VZCZCXRO7392
OO RUEHGA RUEHHA RUEHMT RUEHQU RUEHVC
DE RUEHOT #0078/01 0282201
ZNR UUUUU ZZH
O 282201Z JAN 09
FM AMEMBASSY OTTAWA
TO RUEHC/SECSTATE WASHDC IMMEDIATE 9029
INFO RUCNCAN/ALL CANADIAN POSTS COLLECTIVE PRIORITY
RHEHNSC/WHITE HOUSE NSC WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 OTTAWA 000078 
 
SIPDIS 
 
SENSITIVE 
 
TREASURY FOR NEPHEW 
 
STATE FOR WHA/CAN 
 
E.O. 12958: N/A 
TAGS: PGOV ECON EFIN CA
SUBJECT: LIBERALS TO SUPPORT BUDGET, WITH CONDITIONS 
 
REF: OTTAWA 74 
 
¶1. (SBU) Summary: Liberal leader Michael Ignatieff publicly 
confirmed on January 28 that his party will support PM Harper's 
latest "flawed" budget (septel), on the condition that the 
government submit three reports to Parliament this year on its 
budget implementation, notably about actual expenditures on 
infrastructure spending.  The government will likely accept the 
demand and survive confidence votes on the budget tentatively 
scheduled for January 29, February 30, February 2, and/or February 
¶3.  End summary. 
 
A "FLAWED" BUDGET 
----------------- 
 
 
¶2. (U) In a press conference on January 28 on the FY 2009 budget 
(septel), new Liberal leader Michael Ignatieff first castigated the 
Conservatives for their "disastrous" fall Economic Statement and 
their "reckless, arrogant, and short-sighted" government.  He 
criticized the government's budget proposal for not going far enough 
to improve eligibility for employment insurance, to create child 
care spaces, or to exploit opportunities in the green economy.  In 
addition, he expressed concern over unilateral federal changes to 
the national equalization program (which redistributes income from 
wealthier to poorer provinces) and over anticipated delays in the 
flow of new infrastructure money, questioned the sale of government 
assets at "fire-sale" prices, and denounced the lack of a plan "to 
get Canada out of the C$85 billion debt hole" that deficit spending 
would create. 
 
¶3.  (U)  However, Ignatieff acknowledged that the government had 
made "important concessions," including money for social housing and 
infrastructure for the post-secondary education sector, which he 
claimed stemmed from the efforts of the "united opposition."  He 
noted that targeted tax cuts to low and middle-income brackets were 
"not optimal," but were at least "just below the upper limit of 
tolerance." 
 
HOLDING THE GOVERNEMNT ACCOUNTABLE 
---------------------------------- 
 
¶4. (U) Reprising earlier comments that Canadians want another 
election now "like a hole in the head," Ignatieff emphasized that 
his job as Leader of the Official Opposition was to be "responsible" 
and to hold the Conservatives "accountable."  He confirmed that he 
would make his party's support for the budget conditional on the 
government meeting its budget goals and pledged that he would "drill 
down hard" on the details.  He promised that the Liberals would pose 
an amendment in the House of Commons later on January 28 to the 
government's budget motion requiring the government to report to the 
House three times per year (in March, June, and December) on its 
progress.  He emphasized that if the government failed to live up to 
its commitments, the Liberals would be ready to defeat the 
government. 
 
¶5. (U) According to Ignatieff, the Conservative government was now 
"on probation."  He noted that the budget met immediate needs, but 
added that future changes might be needed if economic conditions 
continued to deteriorate.  He underscored the opposition parties' 
distrust of the PM, claiming that the government had been forced to 
take measures in which it did not believe by the threat of an 
opposition coalition and the economic crisis.  He opined that this 
budget proposal had thrown the Canadian Conservative movement into 
deep ideological confusion "from which I hope it never recovers." 
He argued that his responsibility as leader of the Official 
Opposition was to "hold the government's feet to the fire." 
QOpposition was to "hold the government's feet to the fire." 
 
 
COALITION: DEAD OR ALIVE? 
------------------------- 
 
¶6. (U) Ignatieff declined to declare December's coalition deal dead. 
 While it retained some "problematic aspects," he commented that 
this discussion had changed Canadian politics "for the better" and 
may still be in the national interest.  He warned the Conservatives 
to get used to continued co-operation among the opposition parties. 
However, New Democratic Party leader Jack Layton separately 
re-confirmed that the NDP will vote against the budget, but accused 
Ignatieff of hiding behind a budget amendment "fig leaf" and 
effectively forming a "new coalition" with PM Harper to continue 
former Liberal leader Stephane Dion's "policy" of propping up the 
Harper government.  Bloc Quebecois leader Gilles Duceppe also 
indicated it will oppose the budget, and pronounced that the 
would-be Liberal/NDP coalition was "dead, finished, over." 
 
OTTAWA 00000078  002 OF 002 
 
 
 
COMMENT 
------- 
 
¶7. (SBU) Polls show that the majority of Canadians want the budget 
to pass and the government to begin implementing an economic 
stimulus of some sort.  The Liberals and Conservatives fully 
understand this political reality, which is why the Conservative 
budget proposal included so many items to placate Liberal concerns, 
and why the Liberals are offering up a softball amendment with which 
the government can live.  Ignatieff's threat to defeat the 
government if the new reports fail to satisfy the Liberals is a bit 
hollow, since only the government can designate matters as issues of 
confidence in the House of Commons, although the Liberals (or other 
opposition parties) could potentially use their allotted opposition 
days (which the Conservatives must schedule each session) to propose 
motions of non-confidence. 
BREESE