VZCZCXYZ5342
OO RUEHWEB

DE RUEHOT #0336/01 0651757
ZNR UUUUU ZZH
O 051757Z MAR 08
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 7463
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY

UNCLAS OTTAWA 000336 
 
SIPDIS 
 
SIPDIS 
 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: PGOV SENV KCRM EAID AF CA
SUBJECT: CONSERVATIVES EASILY SURVIVE FEDERAL BUDGET VOTES 
 
REF:  A.  OTTAWA 257 
-       B.  OTTAWA 319 
 
¶1.  (SBU) Summary:  The Conservatives' third budget marks another 
legislative accomplishment for the minority government, as it easily 
survived three confidence votes, concluding on March 4.  The budget 
is a lean, low-key document, constrained by prior commitments of 
C$60 billion in tax cuts and other spending in the October 2007 
economic statement and concern over spillover from an economic 
slowdown in the United States.  However, it did provide an 
unexpected bump-up in its already substantial aid to Afghanistan and 
other recipients, and more domestic resources for border and law 
enforcement programs and for military modernization, as well as for 
protection of Arctic sovereignty and the environment.  .  The only 
substantive concern that the USG may have over the new budget is its 
provision of C$10 million over two years to Natural Resources Canada 
to promote Canada's forestry sector in international markets as a 
model of environmental innovation and sustainability, which may be 
inconsistent with the Softwood Lumber Agreement.  End summary 
 
HOME RUN FOR THE CONSERVATIVES 
 
¶2.  (SBU) The House of Commons on March 4 passed the third annual 
budget from the minority government of Prime Minister Stephen Harper 
in a Conservative motion that was by definition a matter of 
"confidence."  The government had on February 28 and March 3 also 
survived confidence votes on a budget sub-amendment motion from the 
Bloc Qubcois and a budget amendment motion from the Liberal Party, 
respectively.  On the latter motion, all but seven Liberal MPs 
boycotted the vote on their own party's amendment after Opposition 
 
leader Stephane Dion made clear that the budget was not "harmful" 
enough to warrant toppling the government (ref a).   In the March 4 
vote, only 11 Liberal MPs, including Dion, showed up to oppose it, 
prompting Conservative MPs to taunt the Liberals for shirking their 
"fundamental responsibility" to represent their constituents. 
 
¶3.  (U) The 2008 budget, entitled "Responsible Leadership for 
Uncertain Times,"  is the smallest in 11 years.  It projects new 
spending of only C$1.3 billion (3.4 per cent growth) in 2008-2009 
(unlike the first two Conservative budgets, which expanded federal 
spending cumulatively by 14.8 per cent), and of only an additional 
C$6 billion in total over three years.  The government's earlier 
C$60 billion tax cuts (representing C$14.7 billion in annual cuts) 
and its determination to allocate all of the C$10.2 billion surplus 
for FY 2007-2008 to payments on Canada's already modest national 
debt limited the revenues available for the new budget.  Finance 
Minister Jim Flaherty called the budget a "prudent, disciplined, and 
realistic" plan that would keep Canada's finances in the black. 
 
MORE MONEY FOR AFGHANISTAN, FOREIGN AID 
 
¶4. (U) In the new budget, Canada committed an additional C$100 
million in assistance to Afghanistan, primarily for security and 
training of the Afghan police and army.  The one-time increase will 
bring Canada's total aid for Afghanistan 2008-09 to C$280 million 
and boosts Canada's total projected financial commitment to that 
country to C$1.3 billion through 2011. 
 
¶5. (U) The budget also lived up to a 2007 budget pledge to double 
Canada's international assistance to C$5 billion by 2010-11, 
including delivering on Canada's commitment (along with the other 
G-8 nations) specifically to double aid to Africa (to C$2.1 billion) 
in 2008-2009.  Canada will also contribute C$450 million to the 
Global Fund to Fight AIDS, Tuberculosis, and Malaria, and C$50 
QGlobal Fund to Fight AIDS, Tuberculosis, and Malaria, and C$50 
million over two years to launch a development Innovation Fund. 
 
 
¶6.  (U) The Department of Foreign Affairs (DFAIT) received an 
additional C$89 million over two years to add new staff, embassies, 
and missions to enhance Canada's overseas network and operational 
priorities, including under Canada's new Latin America strategy 
(septel). 
 
BORDER AND LAW ENFORCEMENT BEEF-UP 
 
¶7.  (U) The budget allocated C$165 million over two years for 
measures to improve management of the border, including: 
 
-- C$75 million for the Canada Border Services Agency; 
-- C$14 million to expand NEXUS; 
-- C$6 million to support provinces introducing enhanced drivers' 
licenses (EDLs); 
-- C$26 million to incorporate biometric data into Canadian visas; 
-- C$15 million to establish a permanent facility to enhance 
security of the Great Lakes/St. Lawrence Seaway; 
-- C$29 million to meet Security and Prosperity Partnership (SPP) 
priorities, including  for increased regulatory cooperation, better 
protection of the North American food supply, and improved 
trilateral cooperation on energy research and compatibility of 
energy efficiency standards; 
-- introduction of a higher-security 10 year electronic Canadian 
passport by 2011. 
 
¶8. (U) Living up to the Conservatives' 2006 campaign pledges and 
priorities from the October 2007 Throne Speech, the new budget also 
included: 
 
-- C$400 to encourage provinces and territories to recruit 2,500 new 
front-line police officers; 
-- C$122 million over two years for federal corrections; 
-- C$32 million over two years for the Public Prosecution Service; 
and, 
-- C$30 million for the National Crime Prevention Strategy. 
 
MEETING THE NEEDS OF THE CANADIAN FORCES 
 
¶9.  (U) The defense budget is projected to rise to approximately 
C$18.9 billion in FY 2008-2009, a 5.9 per cent increase over FY 
2007-2008, reflecting Conservative policy decisions already in 
place.  Beginning in FY 2011-2012, the automatic annual increase in 
defense spending will rise from 1.5 to 2 per cent, providing the CF 
with an additional C$12 billion over the next two decades to buy new 
equipment.  The Communications Security Establishment (CSE) also 
received an additional C$43 million over two years to keep pace with 
advances in technology. 
 
THE ARCTIC AND THE ENVIRONMENT 
 
¶10.  (U) The 2008 budget earmarked C$720 million for a new 
Polar-class ice breaker (ready for duty in 2017) to replace the 
current aging vessel, as well as C$20 million over two years to 
collect data and for legal work to support Canada's submission to 
the UN Commission on Limits of the Continental Shelf and C$34 
million over two years for geological mapping to support Arctic 
economic development.  The budget also set aside C$8 million over 
two years to build a commercial harbor in Nunavut to help Arctic 
fisheries. 
 
¶11.  (U) On the environment more broadly, the budget provided: 
 
-- C$250 million for the Automotive Innovation Fund to help auto 
companies build more environmentally-friendly and fuel-efficient 
vehicles; 
-- C$250 million to support research on and deployment of carbon 
capture and storage technology in the power generation sector; 
-- C$300 million to support nuclear energy, including the continued 
development of the Advanced CANDU reactor; 
-- C$33 million for better environmental law enforcement; and, 
-- C$66 million to support development of a regulatory framework for 
industrial air emissions. 
 
COMMENT 
 
¶12. (SBU)  Having successfully -- and easily -- weathered the three 
confidence votes on the budget, passed its flagship crime bill (ref 
b), and achieved apparent consensus with the Liberals on a March 13 
confidence motion to extend the Canada Forces' mission in 
Afghanistan until 2011, the government has made significant progress 
on its desired policy agenda.  NDP leader Jack Layton has threatened 
to table another confidence vote on March 7, when the NDP will 
control the topic of debate as one of several upcoming (and 
required) "opposition days," but the risk of such a vote succeeding 
remains slim as long as the Liberals appear willing to avoid an 
election at any cost.  The only substantive concern that the USG may 
have over the new budget is its provision of C$10 million over two 
years to Natural Resources Canada to promote Canada's forestry 
sector in international markets as a model of environmental 
innovation and sustainability, which may be inconsistent with the 
Softwood Lumber Agreement. 
 
WILKINS