December 23, 2010 / 1:58 PM / 7 years ago

Canada's Flaherty sees partial support for budget

OTTAWA (Reuters) - Canada's ruling Conservatives see more hope of winning support for their next budget from the left-leaning NDP than from the main opposition Liberals, which could help avoid an election widely expected in 2011.

In an interview with Reuters, Finance Minister Jim Flaherty said it was clear from a meeting with Liberal finance critic Scott Brison that the rival party would vote against his budget, due early next year.

"It wasn't a very long discussion because he knows we're not doing big new spending programs and if the official opposition thinks that's the way to go, I guess they'll vote against the budget," Flaherty said.

The government and the New Democratic Party, on the other hand, have overlapping interests on worker training, he said.

"That doesn't mean they'll support the budget but it does mean there's some common ground," he said, referring to talks with NDP finance critic Thomas Mulcair.

Flaherty will meet in January with the separatist Bloc Quebecois, which has twice backed Conservative budgets.

Political analysts and some officials inside Prime Minister Stephen Harper's office predict the three opposition parties will unite to bring down the government over the budget.

The Conservatives have held a minority of seats in the House of Commons since coming to power nearly five years ago and need the support of some opposition legislators to survive confidence measures such as budgets.

If the opposition votes the budget down, there will be a new federal election.

NDP leader Jack Layton hinted this month his party might back the budget if Harper embraced demands like more aid for the elderly, a cut in taxes on home heating fuel, and targeted investments in domestic manufacturing.

NO TURNING BACK ON TAX CUTS

But Layton's call for a cancellation of corporate tax cuts and Liberal leader Michael Ignatieff's plea to postpone those cuts to sunnier economic times fell on deaf ears.

"In my view, it's precisely the right time," said Flaherty. "Governments jump around and change tax policies up and down at their peril, in terms of evoking business confidence."

Federal corporate income taxes are due to drop to 16.5 percent on January 1, 2011 from 18 percent, and fall to 15 pct at the start of 2012.

Flaherty said he took note of investor interest in two successful Canadian foreign-currency denominated bonds.

"We will, as necessary, do that (again). There's great demand."

Harper said he will make minor changes to his cabinet early in 2011 but Flaherty, Harper's longest standing minister, expects to keep his job at least until after the budget.

Some political observers have suggested Flaherty has ambitions to succeed Harper in an eventual Conservative leadership race. Flaherty dodged any comment.

"I intend to run in the next election," he said.

Reporting by Louise Egan; editing by Janet Guttsman

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