Parliament Returns: Government Tests Its Economic and Affordability Agenda

Parliament returns with Prime Minister Carney’s government entering the fall in a stronger parliamentary position, but against an increasingly complex economic and geopolitical backdrop.

Carney used the summer to continue developing the government’s economic agenda, including navigating continued trade tensions with the United States and efforts to deepen economic ties globally, including with the European Union. In September, these efforts culminated in nearly $500 billion in new investment commitments announced at the Investment Summit.

On the domestic front, affordability remains top of mind for Canadians as the U.S.-Iran war sent oil prices rising. Quebec’s election on October 5th and Alberta’s October 19th vote on having a referendum to separate are also looming in the near term, threatening to further reshape federal-provincial dynamics.

How the Carney government navigates these challenges and opportunities will define the year ahead.

1. Legislative Priorities en Route to Budget 2026

Why it matters: The period between Parliament’s return and Budget 2026 will be an important test of the government’s ability to turn its recent economic commitments into legislation and implementation.

The details:

• New pieces of legislation will seek to advance the government’s economic commitments. A bill to speed up projects and infrastructure was announced by the Prime Minister and subsequently put on notice in the House of Commons. The legislation is expected to amend the Canada Labour Code, support supply chains, and make changes to the regulatory review process
• The government also put on notice a bill on the extension of the federal fuel excise tax exemption. Considering the Conservatives have been arguing for a permanent exemption and the importance of the affordability question to all parties, we expect this bill to move quickly through Parliament
• Unresolved Canada-U.S. trade tensions keep sector supports and economic diversification high on the government’s agenda. The need for new support measures could be only one new Trump tariff away
• The fiscal backdrop is constantly shifting with higher oil prices strengthening federal revenues while higher bond yields are increasing expenditures. This makes budget preparation more challenging for the government. Combined with the U.S. midterms, the next federal budget may arrive late in the fall

The bottom line: Budget 2026 is where these strands will have to come together. The broader test this fall will be whether the government can demonstrate its investments can generate growth, affordability, and protect sovereignty without compromising its fiscal goal of balancing the operating budget. To that effect, the Prime Minister recently laid the foundation for an optimistic framing of the nation’s fiscal outlook when he stated that Canada is “on track to balance the operating budget next year, one year ahead of schedule.”

2. Keep an Eye on Parliamentary Dynamics

Why it matters: Prime Minister Carney has not shied away from his desire to move “at speeds not seen in generations.” The announcements and priorities identified above will need speedy legislative approval through both houses to provide certainty to investors and have meaningful effects for attracting investment and providing some financial relief to Canadians.

The details:

• The sweep of three summer byelections solidified the Liberal majority (currently at 173 seats) so expect a triumphant return to the House of Commons. With rumours of a Cabinet shuffle put to rest (for now), backbench MPs will be looking for opportunities to show what they can do. Alternatively, some may start getting restless if they feel there is no room for recognition or promotion
• With only up to nine weeks of parliamentary sitting time this fall, unfinished legislative business from the last sitting and a Budget to pass, legislative time will be a premium in the House of Commons. Passing a broad set of priority legislation before the December break will be tough. We are expecting omnibus bills to accomplish this task
• The recent appointment of four more Senators will help fill out the rosters of Senate committees, mitigating one of the alleged reasons that bills ground to a halt in the Red Chamber last session. By appointing long-time Liberal stalwart and Carney consigliere, Tom Pitfield, to the Senate, the Liberals are hoping he will help keep government bills on track

The bottom line: With a majority in the House of Commons and some help in the Senate, the government will move swiftly on its priorities to show progress and results. An ambitious legislative schedule could encounter timeline challenges given the compressed parliamentary fall schedule.

3. What’s Next for the Conservatives and the NDP

Why it matters: As Canadians harden their views toward the United States, the traditional job of opposition becomes more complicated. For Canadians, there is little appetite for partisanship, leaving opposition with the challenge of holding the government accountable without appearing to weaken the government’s hand at the negotiating table.

The details:

• The opposition will try to separate support for Canada abroad from criticizing the government at home. Pierre Poilievre in his caucus this week said that “country before party” must guide Conservatives, while keeping affordability, jobs, public safety, and immigration as the domestic focus. The NDP will pair support for Canadian sovereignty with a “kitchen table” focus on affordability, workers, and families
• Canada-U.S. relations will test this approach. With talks suspended, tariffs escalating, and U.S. midterms approaching, each development creates an opening for the opposition to distinguish themselves from Carney
• Conservatives face another test following Larry Brock’s resignation. A byelection in a traditionally conservative riding could draw significant scrutiny for the CPC and its leader if they underperform at the polls
• For the NDP, the task is more foundational: rebuilding the party machinery and establishing its leader, Avi Lewis, with voters. The party is pointing to its improved Beaches-East York byelection result as an early sign of progress

The bottom line: Both the Conservatives and the NDP need to show there is a meaningful role for opposition politics in a moment dominated by national unity. Conservatives will seek to hold Carney accountable without ceding patriotic terrain, while the NDP will focus on rebuilding its renewed political relevance.