fast food-restaurant groups. 3G is known for its ruthless tactics of cost-cutting and restructuring and brought these sometimes-controversial moves to Popeyes, replacing the chain’s longtime CEO with their pick as soon as the acquisition took place. While private equity can sometimes get a bad rap, Popeyes is proof that both customers and shareholders can benefit when ingenuity, innovation, and yes – even chicken – come together.
THE PRICE OF POSTING
Here’s a reason to worry for those who acknowledge that their social media accounts make their lives look more glamorous than they actually are. After several years of foreshadowing and the continued maturation of artificial intelligence tools, some financial service providers in the U.K. state in their privacy policies that they may analyze social media accounts to look into the financial responsibility of their customers. For instance, if a bank thinks you spend too much money on social outings with your friends at bars and fancy restaurants, or nice vacations, it may begin to threaten your ability to get a loan regardless of the reality of your actual financial situation.
This approach raises many questions, not least of which are what (if any) impact the bank would decide there is if a loan applicant has his accounts on private or doesn’t have social media at all, and whether social media is an accurate tool for evaluating risk in the first place. As financial institutions continue to adopt this practice and collect more data, this will make for an increasingly pressing and interesting (or alarming) policy debate at the intersection of tech and financial services.
ROAD TO LITIGATION
Johnson & Johnson was recently ordered to pay a $572 million fine to Oklahoma for expenses related to combating the opioid epidemic, a fight the state won by citing its “public nuisance” law. This law had yet to be tested against corporations until now, but it has created a roadmap for other courts to use in upcoming litigation. According to Insurance Journal, “more than 45 other states and 2,000 local governments” are hoping to achieve similar verdicts and billions in settlements.
The law allows for a lawsuit against any person or legal entity that has damaged the health, safety, or welfare of the state’s residents, and the judge in Oklahoma found little trouble in declaring Johnson & Johnson a public nuisance. This verdict is likely to scare other companies facing the same challenges into settling. If more settlements are to come, we may never fully know the power of the public nuisance law in the courts, but for the time being, it’s clear that the law is a mighty effective tactic against one industry and there’s no telling which ones could be next.
In the 26 states that have fees for drivers of electric vehicles (EVs), 11 of them charge EV owners more than owners of gas-powered vehicles pay in gas taxes. A new analysis by Consumer Reports highlights some of the key trends behind what’s driving the revenue decisions policymakers are implementing in their states. While some may assume that EV owners would pay less in taxes due to their environmentally conscious purchase, the analysis points to factors that present a different reality.
From policymakers needing to compensate for the missing gas tax revenues that consumers pay at the pump to fund highway projects and infrastructure, to accounting for the wear and tear on roads that heavier EVs cause compared to their similarly-sized gas counterparts, to the theory that some states (and certainly competing industries like oil and gas) are simply looking to discourage EVs, it appears that owning such a vehicle is not a surefire way to lower one’s transportation costs. With 12 states considering their own EV fee proposals – seven which would double over time – the trend highlights that for every action and innovation there’s a corresponding policy and public affairs reaction. And, with the shift to EVs potentially meaning fewer manufacturing jobs, the policy slings and arrows may be only just beginning.