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January 28, 2009

Canada's government announces stimulus package

By ROB GILLIES

OTTAWA (AP) — Canada's Conservative government unveiled a $32 billion plan to stimulate the flagging economy Tuesday, a move that could stave off opposition threats to force Prime Minister Stephen Harper from office.

Finance Minister Jim Flaherty said the two-year stimulus package includes $9.8 billion for infrastructure. Flaherty is predicting a deficit in Canada for the first time in more than a decade.

New Liberal Party leader Michael Ignatieff said he'll announce Wednesday whether he'll support the package. The opposition Liberals had vowed to use a parliamentary confidence vote to topple Harper's minority government if the stimulus plan fell short.

"There are some positive signs to this budget," Ignatieff said. "There's some things that we are concerned about. There's a negative side."

Ignatieff said he's concerned the government has underestimated the seriousness of the crisis, but he said the government has responded to the combined pressure of the opposition parties and those results are positive.

The credit crisis and the global sell-off of commodities have started to hit Canada hard. The country lost more than 100,000 jobs in the last two months of 2008, and the central bank is predicting economic output will contract 4.8 percent in the first quarter.

Flaherty called the crisis "the challenge of our time."

"Canadians are feeling the effects of the global recession, and they are concerned," he said.

The government is providing money for bridges and highways, high-speed Internet networks and home retrofits. The government also lengthened the amount of time unemployed people will be able to collect insurance if they are laid off.

There's also government credit support for automobile leasing, and there is money for job retraining programs, the aboriginal population and struggling industries such as the auto sector and forestry.

Flaherty said he is prepared to provide more stimulus if necessary.

"We are in uncharted waters," Flaherty said. "The economists have been wrong in their predictions. All of the so-called experts continue to become more pessimistic in their forecasts. Things could get worse and if they get worse, we'll do more."

The opposition parties, which hold a majority of seats in Parliament, united against Harper late last year after he announced a plan to scrap government subsidies for political parties, something the opposition groups rely on far more than the Conservatives to pay for campaigns and staff salaries.

Although Harper withdrew the proposal, the opposition continued to seek his ouster, arguing he had no economic stimulus plan to protect Canada from the global financial crisis.

Harper only avoided defeat last month by shutting down Parliament — an unprecedented tactic that allowed him to retain power for now.

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