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Cablegate: Harper Suggests Point of No Return On Elections

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

UNCLAS SECTION 01 OF 02 OTTAWA 001283

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: CA PGOV NDP
SUBJECT: HARPER SUGGESTS POINT OF NO RETURN ON ELECTIONS

REF: OTTAWA 00640

(SBU) Summary: Conservative Party Leader Harper reacted
strongly to news of the budget deal between the NDP and
Liberals, stating that he would be returning to his caucus
and asking the Conservatives to &put this government out of
its misery.8 The deal announced late Tuesday between NDP
leader Layton and PM Martin was an agreement in principle'
that exchanged CN$4.6 billion in new government spending for
NDP support of the Liberal budget. The deal seemed odd,
since even with NDP support the Liberals would appear to come
up short in a vote, but without the NDP they didn,t stand a
chance. The vote could take place as early as next week,
when the government,s survival would be in the hands of the
three independent MPs and two Conservatives whose ill health
may keep them away from Ottawa. End Summary

Let,s Make a Deal
-----------------

2. (SBU) After several days of eyeing each other across the
dance floor, PM Martin and NDP Leader Layton struck a deal
Tuesday evening that would infuse CN$4.6 billion in new
government spending to NDP priority areas over the next two
years, while deferring corporate tax cuts worth CN$3.6
billion. This new spending would be for housing ($1.6
billion), the environment ($900 million), tuition assistance
($1.5 billion), foreign aid ($500 million), and pension
protection ($100 million). PM Martin emphasized that the
corporate tax cuts deferral would affect larger corporations
but those for small and medium sized firms would go forward.
(NOTE: The tax cuts had been backloaded, with most not
scheduled to take effect until 2008 -- see reftel. In fact,
if the deal survives, the CN $4.6 billion to buy off the NDP
will be funded by this year,s surplus. END NOTE)

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3. (SBU) The deal required some fiscal explaining. Speaking
in Regina today, Finance Minister Ralph Goodale readily
admitted that he would have preferred his original budget and
described recent weeks as &a bit of an untidy process.8
Still he defended the government,s actions and maintained
that he was adhering to fiscally responsible principles,
while placing the blame squarely on the Conservative Party
for its obstructionist attitude in Parliament which forced
the Liberals to make this deal with the NDP. The Canadian
Chamber of Commerce and the Canadian Council of Chief
Executives, meanwhile, were quick to condemn the deal as
damaging to Canada,s sound economic policies and
international investment reputation, as well as being bad for
economic growth. Goodale also stressed that the deal will
not push the country back into deficit spending, something
none of the major parties would advocate.

Party Positioning
-----------------

4. (SBU) The NDP has never been riding so high. Leader Jack
Layton was given a hero,s welcome by party faithful on his
return from the summit, but even then was quick to emphasize
that the deal announced on Tuesday applies only to support
for the budget and is not a blanket endorsement of the
Liberal government. In Layton,s statement about the deal,
he noted there would be an election soon, but in the meantime
he intends &to get as much done as we can.8

5. (SBU) Bloc Quebecois Leader Gilles Duceppe pointed out
that Bloc priority issues such as the federal-provincial
fiscal imbalance and employment insurance reform were not
included in the deal (even though he would have agreed with
much of the social spending). He called it a bad budget for
Quebec and a bad budget for Canada and stated that he would
continue to oppose it, as the Bloc did during the last budget
vote.

6. (SBU) Conservative Leader Stephen Harper was much more
scathing in his criticism and clearer in his intentions. In
comments made to a business group in Amherstburg, Ontario,
broadcast on Wednesday afternoon, Harper referred to the pact
as &death-bed conversions and deals with the devil.8 He
called this the most dysfunctional Parliament he has ever
seen, and decried the situation in which &what the Liberals
don,t steal, the NDP gets to spend.8 But he ended by
laying down the clearest marker yet on a spring election.
&As soon as I get back,8 Harper said, &I will ask my
caucus to put this government out of its misery at the
earliest possible opportunity.8 (NOTE: This does not mix
with his previously stated commitment to get feedback from
his MPs from the April 25-29 Constituency Break before making
a decision. END NOTE)

If It Comes to a Vote
---------------------

7. (SBU) There may still be a way out of this train wreck,
but at least one commentator said a budget vote could come as
early as next week. If this happens, the survival of the
government goes to the question of how the three independents
vote and whether two very ill Conservatives can vote. The
line up of voting members is as follows:

Liberals 131 (not counting Speaker Milliken who
only votes in a tie)
NDP 19
Total 150

Conservatives 99 (of whom two members -- David Chatters
and Darrel Stinson -- are very sick with cancer; their
attendance at a vote, especially one held on short notice, is
not guaranteed)
Bloc Quebecois 54
Total 153

Independent 3 (of which only Carolyn Parrish,s vote
for the Liberals is secure; David Kilgour is undeclared;
Chuck Cadman has recently suggested that he would vote to
bring the government down, but he is also ill with cancer).

In principle the Liberals would need all three independents
to survive, but if one or two Conservative are out sick,
their chances improve. And of course all they have to do is
tie for Speaker Milliken to cast the deciding vote.

8. (SBU) Comment: No matter what happens, Jack Layton and his
NDP come out winners, as his mouse of a party has gotten the
attention of the lions, all the while being able to
innocently state that he is trying to make government work.
In the battle for Canada,s so-called progressive voters,
Layton has finally presented himself and his party as having
power and influence in Ottawa. How the others will fare is
less clear. PM Martin could come out of it as having merely
acceded to the wishes of Canadians in trying to continue to
make government work until Gomery finishes its business and
they can make electoral decisions based on full disclosure.
But he could just as well look increasingly desperate, and
paint himself as one who is willing to do anything to stay in
power. With Harper it is less a question of what he gains
from the deal, as whether there is any way to retrieve the
gauntlet he just laid down if he finds out later this week
that his caucus is wary of going to spring elections. After
today,s comments that would appear to be increasingly
difficult. End Comment.

Visit Canada's Classified Web Site at
http://www.state.sgov.gov/p/wha/ottawa

DICKSON

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