Morning Update: Does a by-election loss spell disaster for the Liberals?

Good morning. A Liberal stronghold crumbles in Toronto and could be the prelude to a total wipeout next year – more on that below, along with a brutal crackdown outside Kenya’s Parliament and a B.C. town’s rise from the ashes. But first:

Today’s headlines

• Inflation picks up, raising doubts that the Bank of Canada will cut interest rates next month
• Israel’s high court rules that the military must draft ultra-Orthodox men for service
• Calgary’s mayor pleads with residents to limit water after consumption hits a 10-day peak

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Politics

Behind the Toronto by-election shocker

Sure, Justin Trudeau’s Liberals are plenty unpopular. But unpopular enough that they’d fumble a midtown Toronto riding safely held for 30 years? Even the Conservatives were unconvinced that Don Stewart could eke out a win in the Toronto-St. Paul’s by-election, after Carolyn Bennett retired last year.

Yet that’s exactly what Stewart did, triumphing over the Liberals’ Leslie Church by just 590 votes when polls finished reporting around 5 a.m. yesterday. (The tally took till the wee hours because 76 of the 84 registered candidates ran to protest Canada’s first-past-the-post voting system. The ballot was a metre long.)

At an ocean-conservation event in Vancouver hours after the Toronto defeat, a sombre Trudeau said it was clear he and his entire team had much more work to do. But will it make a lick of difference? The Globe’s John Ibbitson breaks down this bellwether by-election.

We hear a lot about how this riding has been red for decades – but who are the Toronto-St. Paul’s voters the Liberals failed to win over, and why is that worrying?

This midtown Toronto riding is affluent and socially progressive. Even when the Tories held it in the 1980s, MP Barbara McDougall was emphatically on the progressive side of the party. Since then, the riding has always been safely Liberal. For voters in a riding like St. Paul’s to reject Justin Trudeau is a stinging rebuke.

Was this by-election result a protest vote? Or did the Conservatives have something to offer Toronto-St. Paul’s?

Absolutely it was a protest vote. But we shouldn’t undersell the Conservatives. Voters are clearly unhappy over little or no economic growth, high interest rates, inflation and unaffordable housing. When voters are concerned about economic issues, they tend to vote Conservative – even in midtown Toronto, it seems. Pierre Poilievre won this by-election as much as Justin Trudeau lost it.

So what lessons, then, should the Conservatives take into the federal election we expect next year?

The results present the Conservatives with something of a conundrum. Up until now, their path to victory rested on holding their base in Western Canada and in rural Ontario, and then challenging the Liberals in the suburban ridings of Greater Toronto and Vancouver. But this result suggests there may not be a safe Liberal seat in the land. So should the Conservatives continue to focus on swingable suburban ridings, or spread their resources more thinly in hopes of gains in the big urban cores? Get it wrong, and they could waste resources chasing seats that turn out to be unwinnable. That said, for the Tories, this is a pleasant problem to have.

Speaking of next year: Liberal strategist Scott Reid said “the status quo risks carrying the party to a historical humbling” and that the unmistakable message for the Prime Minister is “change or leave.” But a recent Angus Reid poll found that every alternative to Trudeau just made respondents less likely to vote Liberal. So now what?

Remember this: The Liberals were moribund – broke, dispirited, in third place in the House of Commons – when Trudeau came to their rescue in 2013. They have to decide now whether to stick with him, hoping he can salvage something for a new leader to work with after the next federal election, or change leaders, in hopes of renewal. Either way, they know the worst-case scenario could see the party facing what it faced after the 2011 election: risk of extinction.

Is there any bit of history the Liberals can take comfort in?

I can’t think of a single example in Canadian history of a federal party so unpopular at this point in its mandate storming back to win the next election. For the Liberals, their best hope now lies in the power of prayer.

The Shot

Tear gas and water cannons, then live ammunition

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Fewer than 24 hours after the U.S. officially declared Kenya its closest African ally, police in Nairobi opened fire on a crowd protesting new taxes during a cost-of-living crisis. Read more here.

The Wrap

What else we’re following

At home: Three years ago, wildfire destroyed 90 per cent of Lytton, B.C. Politicians rushed in with promises of help and funding, but much of the village is still waiting to go home.

Abroad: As violence escalates between Israel and Hezbollah, Foreign Affairs Minister Mélanie Joly is urging Canadians to get out of Lebanon while they can.

At school: Book bans in public-school libraries have skyrocketed across the United States, owing to co-ordinated efforts from large conservative groups. Librarians are leading the anti-censorship crusade.

First person: In the mid-1980s, when she was a 19-year-old co-op student, Jane Boon had sex with Frank Stronach. She’s wrestled with its meaning ever since.