Canada's Liberals seek to buy time with deal(spending up, tax cuts gone)

Reuters ^ | 04/27/05 | Reuters

[Pikamax]

Canada's Liberals seek to buy time with deal 27 Apr 2005 00:50:44 GMT

Source: Reuters

(New throughout with Martin, Harper, Chamber of Commerce)

By David Ljunggren and Randall Palmer

OTTAWA, April 26 (Reuters) - Canada's beleaguered Liberal minority government, scrambling to buy more time in office, bowed to demands on Tuesday from a leftist party to boost spending and reduce tax cuts in return for backing the government's budget.

The deal in principle between Prime Minister Paul Martin -- badly hit by fallout from a Liberal kickbacks scandal -- and the small New Democratic Party means the government at least has a chance of surviving a vote on the budget in Parliament.

Under the terms of the agreement, the Liberals will shift to the left by reducing tax cuts for large corporations and agree to dip into C$9 billion ($7.2 billion) of contingency reserves over the next two years to boost social spending and foreign aid by C$4.6 billion.

"The purpose of this deal is to make Parliament work. When we took office we said this is a minority Parliament and we want to make it work," said Martin, whose party lost its majority in the House of Commons in an election last June.

But even with New Democratic support, it was not certain Martin would have enough votes to stave off defeat at the hands of the Conservatives and the separatist Bloc Quebecois.

Those two parties look set to try to topple Martin next month and force a June 27 election, either by defeating the budget or by passing a non-confidence motion over alleged Liberal corruption.

"My first response is that Mr. Martin and Mr. Layton think C$4.6 billion of taxpayers' money is the price to make corruption go away, but I wonder if the taxpayers of Canada are going to think the same thing," Harper said during a campaign-style tour of vote-rich Ontario.

Layton said he would now not back a motion of non-confidence in the government at least until the budget had been approved. Parliament is due to start discussing the budget next month, but it was not clear when a vote would be held.

"I know people will say Mr. Layton really likes corruption (by not supporting a non-confidence motion)," Layton told a news conference. "That's absolutely ridiculous."

BUSINESS CALLS DEAL "EGREGIOUS"

Canadian business immediately panned the budget deal. "It is an egregious move on the part of the government to take promised corporate tax relief out of the budget in the hopes of getting the budget passed," said Canadian Chamber of Commerce President Nancy Hughes Anthony.

The problem for Martin is that even if he clinches the deal with the New Democrats, the two parties combined would have only 151 seats in the 308-seat elected House of Commons. One of those, the Liberal speaker, votes only to break a tie.

This means the fate of the government would lie in the hands of three independent legislators, two of whom are leaning toward voting against the government.

The Conservatives and the separatist Bloc Quebecois have 153 seats between them. There is one vacant seat.

An Ipsos-Reid poll for the CanWest newspapers on Tuesday showed that after Martin pleaded with Canadians for more time in office last week, his party narrowed the gap with the Conservatives in popular support to just three percentage points. Another poll showed a five-point Conservative lead.

The figures suggest that if an election were held now, the result would either be deadlock, or the Liberals would be sent packing after 11-1/2 years in power and replaced by a fragile Conservative minority government.

Martin said last week he would call an election once an inquiry into the cash-for-favors scandal finishes its work in December. The Conservatives dismissed the offer.

The probe has heard allegations that Liberals demanded kickbacks in exchange for lucrative government contracts. (Additional reporting by Luke McCann) ($1=$1.25 Canadian)

[GreenLanternCorps]

Of the three independents:

1 leans conservative - Will vote no-confidence

1 is an ex-Grit (Liberal) who quit over the scandal - will vote no-confidence

1 is and ex-Grit cabinet menber who got booted out of the party, but she's a lefty - ?

I call it 155 to 152 an election in June. I would love to be there to see Her Excellency, The Governor-General (lefty Adrienne Clarkson) ask Stephen Harper to form the next Government. The look on her face will be priceless!

[Archon of the East]

Is it just me or is a move to the left of an already socialist Government asking for more corruption? Give the Govt more money? Has the whole world gone completely insane? Maybe I just don't get it.

[jocon307]

And how exactly to they think raising taxes is going to help them with the voters?