Budget talks show signs of political thaw

Mon Dec 15, 2008 4:59pm EST
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By John McCrank

TORONTO (Reuters) - Canada's main opposition Liberal Party struck a more conciliatory tone on Monday about co-operating with the Conservative government after legislators from both parties met to address concerns on the state of the country's finances and fiscal plans.

Liberals Scott Brison and John McCallum met in Toronto with Finance Minister Jim Flaherty for about an hour in an exchange they described as "productive and businesslike." They said they hoped it would be the first of many meetings on the economy before the Conservatives release their budget on January 27.

"All of us understand that Canadians want us to be constructive because Canada, right now, is going through one of the most serious economic difficulties in any of our lifetimes," said McCallum.

The Liberal legislators said they told Flaherty they want a real look at the books before moving forward, and vowed to maintain pressure on the minority government to move quickly on a realistic economic stimulus package.

The Conservatives' fiscal update in November was widely criticized by economists for apparently bending over backwards to show balanced budgets in coming years at a time when most experts agree that temporary deficits are a legitimate way to help pull the country through a recession.

It was also panned by the opposition parties, which refused to endorse it, leading Prime Minister Stephen Harper to request Parliament be shut down to January 26, rather than face a confidence vote the minority government was sure to lose.

The defeat would have triggered a new election or opened the door for a coalition of the Liberal and New Democratic parties to form a government.

"The fiscal update said that there was a C$100 million ($81 million) dollar surplus," said McCallum. "This is a number that nobody believes now, because the growth outlook is far worse -- and there is the asset sale issue -- so in that context, we certainly believe, and Mr Flaherty did not disagree, that the Canadian economy is in deficit for the year coming before taking any fiscal action."   Continued...

<p>Finance Minister Jim Flaherty speaks during Question Period in the House of Commons on Parliament Hill in Ottawa December 3, 2008. REUTERS/Chris Wattie</p>