December 12, 2008 / 6:13 PM / 9 years ago

Flaherty to meet opposition over budget

OTTAWA (Reuters) - Canada’s minority Conservative government, under pressure to produce a stimulus-rich budget next month, will hold talks with the main opposition Liberal Party on Monday, Finance Minister Jim Flaherty said on Friday.

The Liberals indicated they had doubts about how useful the meeting would be, saying they wanted Flaherty to produce accurate details about the state of the economy. He presented a fiscal update last month that many economists dismissed as unrealistic.

The opposition parties last week signed a coalition deal to bring down the government as soon as they could but signs are emerging that tensions might slowly be easing.

“I am prepared to listen to the views of the coalition,” Flaherty told a televised news conference in Saint John, New Brunswick.

“There will be a meeting on Monday in Toronto with members of the Liberal Party and I will be there to listen to their views,” he said, adding that he hoped the Liberals would present a plan on Monday.

The budget is due to be delivered on January 27. Opposition parties say the plan should contain major stimulus measures, an approach the government says it backs.

“It’s quite clear that infrastructure is a very good way to stimulate the economy ... We can invest more in infrastructure but it needs to be fast,” said Flaherty, repeating that Ottawa planned to spend C$6 billion ($4.8 billion) on infrastructure projects next year.

The Liberals said they were still unhappy with November’s fiscal update, which predicted that Ottawa would stay in the black for the next five years if it did not take any stimulus measures.

The Conservative government’s forecast contradicted those of many economists and Parliament’s own budgetary officer, who predict deficits of various sizes.

“We are prepared to have a constructive discussion if he is prepared to provide Canadians and ourselves with honest fiscal numbers,” said Liberal finance spokesman Scott Brison.

“It’s very difficult to develop honest solutions unless you’re being honest about the nature of the fiscal situation ... You can’t build a real stimulus package based on a false fiscal framework,” Brison said.

The left-leaning New Democrats said they were trying to arrange a meeting with Flaherty next week.

Flaherty told the Saint John board of trade that 2009 would test Canada in unprecedented ways.

“And no matter how much we prepare for a blizzard, you can’t stop it from snowing. So we are going to have to endure this difficult time,” he said.

Flaherty says he is prepared to let Ottawa go into deficit, temporarily, to tackle the crisis.

Dale Orr, chief economist at the Global Insight research firm, said stimulus measures should have been started months ago to stave off the worst of the recession.

“After the end of 2009, fiscal stimulus will probably no longer be appropriate, and by the end of 2010, it may well be adding unwanted inflationary pressures,” Orr said.

“Accelerating small infrastructure projects is the best way to provide fiscal stimulus that is temporary, timely, targeted, and cost-effective.”

($1=$1.24 Canadian)

Reporting by David Ljunggren; editing by Rob Wilson

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