The premiership of Paul Martin began on December 12, 2003, when the first Cabinet headed by Paul Martin was sworn in by Governor General Adrienne Clarkson. Martin was invited to form the 27th Canadian Ministry and become Prime Minister of Canada after he succeeded Prime Minister Jean Chrétien as leader of the Liberal Party in the 2003 leadership election. Martin advised the governor general to dissolve Parliament and trigger the 2004 federal election, where he led his Liberals to win a plurality of seats in the House of Commons of Canada, forming a minority government. In the 2006 federal election, Martin's Liberals lost power to the Conservative Party led by Stephen Harper. On February 6, 2006, Martin resigned as prime minister and was succeeded by Harper, who formed a minority government.
Background
The son of former senator and secretary of state for external affairs Paul Martin Sr., Martin was a lawyer from Ontario before he became president and the chief executive officer of Canada Steamship Lines in 1973. He held that position until his election as a member of Parliament for the Montreal riding of LaSalle—Émard in 1988. Martin ran for leader of the Liberal Party in 1990, losing to Jean Chrétien. Martin would become Chrétien's longtime rival for the leadership of the party, though was appointed his minister of finance after the Liberal victory in the 1993 federal election. Martin oversaw many changes in the financial structure of the Canadian government, and his policies had a direct effect on eliminating the country's chronic fiscal deficit by drastically cutting spending and reforming various programs including social services. In 2002, Martin resigned as finance minister when tensions with Chrétien reached their peak. Martin initially prepared to challenge Chrétien's leadership; however, Chrétien announced his intention of retiring, which triggered the November 2003 leadership election. Martin easily won the leadership and was sworn in as prime minister in December.
In the 2004 federal election, the Liberal Party retained power as a minority government, losing its majority due to the sponsorship scandal that began to develop in the late 1990s. Martin's government reached an agreement with Canada's provinces on increased funding for healthcare, negotiated the Atlantic Accord with the governments of Nova Scotia and Newfoundland and Labrador, signed the Kelowna Accord to improve the living conditions of indigenous peoples, and legalized same-sex marriage. In 2005, the opposition parties in the House of Commons passed a motion of no confidence contending that Martin's government was corrupt after the Gomery Commission released new details regarding the sponsorship scandal, which triggered the 2006 federal election. Martin and the Liberals were defeated by the newly unified Conservative Party led by Stephen Harper, ending over 12 years of Liberal rule.
Shortly after the defeat, Martin stepped down as Liberal leader and declined to seek re-election in 2008. Evaluations of Martin's prime ministership have been mixed, whereas his tenure as finance minister is viewed more favourably. Now seen as a global diplomat, Martin continues to contribute on the international arena through a variety of initiatives such as Incentives for Global Health, the not-for-profit behind the Health Impact Fund, where he serves as a member of the advisory board. He also sits as an advisor to Canada's Ecofiscal Commission.
Tenure (2003–2006)
Majority government and sponsorship controversy
On December 12, 2003, Martin was appointed by then-governor general Adrienne Clarkson as the 21st prime minister of Canada. When sworn in as prime minister, Martin held the flag that flew on Parliament Hill when the elder Martin died. Both father and son had served as Cabinet ministers and contested the Liberal leadership on multiple occasions; their attempts from 1948 to 1990 were unsuccessful. Martin's election as leader and becoming prime minister was described as fulfilling a family dream. Both also earned the honorific prefix The Right Honourable. One difference between them was that Paul Sr. was one of the most left-wing members of the party, while Paul Jr. is considered on the right-wing.
When he was sworn in, Martin's new cabinet retained only half the ministers from Chrétien's government, a noteworthy break in tradition from previous instances where a retiring prime minister handed over power to his successor as party leader. Martin and his supporters exercised control over the riding nomination process, breaking with the precedent to automatically sign the nomination papers of backbenchers and former ministers who wanted to run for reelection. While these were signs of open party infighting, this had little impact on Martin's record popularity, with several pundits suggesting that the cabinet change was meant to present a new government different from Chrétien's ten-year tenure. Martin declined to appoint leadership contestants John Manley and Sheila Copps to cabinet.
Martin and the Liberals were adversely affected by a report from Auditor General Sheila Fraser on February 9, 2004, indicating that sponsorship contracts designed to increase the federal government's status in Quebec resulted in little to no work done. Many of the agencies had Liberal ties, and roughly $100 million of the $250 million in program spending went missing. The scandal hurt Martin's popularity, especially in Quebec, where Bloc Québécois leader Gilles Duceppe even accused Martin of planning to widen the St. Lawrence seaway to benefit his own Canada Steamship Lines. The scandal also cast skepticism on Martin's recommendations for Cabinet appointments, prompting speculation Martin was simply ridding the government of Chrétien's supporters to distance the Liberals from the scandal. Martin acknowledged that there was political direction but denied involvement in, or knowledge of, the sponsorship contracts. He had a judicial inquiry called to investigate what came to be known as the Sponsorship Scandal, and nominated John Gomery to head it.
During his term, Martin appeared as himself in a fictional, comedic context in several programs, including an episode of the CTV sitcom Corner Gas in 2006, and also in the CBC mockumentary series Jimmy MacDonald's Canada in 2005.
2004 federal election
The Liberals were facing a new united Conservative Party led by Stephen Harper, while the Bloc Québécois and NDP were also buoyed by the Sponsorship Scandal. Martin advised Governor General Adrienne Clarkson to call an election for June 28, 2004.
The Liberals were also hampered by their inability to raise campaign money competitively after Chrétien passed a bill in 2003 that banned corporate donations, even though the Liberals had enjoyed by far the lion's share of this funding due to the then-divided opposition parties. It has been suggested that Chrétien, who had done nothing about election financing for his 10 years in office, could be seen as the idealist as he retired, while his rival and successor Martin would have the burden of having to fight an election under the strict new rules.
An unpopular provincial budget by Liberal premier Dalton McGuinty, who broke a pledge not to raise taxes, hurt the federal party's numbers in Ontario, as did a weak performance from Martin in the leaders' debates. The Conservatives soon took the lead, prompting some predictions of an imminent Harper government. The Liberals managed to narrow the gap and eventually regain momentum. Martin was successful in winning a plurality of seats to continue as the government, though they were now in a minority situation, the first since Joe Clark's tenure in 1979–80.
Minority government
The Martin government faced combined challenges from Quebec separatism and general hostility arising from the Sponsorship Scandal. The first test of the Liberal minority came following the Speech from the throne on October 5, 2004. The Bloc Québécois moved an amendment to the speech challenging the government over provincial jurisdiction. The Conservatives supported the amendment, but the NDP opposed it. Collapse of the government on the confidence vote was averted after Martin called Harper and reached a last-minute deal watering down the motion's wording. The government faced another hurdle when the Conservatives announced their own plan to move an amendment to the speech. Harper denied that the Tories intended to bring down the government. The fall of the government was averted for the second time after the Liberals reached a deal with the opposition parties. Don Boudria, the Liberals' Chrétien-era House leader, likened the brinkmanship in the first few weeks of the 38th Parliament to a game of Russian roulette.
Economic policy Martin invested heavily in Quebec, for example with the Bombardier Inc. C series project, which was later taken over by Airbus when the owner got into financial difficulties and called the Airbus A220. By June 2005 Martin gave the Federation of Canadian Municipalities a GST rebate and was about to supply to them a portion of the federal gasoline tax; the programme was called "New Deal for Cities and Communities". This was a left-over of his time as minister of finance, spurred by continued carping by academics, some of whom did not hesitate to note in 2004 that "[u]nlike the federal and provincial governments, municipalities cannot borrow for operating purposes; they can only do so for capital expenditures."
Healthcare funding
At the First Ministers' Meeting of September 13–15, 2004, Martin and the provincial premiers reached an agreement on increased funding for healthcare. This 10-year plan outlined $18 billion in increased transfers to the provinces over 6 years, notably through increases in the CHT: The CHT was to be increased by $3 billion in 2004-05 and $2 billion in 2005-06; A new CHT base set at $19 billion starting in 2005–06, greater than suggested in the Romanow Report; An escalation factor set at 6% starting in 2006–07.
Equalization
Martin also introduced changes to the equalization program, under which the Federal Government is constitutionally obligated to redistribute federal revenue to provinces having less ability to raise revenues through taxation than wealthier provinces. The goal is to ensure uniformity of public service provision across the nation. This was received well in "have-not" provinces, but Nova Scotia and Newfoundland and Labrador sought to retain income from natural resources on federal marine territory that would generally be taken, or 'clawed back', by the federal treasury in lieu of equalization payments. In the 2004 federal election campaign, Harper provided a written promise that Newfoundland and Labrador and Nova Scotia under a Conservative government would receive 100 percent of the revenue generated from their natural resources without an equalization clawback, a promise he reneged upon when elected Prime Minister. NDP leader Jack Layton followed suit soon after with a similar guarantee, and later Martin promised that under a Liberal government both provinces would receive the same deal, except only for oil resources. Negotiations over the agreement were harsh, with Newfoundland and Labrador Premier Danny Williams at one point ordering all Canadian flags removed from provincial government buildings in December 2004. The dispute was resolved when the federal government agreed to Martin's original campaign promise.
2005 budget
The 2005 federal budget was presented in the House of Commons on February 23, 2005. The budget included an array of new spending for the Armed Forces, the environment and a national child-care program.