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Fate of budget, coalition in Ignatieff's hands

Globe and Mail Update

The fate of the Harper Conservative's massive stimulus plan and its minority government now rests in the hands of Liberal Leader Michael Ignatieff, as does the future of the fledgling Liberal-NDP coalition.

Mr. Ignatieff said he will announce his party's decision on whether or not to support the budget at 11 a.m. Wednesday, after he meets with his caucus.

He said Liberals will pore over the document this evening with three questions top of mind: Have the Tories underestimated the severity of the financial crisis, have they done enough for the unemployed through proposed changes to employment insurance, and how quickly will Ottawa spend the new infrastructure money?

"My concerns about the budget are: Have they underestimated the seriousness of the crisis? That affects all the numbers," Mr. Ignatieff told reporters Tuesday. "If they make that judgment wrong, pretty well everything goes south, including their deficit projections."

But Mr. Ignatieff gave credit to the government for responding to "the combined pressure of the opposition parties and those results are positive,” he said.

Earlier, Bloc Québécois Leader Gilles Duceppe said the budget is unacceptable because it shortchanges Quebec on equalization and does little for low-income families or the environment.

Mr. Duceppe said the environmental measures listed in the budget will only help the nuclear industry and “the rich oil companies” with money for capturing carbon emissions.

“It's clear that we won't support this budget,” Mr. Duceppe told reporters following the budget's release.

There was little suspense in the NDP's budget reaction. Leader Jack Layton had already vowed to vote against the document, pinning his hopes – like Mr. Duceppe – on the defeat of the Conservative minority government and a Liberal-led coalition.

"It doesn't help the most vulnerable," Mr. Layton told reporters. "It's going to leave a lot of people behind."

Mr. Layton said the infrastructure program is flawed because it requires cash-strapped municipalities to match federal contributions, undermining any promise of job creation.

"There's no way the NDP can support this," added NDP finance critic Thomas Mulcair, citing as another example the government's failure to eliminate the two-week waiting period for employment insurance benefits.

"A lot of people need that access to employment insurance right away. It would have been a very small measure to take care of that," he said.

However, Ottawa will increase the period jobless workers can receive EI benefits by five extra weeks, to a maximum of 50 weeks for the next two years. The government will also increase the protection for workers when their employer goes bankrupt.

Liberal finance critic John McCallum refused to tip his party's hand during an appearance on CBC News following the budget. He said Liberals clearly welcome major expenditures on infrastructure, but want time to go over the details, such as whether or not federal funds are guaranteed.

"Some of the things were in the direction we would have gone, others are different," Mr. McCallum said.

"I think we will look at this through the lens of the government's past behaviour on deficits. For example, just a couple of months ago they told us they were in surplus. Today we see a $15-billion deficit already before taking a penny of action. So that's a concern."

The coalition was born in late November in the days immediately following the Harper government's economic update. Opposition MPs were stunned when the Tories used the economic crisis to justify scrapping the $1.95-per-vote public subsidy for political parties. Loss of the grant, worth about $30-million in total, would have financially crushed the parties save for the cash-flush Conservatives.

Mr. Flaherty's update provided no economic stimulus, promised balanced budgets for the next five years, and pledged to temporarily remove the right to strike in the public service.

All three opposition parties refused to support the update and began backroom negotiations to defeat the government and replace it with a Liberal-NDP coalition. It would be led by then-Liberal Leader Stéphane Dion and propped up by the separatist Bloc Québécois.

Within 24 hours, Mr. Harper was scrambling for his government's survival. He postponed confidence votes and began retracting, one by one, the offending measures from the fiscal update. He promised to move up a stimulus-laden federal budget to January.

Mr. Dion, Mr. Layton and Mr. Duceppe refused to back down, signed a coalition pact, and wrote a formal request to Governor-General Michaëlle Jean urging her to consider giving the coalition a chance to govern. Facing certain defeat in the House of Commons, Mr. Harper persuaded Ms. Jean to suspend Parliament until Jan. 26.

With reports from The Canadian Press

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