Opposition coalition downplays stimulus talk

Wed Dec 3, 2008 1:37pm EST
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OTTAWA (Reuters) - The opposition coalition seeking to replace the minority Conservative government may deliver a fiscal stimulus package worth substantially less than C$30 billion, senior legislators said on Wednesday.

The three opposition parties -- the Liberals, the New Democratic Party, and the separatist Bloc Quebecois -- have joined forces and are threatening to defeat Prime Minister Stephen Harper in Parliament at the first opportunity over his handling of the economy. Harper may seek a temporary suspension of Parliament to try to prevent the coalition from taking power.

"It will be less than C$30 billion ... it could be a lot less than that," John McCallum, a Liberal member of Parliament and economic advisor to the party leadership, said of the coalition's proposed stimulus package.

"It would be irresponsible and fiscally imprudent for a future government to give any figure until we can see what is the state of the books," he said.

McCallum's comments appeared to contradict those by other Liberal politicians who cited the C$30 billion figure -- roughly the equivalent of 2 percent of gross domestic product. Media reports had also reported that number, but McCallum has repeatedly denied those reports this week.

Investors are eager for news of the size and timing of any fiscal stimulus package, whether it be from a Conservative or an eventual centre-left coalition government.

Fiscal stimulus aims to help the economy recover faster from recession and could affect the Canadian dollar and bond markets.

Finance Minister Jim Flaherty has said Ottawa plans to double infrastructure spending next year to C$6 billion and has made a vague promise of additional spending if the economy worsens more than expected.

He said on Tuesday a C$30 billion spending plan would plunge the country into permanent deficit.   Continued...

<p>Liberal leader Stephane Dion (C) shakes hands with Bloc Quebecois leader Gilles Duceppe (R) as New Democratic Party leader Jack Layton watches during a news conference on Parliament Hill in Ottawa December 1, 2008. REUTERS/Chris Wattie</p>