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Thu, Feb 05, 2009 - Page 10 News List

Canadian parliament passes economic stimulus plan

AFP , OTTAWA

Canada’s parliament on Tuesday approved a C$40 billion (US$32 billion), two-year economic stimulus plan, assuring the survival of Canadian Prime Minister Stephen Harper’s minority Conservative government.

The measures were supported by 211 of 308 parliamentarians in a budget vote, with the main opposition Liberals propping up the ruling Conservatives in order to avoid a fourth snap election in five years.

The leftist New Democrats, separatist Bloc Quebecois and six rogue Liberal MPs opposed the budget.

The result was expected. Liberal leader Michael Ignatieff announced his intentions last week after the budget was unveiled, knowing his party is ill-prepared to fight an election Canadians do not want during an economic crisis.

But it is less clear — as economists forecast a sharper downturn than the government hopes and the Liberals offered only grudging support for the plan, — if the stimulus will be enough to pull Canada’s economy out of recession.

Canadians, meanwhile, are left wondering if the cost of political stability — Canada’s first budget deficit in 11 years — is worth it.

The stimulus amounts to a 1.9 percent boost in economic activity this year and 1.4 percent next year.

The plan includes C$20 billion in personal tax relief over five years, aid for sectors in peril and the largest infrastructure spending in the nation’s history.

But it will result in a C$1.1 billion budget deficit for the fiscal year ending next month and a C$64 billion budget deficit over the next two fiscal years, the government said.

Canada is not expected to see another surplus until 2014. Its last deficit, in 1996, was C$8.9 billion.

While in a better position relative to its G7 peers, Canada, a major exporter, had not escaped the downturn.

More than 100,000 jobs were lost in the past two months and the economy is forecast by the finance department to decline by 0.8 percent this year.

Canada is now the last of the G7 industrialized nations to roll out a stimulus plan to help turn around a global recession.

Also See: New Zealand unveils stimulus plan

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