Quebec Decides Whether It’s Ready for New Party Amid Dairy Furor

(Bloomberg) -- Quebeckers go to the polls Monday to decide whether to try a new political party for the first time in nearly four decades, with the province’s dairy industry suddenly under threat.

The untested Coalition Avenir Quebec, a six-year old party headed by a former businessman who wants to curb immigration, has a narrow lead in popular support against the governing Liberal Party after months of riding solidly ahead in polls. An unusual campaign that left Quebec’s independence out of the debate reflected voters’ appetite for change and is set to be costly for the separatist Parti Quebecois, the Liberals’ traditional challenger.

“A lot of voters are looking for something different,” Sebastien Dallaire, a pollster at Ipsos in Quebec, said in an interview. “There is a desire to move on from the old dichotomy Liberal Party-Parti Quebecois that’s been in place from the 1970s.’’

A booming economy, three years of budget surpluses and some recent tax cuts may not be enough to keep Premier Philippe Couillard in power as many voters appear unwilling to forgive him for slashing education and health-care spending early in his mandate. Francois Legault’s CAQ, which has pledged to keep the books balanced, reduce bureaucracy and lower school taxes, is luring some voters with a whiff of novelty without taking a drastic economic shift after 15 years of almost uninterrupted Liberal reign.

Hours before the vote, Canada agreed to join a new version of the North American Free Trade Agreement with Mexico and the U.S. The tentative accord includes concessions to give the U.S. more access to the Canadian dairy market -- angering producers in Quebec, which is home to about half of the northern nation’s dairy farms.

Financial markets don’t appear to see major difference between the CAQ and Liberal economic platforms. While the spread between Quebec and Ontario bonds has narrowed, it’s still cheaper for the francophone province to borrow, a sign investors expect fiscal discipline to continue.

Things could get more complicated down the road. The economy right now is “as good as it gets” thanks to a global recovery that’s boosted commodity prices, according to Sebastien Lavoie, chief economist at Laurentian Bank Securities in Montreal. That cycle is coming closer to an end, with the additional risk the trade war between the U.S. and China could escalate.

“The next four years will be a lot more challenging and the next government won’t be able to benefit from the same economic momentum that the previous government had,” Lavoie said. “That may cut your room to maneuver, put in place policies, all the ideas that you try to sell right now to the public.”

Long waits in emergency rooms and difficulty in finding family doctors have made healthcare a top concern for voters. Sovereignty, the traditional divide in Quebec’s elections, has been left on the sideline.

“This campaign is a first,” said Eric Montigny, a professor of political science at the University of Laval in Quebec City. “It’s the end of the traditional delineation along yes/no points of view.”

That adds an element of uncertainty to the four-player race in a province where the classic left-to-right spectrum doesn’t apply. For instance, polls suggest the CAQ has lost some early supporters to Quebec Solidaire, a party that wants to reduce social inequality in part by raising corporate taxes, hiking mining royalties and taxing the rich.

The Parti Quebecois, which is competing with Quebec Solidaire for third place, could also suffer an historic defeat. Though it was the driving force behind two referendums on separating from Canada and some of the province’s signature laws, it’s no longer assured of playing a dominant role, Montigny said.

It’s unclear how much immigration will weigh on the vote. Legault wants to cut the number of immigrants allowed into the province each year to 40,000 from 50,000 and has vowed to give newcomers three years to learn French or face the risk of being expelled. Couillard has been a vocal critic of the measure, predicting it would be the true “ballot box question.”

The debate has sent more English-speakers and minorities toward the Liberals in recent weeks. But it may not sway French-speaking voters who don’t rank issues around immigration and integration high, even though they are emotional ones, according to Dallaire.

“Parties have to make a difference between a popular issue and an important issue to voters,” the pollster said. “If you keep pushing a popular issue but that is seen as not important, it can backfire.”

Nafta Deal

It’s also too soon to say what impact -- if any -- the new Nafta deal may have on the outcome of Monday’s vote.

Parti Quebecois Leader Jean-Francois Lisee took to Facebook late Sunday to criticize Prime Minister Justin Trudeau’s decision to sign the accord, which he says will cost dairy producers in the province about C$300 million ($234 million) and may push several farmers into bankruptcy.

He urged Quebeckers to show their displeasure by voting for his party. “What’s at stake here is the survival of our food industry,” Lisee said in a video message. “We need a government that stands up for Quebeckers.”

Legault and Couillard were also critical of the deal, which slightly loosens Canada’s system of tariffs and quotas on dairy, known as supply management.

“We’re disappointed,” Legault said Monday. “There were compromises made on supply management that will hurt our agricultural producers.”

The incumbent premier echoed that sentiment. “I’m very much preoccupied with the future of our family farms,” Couillard said. “I can already tell you that I will stand alongside the family farms of Quebec and our agricultural model.”

--With assistance from Erik Hertzberg and Maciej Onoszko.

To contact the reporters on this story: Sandrine Rastello in Montreal at srastello@bloomberg.net;Frederic Tomesco in Montreal at tomesco@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net, Stephen Wicary, Chris Fournier

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