November 27, 2008 / 2:39 PM / in 9 years

Canadian row erupts over end to party financing

OTTAWA (Reuters) - The Canadian government is considering ending public subsidies of federal political parties, Conservative sources signaled on Thursday, an explosive move with the potential to trigger an election.

<p>Canada's Prime Minister Stephen Harper talks to the media after the signing of a free trade agreement between Colombia and Canada in Lima November 21, 2008. REUTERS/Enrique Castro Mendivil</p>

But the main opposition Liberal Party indicated after an emergency meeting that although it would be hobbled by the move, it would likely not bring down the government over it at a time of economic crisis.

“It’s not a question of defeating the government,” Liberal Member of Parliament Gerard Kennedy told reporters after an emergency caucus meeting to consider how to respond to it. “It’s a question of pressing the government to act (on the economic crisis).”

A number of media outlets, including the Globe and Mail newspaper and the Canadian Broadcasting Corp, reported on Thursday that the government plans to eliminate government funding of political parties in a move that it would bill as a cost-saving measure.

When asked about the reports, Conservative Defense Minister Peter MacKay told reporters: “Our party is obviously taking the biggest hit ... We recognize that there are tough economic times ahead, so as a result we all have to make sacrifices.”

Under the current system, each party receives C$1.95 ($1.59) a year for each vote obtained in the last election. That would give the Liberals C$7 million next year and the Conservatives C$10 million.

However, the move would hit the opposition parties much harder than the Conservatives as a proportion of their financing since the other parties have a smaller base of donors and rely more on the subsidies.

The measure would be advanced as part of the government’s fiscal and economic update to be presented later on Thursday.

To pass legislation, the minority Conservative government, just reelected last month, needs the support of at least one of the three opposition parties. Under Canada’s parliamentary system, if financial measures are voted down, a new election would be forced.

The left-leaning New Democratic Party, the smallest of the three opposition groups, promised to oppose the move and said the Bloc Quebecois, the next-largest party, would also do so.

“They’re going to hit a brick wall with us in the House (of Commons). We’ll never put up with it. I know the Bloc will never put up with it,” Thomas Mulcair, deputy leader of the New Democrats, told CBC television.

“It remains to be seen whether the Liberals are going to take a principled stand here, or whether they’re going to be bought off.”

The Liberals said last week when the Conservatives unveiled their policy document for the new Parliament that it would be irresponsible to topple the government so soon after the October 14 election.

Liberal leader Stephane Dion, asked on Thursday if he would bring the government down over new party financing rules, said: “We will not speculate about all this. We want a plan to help Canadians with their mortgages, with their pensions and with their work...and we don’t want to play politics as Mr. Harper is doing.”

The Liberals have little money left after the October election and would be unable to come close to Conservative levels of spending in any snap election. The party is also in the midst of a leadership change, with Dion stepping down in May.

Still, the Liberals must also deal with the fact that if they do not block the subsidy cuts they could be handicapped for elections to come.

($1=$1.23 Canadian)

Reporting by Louise Egan and David Ljunggren; editing by Peter Galloway

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