Last January, the grits were starting to slip in the polls after slightly more than a month of election campaigning as Canadians began to adjust to the idea that the Conservatives could actually run the country.

But, today, it is the Tories who are slipping in the polls after the Liberals somehow managed to turn a lacklustre and accident-prone leadership race into the most exciting political media event in years.

With the Liberals hitting 40% in the polls — the threshold for a majority government — Canadians are thinking what would have been unthinkable a few months ago.

No doubt this surge of Liberal red in the polls is at least partially attributable to the traditional post-convention bounce that follows a change in political leadership. Yet, it is also clear that Canadians haven’t developed a bond with the Harper government, even though they may still be angry at the Liberals. As a result, Canadians may default back to the Liberals as Canada’s natural governing party.

The Harper government recently surpassed the 279 days the Clark government held power in 1979. However, current polls are showing the same patterns that they did back then. In the coming months, the No. 1 question at Liberal Party headquarters will be whether this lead will be solid enough to force the governing party into a vote of confidence in the House of Commons.

Ironically, Bay Street probably won’t be affected, regardless of whom forms the next government, simply because financial markets aren’t getting much attention on Parliament Hill.

In the Liberal years of power, both the Chr»tien and Martin governments had close links with Bay Street because of those two Liberal prime ministers’ career histories and because the Liberals tied their electoral fortunes to economic growth among the G-7 countries.

It will be many years before Bay Street enjoys the kind of access to Parliament Hill it had during the Chr»tien and Martin governments.

The current government, rather, owes much of its success to right-wing populism. It seized power by catering to bread-and-butter Main Street issues, a development that caught financial markets by surprise.

About the last thing the current government wants is to be seen being close to Bay Street.

This is why the Harper government will occasionally make noises about productivity or Canada’s competitiveness, then revert to Main Street priorities such as law and order, the GST or cleaning up Parliament Hill.

The Harper government also appears to have made a serious strategic blunder that will keep it away from economic and investment issues. It has been so eager to bury the Kyoto protocol commitments made by the Liberals that it has managed to get the environment back on the public radar screen as a priority issue, which is something Liberal leader St»phane Dion has been able to exploit.

This is why Harper rushed out to announce a ban on harzardous chemicals in a bid to compete with Dion’s environmental bona fides.

Meanwhile, Dion’s underdog leadership campaign machine had very few links with Bay Street, with the exception perhaps of the support of Doug Peters, the former TD Bank Financial Group economist and junior finance minister in the early Chr»tien years.

Had either Bob Rae or Michael Ignatieff won the leadership, as most people expected, Bay Street eventually would have reclaimed a connection with the Liberals. But neither man did, and Bay Street now finds itself affected by a second surprise development in less than a year.

It is not in the national interest for Ca-nada’s investment community to be disenfranchised in the corridors of power. However, until the investment community can re-establish its place as a stakeholder on Parliament Hill, disenfranchisement will continue to be the reality.

Part of Bay Street’s invisibility in Ottawa can be attributed to the Parliamentary press gallery. A case in point: in mid-December, the House of Commons’ finance committee released its annual pre-budget report with 43 recommendations, including a call for a national securities regulator by mid-2007. In the past, the finance committee enjoyed coverage that rivalled the coverage given to party leaders. This year, however, the committee’s work was largely ignored by the media.

The current media climate in Ottawa certainly gives short shrift to policy issues. But, by sheer critical mass, the media’s agenda will be determined by the government’s agenda.

@page_break@In addition, the Conservative government has conditioned the media and voters to believe that nothing of importance happens outside the Prime Minister’s Office.

That leaves Bank of Canada Governor David Dodge as the lone voice in Ottawa to speak up for healthy financial markets. And the government can’t afford to respond to anything Dodge says because of the risk that it will either look like it is taking orders from the central bank or is on a collision course with it.

For now, one thing is clear: Bay Street should be thinking hard about how to get back in the game. IE