Cablegate: Canada's Budget Bills Pass the House of Commons In

This record is a partial extract of the original cable. The full text of the original cable is not available.

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
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

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