After a series of stumbles and setbacks the Liberals have an ambitious but risky plan to break their slump and get back on track

Serving in Justin Trudeau’s cabinet looked, at the outset, quite literally like a walk in the park. Images of the lucky chosen strolling in all their gender-balanced, ethnically diverse glory up Rideau Hall’s tree-lined lane to be sworn in on Nov. 4, 2015, has lasted as the iconic, bucolic image of this Liberal government’s beginnings.

There was no dappled sunshine, though, on the podium at Stouffville, Ont., just under two years later, when Trudeau stood for a news conference to personally take charge of damage control over his government’s botched bid to reform small-business taxes. All he got was the cold light needed by the TV crews assembled to capture what turned out to be this Prime Minister at his most brittle.

Those testy exchanges are by now the stuff of political lore. First a reporter asked politely to put some questions to Finance Minister Bill Morneau, who was standing a few strides behind his boss. “I’ll take them,” Trudeau said. Later, when another journalist again dared suggest questioning Morneau, Trudeau crossly relented—with a condition. “Yes, but you have to ask a question of me first,” he said, “because you get a chance to talk to the Prime Minister.”

When Trudeau’s smile is working, his eyes crinkle. In Stouffville, they only narrowed. His irritability—written on his face and audible in his icy tone—seemed to confirm a conventional wisdom that was by then already gelling back in Ottawa: the dreaded mid-term malaise was upon the Liberals.

But is breaking out of the slump only a matter of putting Morneau’s woes behind them? He had exposed himself—and subjected the government—to a rare combination punch of policy turmoil and personal controversy. He first failed to calm the entirely predictable blowback from professionals, farmers and entrepreneurs to his small-business tax proposals. Then stories broke about his earlier decisions not to properly shield himself—a rich former Bay Street executive trying his hand at politics—from conflicts of interest.

As serious as it is to have a finance minister so badly wounded, however, some Liberal MPs and government operatives privately argue that Morneau’s problems have been contained. He adjusted the tax reform package to partly placate critics, and took serious, if belated, steps to separate his personal wealth from his political life. The two years left before a fall 2019 election offer ample time to recover.

But that’s assuming Morneau’s miserable fall isn’t part of an ongoing pattern. After all, the Liberals’ 2017 began with Trudeau dropping Maryam Monsef from Democratic Reform and into Status of Women, on the way to breaking his promise to change the way Canadians elect MPs. Spring brought house leader Bardish Chagger bowing to Tory and NDP anger by dumping plans to reform how Parliament functions.

And autumn has featured, along with Morneau’s troubles, Heritage Minister Melanie Joly being scorched by a firestorm—hottest by far in Quebec, her home province—sparked by her deal with Netﬂix, which extracts $500 million over five years for Canadian productions from the internet streaming giant, but imposes none of the taxes and regulations her critics demand.

All this as polls show Andrew Scheer’s Conservatives running close behind Trudeau’s previously far-ahead Liberals. In an Insights West poll conducted in late October for Maclean’s, the Liberals had 35 per cent support, the Conservatives 33 per cent and the New Democratic Party 20 per cent. In the 2015 election, the Liberals won with 39.5 per cent of the vote, and polls tracked their support soaring to the high 40s a year later. The government’s clearest reaction to its sagging fortunes came in Morneau’s fall economic statement. Gone were the lofty, long-term innovation themes of last fall’s version of the annual update. In their place, Morneau retreated to basics. His headline: faster indexation of the Canada Child Benefit—the popular payment to parents unveiled in the Liberals’ inaugural 2016 budget—which translates into an extra $200 a year for a typical family with two kids, starting next summer.

If it looked like the chastened Trudeau crew was shifting to playing it safe, though, that interpretation was premature. In interviews in the days after Morneau’s Oct. 24 economic statement, several key cabinet ministers and well-placed government officials all insisted the brakes haven’t been applied to a string of ambitious and inherently risky policy unveilings, planned for the coming months and beyond.

A landmark national housing strategy, deep criminal justice reforms and simultaneous overhauls of laws covering broadcasting, telecommunications and copyright all remain in train. The federal-provincial deals required to launch a decade-long, multibillion-dollar infrastructure spree must be negotiated and ﬁnalized in the next few months. Marijuana legalization and the implementation of coast-to-coast carbon pricing are both slated to be finalized in 2018.

By any standard, that agenda is dauntingly formidable. Making it happen would cement the Trudeau government’s claim to being transformative. But more setbacks could make this season’s problems look, a couple of years from now, less like faltering than foreshadowing.

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Liberal MPs shaken by recent setbacks have few veterans—in a cabinet packed with political rookies—to look to for reassurance that they can pull it off. But Public Safety Minister Ralph Goodale, 68, first elected under Justin Trudeau’s father, Pierre Trudeau, in 1974, has seen it all. It shows. Goodale’s trouble-free delivery of national security reforms last spring stood out as textbook policy execution. He shrugs off a “mid-term dip” as routine. “After an election there’s always a burst of enthusiasm and popularity,” Goodale says, “and we enjoyed a long period of that.”

In fact, the notion that a drop around the halfway point in a four-year term is only natural might be a case of Canadian discourse being clouded by American experience. History shows that a serving U.S. president’s party usually loses ground in mid-term congressional elections. In Canada, however, the pattern isn’t nearly as clear. Pollster Frank Graves of Ekos Research points out that Jean Chrétien’s 1993 win wasn’t followed by any “post-election swoon,” while Paul Martin after 2004 and Stephen Harper after 2011 suffered declines which, far from being short-term slumps, proved irreversible.

Still, after the 2015 election, the ebullience felt unsustainably fizzy. Goodale chalks it up to the contrast between Trudeau’s youth and flair and what he calls Harper’s “grinding mediocrity.”

Less-partisan voices might call the previous PM’s approach “incremental.” But Goodale’s point is more than sniping. Trudeau’s 2015 platform was jammed with more than 200 promises. Harper’s first winning campaign in 2006 focused on just five top priorities, and he thereafter kept his policy agenda tightly restrained.

Goodale sees two factors affording Trudeau room to be far less risk-averse. First is a buoyant economy, posting growth about twice the average of the Harper years. Second, he says Canadians who see themselves better reflected in a cabinet with as many women as men, and more visible minority members, will be more inclined to “cut the government some slack.”

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With so many hefty policy files in play at once, the Trudeau government’s method can appear more scattergun than strategic. Top officials insist it isn’t so. One way to make sense of what’s happened to date, for instance, is to take into account the cycle of provincial elections.

Trudeau was lucky to win power at a time when a raft of co-operative, progressive premiers also held office. But top Liberals realized that provincial elections could change that in a hurry. Indeed, elections slated for 2018 endanger the Liberal regimes in Quebec and Ontario, and Alberta NDP Premier Rachel Notley, who has worked closely with Ottawa, must face voters in 2019.

Looking years out at the election calendar, Trudeau’s strategists pushed early for federal-provincial initiatives like Canada Pension Plan reform, a health accord and the framework for fighting climate change. That left more of the work that’s solely federal jurisdiction for the mandate’s second half.

But fed-prov friction hasn’t been cancelled out of the equation. Environment Minister Catherine McKenna’s “pan-Canadian framework on climate change” remains to be implemented next year, with Saskatchewan still offside. While Trudeau presses ahead for legalization of marijuana by next summer, some provinces say they need more time to plan for heavy lifting on regulating and policing legal pot sales.

Rarely in the news lately is the federal government’s massive infrastructure plan, even though, back in the 2015 campaign, it loomed large. Infrastructure Minister Amarjeet Sohi, a low-profile minister with a high-impact portfolio, must hammer out huge bilateral deals with all the provinces for their slices of $33 billion in federal funds for ribbon-cutting-worthy projects like big public transit expansions.

Ottawa wants accountability from the provinces, and delicate talks are going on behind the scenes. “It’s hard to find the right balance between being able to report on progress of projects and not overburdening them,” says one federal official. The stakes are enormous, and jostling for political credit is inevitable.

Traditional infrastructure is at the core of federal policy to keep the economy humming. Other ideas are less certain. Morneau has yet to launch his much-discussed Canada Infrastructure Bank, designed to use $15 billion in federal money to lure much more in private investment into profit-making projects like toll roads and power grids.

By next spring, Innovation Minister Navdeep Bains is slated to announce five “superclusters”—agglomerations of cutting-edge companies, universities and other partners—that will share $950 million in federal support. Liberal strategists are betting that thrusts like infrastructure and superclusters will shore up Trudeau’s rhetoric about middle-class prosperity being his government’s preoccupation.

Some other priorities might have serious economic implications, but they are much harder to package as part of a prosperity message—notably the stubborn social and economic problems plaguing Indigenous people.

In a late-summer cabinet shuffle, Trudeau moved Jane Philpott, who had earned solid reviews during her stint as health minister, into a newly created role as Indigenous services minister. Her assignment: deliver measurable progress on tangible issues like water, housing, education and health on First Nations reserves.

Philpott, 56, stands out as a steady hand among the cabinet’s political neophytes. But her new portfolio will test her; take housing, for example. In an interview, she touts the nearly 9,000 homes newly built in First Nations communities under the Trudeau government as an accomplishment. On the other hand, she also estimates 40,000 new houses are needed, and another 40,000 cry out for serious repairs and renovations. What counts as enough?

And housing is arguably easier to post progress on than, say, education and social services. Feelings run high, for example, around a key Canadian Human Rights Tribunal ruling last year, which found that the federal government discriminates against First Nations children by underfunding family services.

The government has drawn bitter criticism for going to federal court for clarification of that ruling’s implications, facing off against advocates for First Nations children. It’s not where Philpott wants to be. “I’m talking to every one of those groups and saying let’s stop solving this problem by negotiating through lawyers,” she says. “Let’s actually talk face to face about what needs to be done.”

It’s far from clear that she can overcome ingrained suspicions and decades of pent-up disappointment. Grand Chief Arlen Dumas, head of the Assembly of Manitoba Chiefs, recently met with Philpott when she visited the province for a look at innovations in First Nations schools and housing. “She has a good way about her,” Dumas says. “She seems eager and ambitious.”

And yet Dumas is impatient with the pace of progress, and angry about some signals coming from Ottawa. In a recent speech on Indigenous issues at the United Nations, for instance, Trudeau said to make progress First Nations must take “a hard look at how they define and govern themselves as nations and governments, and how they seek to relate to other orders of government.” Dumas bristles at that advice. “We have the wherewithal to administer and run all these programs,” he says, mentioning education, child welfare, housing and water. “The problem is they are all underfunded.”

The issues Philpott confronts can seem overwhelming, but she doesn’t have to solve them all by 2019. She points to a few issues on which there’s a “clear path,” like stamping out tuberculosis in Inuit communities, which she says is a matter of putting in place “the X-ray machines and the human resources and the drugs and the housing.”

Dramatically reducing the number of reserves on long-term boil-water advisories, which now stands at 71, on the way to fulfilling the Liberal campaign promise to make sure all have safe water within five years, might be the most closely watched barometer of Philpott’s effectiveness. It’s hardly clear sailing: under the Liberals, 26 boil-water warnings have been lifted—but 19 added.

On the more intractable issues of Indigenous poverty, addiction, bad schools and substandard services, she looks out past the next election. “There’s work that we know we can’t do in two years,” she says. “So, to a certain extent, you’re also setting the stage and figuring out how you can set things up so you’ll be well-prepared to take the next steps.”

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Along with Philpott, government insiders tend to list Foreign Minister Chrystia Freeland and Environment Minister Catherine McKenna among Trudeau’s more sure-footed rookies.

Freeland spearheads arguably the most consequential file of all—the high-stakes NAFTA renegotiation foisted on Canada and Mexico by Donald Trump—yet the risks to her personal reputation look minimal. Who could blame her if Trump’s protectionist nativism proves impossible to overcome at the bargaining table? Public opinion is with this government when it heads abroad: Insights West’s poll found that a staggering 67 per cent of Canadians rate the Liberals as “good” or “very good” at representing Canada internationally. (By comparison, approval of their handling of First Nations, marijuana and climate change each stand at around 50 per cent.)

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McKenna, too, has put herself in an enviable position on her top file, climate change. McGill University economics professor Chris Ragan, who also chairs Canada’s Ecofiscal Commission, a group of economists who are trying to promote solutions to environmental challenges that make economic sense, credits her with having “dealt very deftly with the fed-prov issues.”

The deal she hammered out with most of the provinces late last year urges them to enact carbon pricing, but promises that even if Ottawa has to step in to impose a tax, they’ll get to keep the revenues. “The pan-Canadian framework,” Ragan says, “is a pretty impressive start.”

The other half of the environment-energy nexus is a more immediate worry. Natural Resources Minister Jim Carr presides over the contentious pipeline policy file. He insists TransCanada’s recent decision to abandon its Energy East pipeline plan was the result of market conditions, not overregulation.

Still, the demise of Energy East left oil-producing Alberta and Saskatchewan bruised, raising the political stakes as Carr promises, sometime in the coming months, to overhaul the Canadian Environmental Assessment Act, 2012, and the National Energy Board Act, along with the Fisheries Act and the Navigation Protection Act.

The loudest responses to this wide-ranging reform are easy enough to predict even before any details are known. Environmentalists will see a carte blanche handed to planet-destroying extraction industries; self-styled economic realists will see those same industries shackled. “There are some people who want to leave the oil in the ground; there are other people who want to take it out now with minimum regulation,” Carr says, adding the government can only trust that there’s “a quieter group in the middle.”

In a less-activist government, Carr’s legislative chore might easily rank as the toughest. In Trudeau’s, there’s lots of competition. Before the end of this year, Social Development Minister Jean-Yves Duclos is slated to table a national housing strategy, the first bid by Ottawa to take a lead in the area—mostly dominated by provinces and cities—in decades. (Last spring, Morneau’s budget committed $11.2 billion to affordable housing over 10 years.)

Justice Minister Jody Wilson-Raybould has just wrapped up a series of round tables, held in every province, in a major review of criminal justice law, and is expected to begin rolling out legislation and policy in the next few months. “It is massive,” says one government official familiar with the closely held details.

Also in the policy pipeline is Joly’s bid for redemption after her Netflix announcement left her looking isolated and besieged. Last spring’s federal budget, under the heading “Canada’s Digital Future,” promised reviews of the key laws covering the entertainment and information industries—the Broadcasting Act, Telecommunications Act and Copyright Act—all with a focus on “the role of Canadian content in an increasingly digital world.”

Her critics are wary, but she has allies, too. “We’re not obsessing on her announcements on internet television services,” says Tim Southam, a veteran movie and TV director and president of the Directors Guild of Canada. “We are encouraged by this minister’s consistent focus on the content creators—that’s us, directors, writers and actors.”

Culture and crime, housing and pipelines, infrastructure and Indigenous issues. These are just the issues the Liberals have chosen to tackle. Trump couldn’t have been foreseen, and he demands constant top-level attention from Trudeau’s inner circle. Beyond NAFTA, for instance, some sort of policy adjustment in response to refugees fleeing Trump’s America across lonely stretches of the Canadian border is expected as early as December.

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An optimist might see the crowded political and policy landscape as offering ample opportunity for Liberals to put their mid-mandate rough patch behind them. The more pessimistic view is that pitfalls abound for a government that has revealed itself as being fully capable of stepping into them.

Morneau’s mess reminded Liberals how metastasizing bad news can overshadow everything else for weeks on end. Even as controversy fades, impressions linger. Morneau failed to disclose ownership of the corporation that holds his French villa, which in turn gave opposition MPs a chance to revisit Trudeau’s ill-advised Christmas 2016 trip to the Aga Khan’s private Bahamian island—images of elite leisure that hardly reinforce the PM’s mantra about attending to “the middle class and those working hard to join it.”

The leaked documents on offshore tax shelters dubbed the Paradise Papers linked Claridge Inc., a Montréal investment company headed by top Liberal fundraiser Stephen Bronfman, to a Cayman Islands-based trust. Bronfman said he “has never funded nor used offshore trusts,” and Trudeau declared himself “satisfied with those assurances.” Fairly or not, having to field questions about tax-haven investment vehicles favoured by the very rich shunts the Prime Minister off his preferred message track.

How do Canadians tend to size up the situation? Graves sees the Liberals as still riding a popular current of yearning for something unlike what Harper gave the country for a decade. “This government was elected to provide a clear progressive alternative to a government people had gotten fed up with,” he says.

Insights West’s poll for Maclean’s—conducted just as Morneau’s problems were dominating the news late last month—found that 39 per cent of Canadians expect the Liberals to lose steam and accomplish less in the next two years—but 47 per cent still anticipate that the Trudeau government will pick up momentum and achieve more.

That well of positive feeling, holding up even with the Liberals lately looking so eminently fallible, lends support to Goodale’s seasoned outlook. “Will we get to the perfect finish line in one term? No,” cabinet’s old hand says. “But I think we will get to a point, and are already well down that course, where people will say, ‘We like this direction, we like the progress so far, we’ve got to hold their feet to the fire.’ ”

Correction: An earlier version of this story incorrectly stated the impact of Canada Child Benefit changes. Maclean’s regrets the error.

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