Trudeau to announce cabinet in two weeks

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Liberal Leader Justin Trudeau has named a former senior Ottawa bureaucrat, Peter Harder, to head his transition team, sources said Tuesday, as the incoming prime minister turns his attention to forming government after a winning decisive majority in Monday's election.

The Liberals won 184 of the country's 338 seats, capturing 39.5 per cent of the vote as the appetite for change drove the party from third place in Parliament to first with the largest increase in seats in an election in Canada's history.

At a news conference Tuesday, Mr. Trudeau, said he will announce his cabinet on Nov. 4. He  says he wants to name a cabinet as quickly as possible and that the group — while reflecting his promise of gender equity — will be smaller than has been the case in recent years.

Mr. Trudeau says he will stick to his campaign promises, although they will be introduced in a responsible manner.

For full coverage of Federal Election 2015

Conservative Party President John Walsh announced Tuesday morning that outgoing prime minister Stephen Harper is stepping down as party leader but will continue to sit as an MP. The party will select an interim leader as soon as possible while also launching the process for selecting a new Conservative Party leader.

"While the election result was not what Conservatives across Canada hoped and worked so hard for, we respect the outcome of our democratic process," said Mr. Walsh in a statement.

For Mr. Trudeau, the first priority will be forming a cabinet, and he will have Liberal MPs in every region of the country to choose from, including several veterans who served in cabinet in previous Liberal governments and some high-profile newcomers.

Mr. Trudeau appointed Mr. Harder to lead his transition team in the weeks before votes were cast as polls showed the Liberals were increasingly likely to form at least a minority government. Mr. Harder served as deputy minister in a number of departments, including Foreign Affairs and International Trade. He is now a corporate director; senior policy adviser at Dentons, an international law firm, and president of the Canada-China Business Council.

Mr. Harder left the Queen Elizabeth hotel in Montreal with Mr. Trudeau Tuesday morning.

Leaving on the campaign bus for Ottawa on Tuesday, Mr. Trudeau said he was "feeling good," adding that was "a lot of work ahead."

Mr. Trudeau's team has been preparing the transition for months. Late last year, the Liberal leader's senior adviser, Gerald Butts, sat down with David Zussman, a public policy expert who literally wrote the book on transitions, which is called "Off and Running."

Mr. Butts had gone through a transition when he was a senior aide to Dalton McGuinty in Ontario in 2003, but he called Mr. Zussman to discuss the process in Ottawa. Liberal sources said Mr. Zussman is not part of the formal transition team.

One of the issues Mr. Trudeau and his team will need to consider is how quickly to recall Parliament. It is not known yet whether Parliament will be called back before Christmas. Liberals say it could be a challenge to staff the offices of MPs and cabinet ministers in time for the House of Commons to sit before then.

In an e-mail exchange with the Globe last week before his new position was known, Mr. Harder indicated that Parliament has approved enough funding for the government to operate until the end of the fiscal year that ends March 31. That means there is not a need for Parliament to sit quickly in order to pass a funding or supply bill. However, the new government may want to have a short sitting before Christmas for other reasons. In his victory speech in Montreal, Mr. Trudeau sent out a message of unity to Canadians, continuing the positive approach he adopted during the campaign. The Liberals operated on the principle that "you can appeal to the better angels of our nature – and you can win doing it," he said.

He stayed away from specific promises but vowed to lead a more open, accountable and inclusive government, a clear knock against Mr. Harper, who was widely criticized for centralizing power in Ottawa and treating opponents as enemies.

The incoming prime minister faces some pressing issues that require immediate attention. He must decide whether Canada will ratify the Trans-Pacific Partnership, the 12-country trade deal that could mean major changes for the country's supply-managed agricultural sector, auto industry and digital economy. During the campaign, Mr. Trudeau said he needed to see the text of the agreement before deciding on a position. His decision may be helped by the fact U.S. President Barack Obama may not have the support needed to win approval in the U.S. Congress.

He also has a heavy schedule of travel in November, including a trip to the Group of 20 meeting in Turkey, where Middle East conflict will be prominent on the agenda. Mr. Trudeau has promised to end Canada's combat participation in the air war against the Islamic State in Syria and Iraq, and will have to explain that change to NATO partners, including the United States.

He will also likely attend the United Nations climate summit in Paris, which starts at the end of November, and has promised to work with the provincial premiers to send a message to the world that Canada fully embraces the battle against global warming and will have a more ambitious strategy. However, Mr. Trudeau said Ottawa will not set any new targets until he has had a chance to meet with the premiers after the UN summit – even though environmental groups are pressing him to meet with the premiers before Paris to bring a new Canadian offer to the table.

Market reaction to the results was muted with very little change overnight in the value of the Canadian dollar. Bay Street analysts appeared to welcome the four years of political stability that comes with a majority mandate.

Analysts said the Liberal plan to run short term deficits in order to boost spending on infrastructure could produce small gains in terms of economic growth, but economists cautioned that whether or not that occurs will depend on the details and timing of how the new government implements its election platform.

The Liberal focus on infrastructure played well in Canada's cities, as the Liberals expanded their support in Montreal, squeezed the NDP out of Toronto and pushed back the Conservatives in many suburban ridings outside of Toronto and Vancouver.

The urban gains were perhaps most remarkable in British Columbia. The Liberals increased their seat count in B.C. from two to 17.

"I think we had a platform that spoke directly to cities," said Liberal Adam Vaughan, who was elected Monday in Spadina-Fort York. "At the local political level, everybody knows that cities are carrying a massive infrastructure deficit that impacts the quality of life whether you're in Vancouver, Montreal, Halifax or St. John's. And it's certainly true in Toronto."

Mr. Vaughan, who helped craft the party's infrastructure plan, said the program was designed to get federal money to Canadian municipalities quickly.

TD Bank estimated that the Liberal spending plan could boost annual economic growth by up to 0.1 and 0.3 percentage points in 2016 and 2017 respectively.

Doug Porter, chief economist for the Bank of Montreal, is more bullish on the potential economic boost of infrastructure spending.

"At best, the stimulus would lift GDP growth by a bit more than 0.5 per cent next year, so we would be leaning toward annual growth of closer to 2.5 per cent in 2016, versus our current call of just over 2 per cent… assuming the proposed measures are fully implemented in the next budget," said Mr. Porter in a research note.

As Mr. Trudeau leads the transition to a Liberal government, the Conservatives and New Democrats will begin the soul-searching over what went wrong in the 2015 campaign and how they can turn their fortunes around. After holding power for almost 10 years, Mr. Harper's Conservatives dropped to Official Opposition status with 99 seats and 32 per cent of the popular vote – down from 39 per cent of the popular vote four years ago – though the party held its core support throughout this campaign.

Voter turnout was 68 per cent, one of the highest measures since 1993, according to preliminary numbers from Elections Canada.

With files from Canadian Press