After 22 years in office – and having dominated federal politics for six decades – Canada's Liberal Party found itself thrust into opposition at the election of 1957. Despite the Liberals' winning a plurality of the popular vote, Canada's first-past-the-post electoral system handed a larger seat share to John Diefenbaker's Progressive Conservatives (PCs), who went on to form a minority government. When Diefenbaker called a snap election the following year, the results were more devastating: the PC Party emerged with the largest parliamentary majority in Canadian history, reducing the Liberal caucus to 48 members in the 265-seat House of Commons.

Resounding defeat provoked a period of ideological conflict and soul-searching within the Liberal Party, prompting debate over the party's direction on a range of social and economic issues. On matters of social welfare, the Liberals had some rightful claim to a legacy of popular reform. Under the governments of William Lyon Mackenzie King, the party had laid the foundations of the modern Canadian welfare state, enacting means-tested old-age pensions in 1927, unemployment insurance in 1940, and family allowances in 1945. Under Mackenzie King's successor, Louis St. Laurent, universal pensions followed in 1951 and national hospital insurance in 1957. At the same time, over the course of the 1950s, St. Laurent's party had lost the initiative in the field of social policy, moving only slowly and grudgingly toward expansions of the welfare state and allowing itself to be outflanked by the opposition.