January 27, 2009 / 7:33 AM / in 9 years

Conservatives vow stimulus as confidence votes loom

<p>Canada's Governor General Michaelle Jean (R) and Prime Minister Stephen Harper laugh before the Speech from the Throne in the Senate chamber on Parliament Hill in Ottawa January 26, 2009.Chris Wattie</p>

OTTAWA (Reuters) - Canada's minority Conservative government pledged on Monday to "spend what is necessary" to fix the economy a day before it delivers a budget on which its political survival may hinge.

Presenting its action plan in the Speech from the Throne, formally starting a new session of Parliament, the government said its economic stimulus plan would promote long-term growth while avoiding a return to permanent deficits.

The speech is technically a matter of confidence, meaning the government will fall in Parliament unless one of the three opposition parties supports it. But more attention is being paid to Tuesday's budget, which is also a confidence matter.

"Canadians face a difficult year -- perhaps several difficult years. In the face of such uncertainty, our government has developed a clear and focused plan," the government said in the unusually short speech.

"Our government will spend what is necessary to stimulate the economy, and invest in what is necessary to protect our future prosperity."

Two of the three opposition parties said they would oppose the Throne Speech while the Liberal Party, the biggest opposition party, which has enough votes to keep the government in power, made cautiously positive noises.

Liberal leader Michael Ignatieff said the government appeared to have listened to some of his demands, for example saying the budget would seek to protect the vulnerable, but he said he wanted to read it before making a decision on whether to support it.

"I want to see whether they've done serious business or whether they're trying to fool us," Ignatieff told CBC television.

The government pledged action to build infrastructure, protect the stability of the financial system, ensure access to credit, protect jobless and other vulnerable people, and support industries in difficulty -- including forestry, manufacturing, automotive, tourism and agriculture.

The speech was delivered by Governor General Michaelle Jean, the representative of Canada's head of state, Queen Elizabeth. It was so brief -- 3-1/2 pages -- that Liberal Member of Parliament Ralph Goodale called it the "Pamphlet from the Throne."

Its brevity was attributed largely to the fact that the government had just delivered a Throne Speech two months earlier.

Prime Minister Stephen Harper's government managed to avoid being brought down in December only by having Parliament suspended, an act which required a new Throne Speech when Parliament resumed on Monday.

Political tempers have cooled since December, and the Liberals know that while their numbers have improved since December, they still trail the Conservatives in most polls. If the government falls, an election could be called, and that may be too risky for the Liberals.

Another alternative would be to try to install an opposition coalition to replace the Conservatives, just reelected in October, but that idea has proved deeply unpopular with large segments of the population.

The government will face up to six confidence votes over the speech and the budget, most likely starting on Thursday evening.

Analysts saw little that was surprising in Monday's speech but one pointed out a difference between the government's line and the Bank of Canada's prediction that the economy would start bouncing back in mid-year.

David Watt, senior currency strategist, RBC Capital Markets, said the idea that Canada could face several difficult years "doesn't exactly strike the optimistic tone that we heard from the Bank of Canada the other day".

Additional reporting by Louise Egan; Editing by Jeffrey Hodgson and Peter Galloway

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