December 3, 2008 / 4:06 PM / in 9 years

Opposition coalition downplays stimulus talk

OTTAWA (Reuters) - The opposition coalition seeking to replace the minority Conservative government may deliver a fiscal stimulus package worth substantially less than C$30 billion, senior legislators said on Wednesday.

<p>Liberal leader Stephane Dion (C) shakes hands with Bloc Quebecois leader Gilles Duceppe (R) as New Democratic Party leader Jack Layton watches during a news conference on Parliament Hill in Ottawa December 1, 2008. REUTERS/Chris Wattie</p>

The three opposition parties -- the Liberals, the New Democratic Party, and the separatist Bloc Quebecois -- have joined forces and are threatening to defeat Prime Minister Stephen Harper in Parliament at the first opportunity over his handling of the economy. Harper may seek a temporary suspension of Parliament to try to prevent the coalition from taking power.

“It will be less than C$30 billion ... it could be a lot less than that,” John McCallum, a Liberal member of Parliament and economic advisor to the party leadership, said of the coalition’s proposed stimulus package.

“It would be irresponsible and fiscally imprudent for a future government to give any figure until we can see what is the state of the books,” he said.

McCallum’s comments appeared to contradict those by other Liberal politicians who cited the C$30 billion figure -- roughly the equivalent of 2 percent of gross domestic product. Media reports had also reported that number, but McCallum has repeatedly denied those reports this week.

Investors are eager for news of the size and timing of any fiscal stimulus package, whether it be from a Conservative or an eventual centre-left coalition government.

Fiscal stimulus aims to help the economy recover faster from recession and could affect the Canadian dollar and bond markets.

Finance Minister Jim Flaherty has said Ottawa plans to double infrastructure spending next year to C$6 billion and has made a vague promise of additional spending if the economy worsens more than expected.

He said on Tuesday a C$30 billion spending plan would plunge the country into permanent deficit.

Bob Rae, another senior Liberal, told CBC television the C$30 billion number was “made up” and that he had no idea where it came from.

But another high-profile Liberal, Martha Hall Findlay, said earlier on Wednesday: “I think we already said that we would invest C$30 billion. That’s in line with the G20 amount.”

On Tuesday, Liberal Member of Parliament David McGuinty also cited that number when talking of fiscal stimulus.

“We’re heading for a period of deflation if we don’t actually prime the pump and we don’t actually have a serious economic stimulus package -- C$30 billion minimum,” he said.

When asked if the C$30 billion figure was the coalition’s official policy, he appeared to downplay the number.

“Thirty billion is the number we use,” he said.

Immediately after the Group of 20 major economies met in Washington earlier this month, the International Monetary Fund recommended countries with fiscal capacity deliver stimulus worth roughly 2 percent of gross domestic product.

($1=$1.26 Canadian)

Reporting by Randall Palmer and Louise Egan; editing by Peter Galloway

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