US embassy cable - 05OTTAWA1960

UNCLAS OTTAWA 001960 
 
SIPDIS 
 
SENSITIVE 
 
DEPARTMENT FOR EB/IFD, EB/OMA, WHA/EPSC, AND WHA/CAN 
STATE PASS FEDERAL RESERVE BANK FOR CHUGH 
STATE PASS SEC FOR JACOBS 
TREASURY FOR WILBUR MONROE AND DAVID NAGOSKI 
PARIS ALSO FOR USOECD 
 
E.O. 12958: N/A 
TAGS: EFIN, ECON, CA, Budget 
SUBJECT: CANADA'S BUDGET BILLS PASS THE HOUSE OF COMMONS IN 
LEGISLATIVE SLEIGHT OF HAND 
 
REF: A. OTTAWA 1802 
     B. OTTAWA 640 
 
1.  (SBU) In an unexpected parliamentary maneuver, the 
Liberal Party, with strong support from the New Democrats and 
acquiesence by the Bloc Quebecois, passed bill C-48, the 
C$4.6 billion in supplemental spending that will provide 
additional funding for post-secondary education, low-income 
housing, environment-friendly measures to boost municipal 
public transport and energy efficiciency for low-income 
homeowners and foreign aid (ref A).  The economic impact of 
the additional spending, a small amount spread over two 
years, is minimal in the context of a C$2 trillion economy 
and given the fact that much of the money may go into trust 
funds or multi-year spending programs (to fund, for example, 
low-income housing) that will dilute its immediate impact. 
This additional spending will only take place if the GOC's 
fiscal surplus exceeds a minimum threshold, but the Prime 
Minister has said that the GOC expects to be able to fully 
fund the programs.  There is no procedure for prioritizing 
spending should the surplus be insufficient to fund all the 
initiatives in C-48, (although a GOC official opined that the 
additional funding for foreign aid would be towards the 
bottom of the list). 
 
Caught by Surprise 
------------------ 
 
2.  (SBU)  The Conservative Party expected the vote on C-48 
to occur the week of June 27 and had blustered that they had 
the numbers to defeat the bill.  Their MPs were ordered to be 
in place and ready for the confidence vote this week. 
Apparently some Conservatives took this as assurance that 
there would be no vote on June 23 and made travel plans 
accordingly.  The Liberals forced the sudden vote using an 
obscure rule that permits ending debate instantly if a 
majority of parties agree.  With the New Democrats on board, 
it was a matter of persuading the Bloc Quebecois to endorse 
the move.  The Bloc, stating it had made all its points on 
C-48 and was eager to move on to debate the same-sex marriage 
legislation, endorsed the proposal, opening the way to the 
June 23 late-night vote.  The press reports that seven 
Conservatives were missing. 
 
Smooth sailing ahead for budget legislation 
------------------------------------------- 
 
3.  (SBU) The legislation must now pass the Senate and 
receive royal assent from the Governor General, both of which 
will be done before parliament breaks for the summer.  (Note: 
 Bill C-43, the basic budget bill, is being currently 
considered by the Senate and may be approved today.  End 
note.)  Although the FY2005-06 budget legislative process is 
now safely on track and there is no further possibility of a 
budget-related confidence vote that could topple the 
government, the Department of Finance is prepared for future 
unbudgeted funding demands.  The minority Liberal Party will 
spend the summer in campaign mode and the Prime Minister 
could make expensive promises. There is a First Ministers' 
meeting (with the Prime Minister and provincial leaders) on 
aboriginal issues scheduled for the fall, which could result 
in some tough unexpected funding demands.  In addition, 
special revenue deals over the past year for Ontario, Quebec, 
Newfoundland and Labrador, and Nova Scotia, could lead to 
demands from other provinces for additional federal largesse. 
 
 
Visit Canada's Classified Web Site at 
http://www.state.sgov.gov/p/wha/ottawa 
 
DICKSON