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Parliament approves stimulus package

Latest update : 2009-02-04

Canada's parliament approved a $40 billion (US $32 billion) economic stimulus package on Tuesday. Prime Minister Stephen Harper's minority government assured its own survival with the decision.

AFP - Canada's parliament on Tuesday approved a 40-billion-dollar (32 billion US), two-year economic stimulus plan, assuring the survival of Prime Minister Stephen Harper's minority Conservative government.
The measures were supported by 211 of 308 parliamentarians in a budget vote, with the main opposition Liberals propping up the ruling Conservatives in order to avoid a fourth snap election in five years.
The leftist New Democrats, separatist Bloc Quebecois and six rogue Liberal MPs opposed the budget.
The result was expected. Liberal leader Michael Ignatieff announced his intentions last week after the budget was unveiled, knowing his party is ill-prepared to fight an election Canadians do not want during an economic crisis.
But it is less clear, as economists forecast a sharper downturn than the government hopes and the Liberals offered only grudging support for the plan, if the stimulus will be enough to pull Canada's economy out of recession.
Canadians meanwhile are left wondering if the cost of political stability -- Canada's first budget deficit in 11 years -- is worth it.
The stimulus amounts to a 1.9 percent boost in economic activity in 2009, and 1.4 percent next year.
The plan includes 20 billion dollars (16 billion US) in personal tax relief over five years, aid for sectors in peril and the largest infrastructure spending in the nation's history.
But it will result in a 1.1-billion-dollar (900 million US) budget deficit for the fiscal year ending in March and a 64-billion-dollar (52 billion US) budget deficit over the next two fiscal years, the government said.
Canada is not expected to see another surplus until 2014. Its last deficit, in 1996, was 8.9 billion dollars (7.2 billion US).
While in a better position relative to its G7 peers, Canada, a major exporter, had not escaped the downturn.
More than 100,000 jobs were lost in the past two months and the economy is forecast by the finance department to decline by 0.8 percent this year.
Canada is now the last of the Group of Seven industrialized nations to roll out a stimulus plan to help turn around a global recession.
Earlier, Ignatieff said he would allow six members of his caucus from the island province of Newfoundland and Labrador to dissent "this one time" in the budget vote to show displeasure with Harper's overall running of the country.
He and others have accused Harper of punishing political foes in the budget with less federal funding for certain regions, including Newfoundland.
Ignatieff took over the reins of the party only last month, and this vote was viewed also as a test of his leadership.
"I decided to permit (six Liberal MPs) a one-time protest vote against the budget in order to send a clear signal that this is no way to run a federation," Ignatieff said.
"Harper's unilateral actions in my view weaken our federation, cause strains in our federation at a time when Canadians should be pulling together."
The Liberals' continued support for the government also came with strings. If the government is seen to be diverging from its stimulus plan or "failing Canadians," Ignatieff said, the Liberals would withdraw their crucial support.

Date created : 2009-02-04