January 11, 2008 / 7:57 PM / 10 years ago

Canada won't change industry aid despite attacks

OTTAWA (Reuters) - Canada's minority Conservative government said on Friday it would not alter a C$1 billion plan to aid hard-hit one-industry communities despite fierce criticism that the package is little more than political blackmail.

Prime Minister Stephen Harper announced a trust fund on Thursday to help workers and said it would be part of the next budget, which is expected in early March. If the budget is not approved by Parliament, the aid money will not be spent.

Critics said Harper should make the aid available now and not use it as a tool in the next election campaign. If the budget is defeated, the government will fall immediately and an election called.

Finance Minister Jim Flaherty said there was nothing unusual about making the aid part of a budget.

"We are a democracy ... this is not a dictatorship. We must have parliamentary approval to spend money," he told reporters in Toronto. "It's a money item and we do money items in budget bills."

The trust fund is designed to help unemployed workers and communities -- many of them in rural areas.

In particular, forestry and automobile industries have been hit hard by the strong Canadian dollar and weakening demand in the United States, Canada's main trading partner.

Gilles Duceppe, leader of the separatist Bloc Quebecois, demanded on Friday that Parliament resume sitting next week to adopt the aid plan and accused Harper of playing with people's livelihoods.

"Above all, he has to abandon this brazen partisan blackmail and separate the adoption of the aid plan from the budgetary process," he told a news conference.

"You can't fight an election on the backs of people who are desperate ... it's unworthy of a prime minister," he said. Parliament is due to return on January 28.

Harper -- who won power in the January 2006 election -- said last month he expected the fallout from the weakening U.S. economy to hit Canada.

He will meet the premiers of Canada's 10 provinces and three territories for dinner in Ottawa on Friday for a conversation likely to be dominated by the economy.

The leaders of the two largest provinces -- Ontario and Quebec -- both said the plan was inadequate.

"I don't think forestry workers in Quebec deserve to be part of the election campaign. That's not what it's about. They need the help now," Quebec Premier Jean Charest told reporters late on Thursday.

The Federation of Canadian Municipalities backed the aid plan on Friday but said "much more remains to be done to ensure the health and survival of our rural communities."

($1=$1.02 Canadian)

Reporting by David Ljunggren; Editing by Peter Galloway

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