By Gord McIntosh

(November 28 – 12:40 ET) – The federal Liberals were returned to a third straight majority government Monday and attention now turns to election promises and what to do with Finance Minister Paul Martin.

With about 41% of the popular vote, the Liberals took 173 seats in the House of Commons, 100 of them in Ontario, up from 155 in the 1997 election and 161 at dissolution of Parliament last month.

With the resounding victory, Prime Minister Jean Chretien is now free to pass into law pre-election tax cuts worth $45 million over five years. The cuts were unveiled in the October 18 impromptu mini-budget.

The right-wing Canadian Alliance, drawn from the former Reform party and disaffected Progessive Conservatives, improved its overall standing to 66 seats from 55 at dissolution.

But all but two of those seats were in the Alliance’s power base of the West. Alliance hopes to take 40 seats from the Liberal fortress of Ontario fizzled. The party’s share of the popular vote was 23%.

Another loser was the nationalist Bloc Quebecois with 14% of the popular vote and 37 seats, down from 44 at dissolution because of a surprise Liberal surge in Quebec that is widely credited to campaigning by Finance Minister Martin.

Chretien now must turn his attention to a new cabinet. Only one Liberal minister, Anne McClellan, was defeated Monday.

Shuffling Martin, who many believe is a popular heir apparent to Chretien, out of finance would likely cause a stir in financial markets. However, star candidate John McCallum, former chief economist at the Royal Bank, could be an acceptable alternative for the finance portfolio.

Martin, who was able to eliminate a chronic fiscal deficit thanks to Draconian cuts in the 1995 budget, may be up against pressures in cabinet from leadership rivals — and traditional social safety net Liberals — Allan Rock and Brian Tobin, former premier of Newfoundland.

Despite the resounding victory, speculation is continuing about Chretien’s future as Liberal leader and whether a succession will come in time for Martin, who is almost the same age as the prime minister.

Both the Progressive Conservatives and New Democratic Party were able to cling to official party status with 12 and 13 seats respectively. The Conservatives obtained 12% of the popular vote while the NDP took 8.5%.