February 4, 2008 / 8:09 PM / in 10 years

Ottawa separates C$1 billion aid package from budget

OTTAWA (Reuters) - The Conservative government has decided to speed up delivery of a promised C$1 billion ($1 billion) in aid to towns and workers hit by the economic downturn, possibly also speeding up its own downfall as a result.

<p>GM employees assemble Chevrolet Impalas at the GM Oshawa Assembly Plant, June 19, 2007. The Conservative government will create a separate bill for a promised C$1 billion ($1 billion) in aid to towns and workers hard hit by economic downturns, instead of including the money in the next federal budget, a government minister said on Monday. REUTERS/J.P. Moczulski</p>

Ottawa will create a separate bill for the money instead of including it in the next federal budget, as it had previously announced, a government minister said on Monday.

The budget is not expected until late February or early March but the House of Commons could pass the new legislation as soon as Tuesday.

“There’s a lot of enthusiasm for this plan, a desire for it to go forward as quickly as possible. As a result, the government has taken the decision that we will move forward with legislation to get this approved,” House Leader Peter Van Loan told reporters.

A stand-alone rescue package should win easy support from the opposition, which had accused the government of political blackmail for attaching it to the budget. That meant that if the budget was not approved, the money would not be spent.

“If there are no bad surprises, poison pills, we will vote for it ... we’ll decide what to do with the budget when we see it,” said Liberal Party leader Stephane Dion.

The aid money is aimed at helping workers in areas such as the forestry and automobile sectors, which have been hit hard by the strong Canadian dollar and weakening demand from the United States, Canada’s main trading partner.

With the aid money already approved, it could become easier for the Liberals and the other opposition parties -- the New Democrats and the Bloc Quebecois -- to eventually vote against the budget, thus bringing down the minority Conservatives and forcing an early election.

Before Monday’s announcement, the Liberals had said they would wait to see the budget before making a judgment, while the other two parties were leaning toward opposing it.

The decision to introduce it separately also caused speculation that the Conservatives were trying to engineer their own downfall, preferring to face an election now than face the prospect of an economic downturn that could cost them votes later. Government officials would not comment.

Ottawa said it was bowing to pressure from those regions standing to benefit from the aid, who wanted to see the cash flowing as soon as possible.

Under the agreement, Ottawa negotiates with the provinces for their share of the C$1 billion fund.

($1=$0.99 Canadian)

Reporting by Louise Egan; Editing by Peter Galloway

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