June 6 budget will phase out per-vote subsidy

The federal budget will be"reintroduced" in the House of Commons on June 6 and will include a phasing out of the per-vote subsidy for political parties, Finance Minister Jim Flaherty announced Wednesday.

"While minor tweaks and adjustments will be presented, this will almost exclusively restate all the same commitments made two months ago in the budget, along with some platform commitments," Flaherty said in the foyer of the House of Commons Wednesday morning.

One of those commitments, Flaherty confirmed, will be to scrap the $2-per-vote subsidy to political parties.

The Conservatives havewanted to eliminate the taxpayer-funded subsidy that was introduced in 2004, and during the campaign Prime MinisterStephen Harper said his party would move quickly to scrap it if the Conservatives won a majority government.

Phasing out the subsidy will mostly hurt the Liberals, NDP and Bloc Qubcois whose fundraising strategies aren't as successful as the Conservatives' and it will mean the loss of millions of dollars in revenue for the parties.

'Take away public financing and what you're basically saying is those with the best ability to raise money get to have their ideas heard' NDP Leader Jack Layton

NDP Leader Jack Layton voiced his opposition to the Conservatives' plan, saying it "opens the door for big money to come back into politics" and means private fundraising will "become the engine of the political system."

"We think that's wrong," Layton said Wednesday following a morning meeting with his caucus on Parliament Hill. He said his party will live with the new rules and the NDP will work harder to raise funds, but he's worried about the impact the elimination of public financing will have on Canada's democracy.

"I think that our democracy is better served if ideas have equal opportunity in the competition for Canadians' consideration, and that's what public financing is designed to do," he said. "Take away public financing and what you're basically saying is those with the best ability to raise money get to have their ideas heard, and I don't think that's helpful for a democratic society."

Bob Rae, who was named interim Liberal leader Wednesday, also reacted to Flaherty's announcement that the Conservatives intend to quickly follow through on their pledge to scrap the subsidy.

He said many countries around the world have public financing for political parties and the Liberals will try to remind Canadians that it's an "important feature of our democratic life."

"Even majority governments can't be oblivious to public opinion," said Rae. "Public opinion counts for a lot and that's where this battle has to take place."

Raeresponded to a question about speculation that the Conservatives are cutting the subsidy in order to deliberatelyhurt their political opponents by saying, "if there's any spirit of vindictiveness in why and how this is being done thenI can't think of anything more wrong."

$2B for Quebec HST transition

Flaherty said the June 6 budget would also include a "provision" for an HST compensation deal for Quebec. The province is seeking more than $2 billion to match compensation given to other provinces such as B.C. and Ontario for harmonizing provincial sales taxes with the federal GST.

The government plans to move ahead with a massive operational review of program spending in order to eliminate the deficit one year earlier than was originally projected in the March budget, Flaherty said.

"This will achieve $4 billion in annual savings and allow the government to return to balance one year early by 2014-2015," he said.

Parliament begins its new session just days ahead of the budget,on June 2, with the election of the Speaker of the House of Commons.The throne speech will be delivered the following day by Gov. Gen. David Johnston.

The last Conservative budget, titled "The Next Phase of Canada's Economic Action Plan," was largely designed as a pre-election platform. It was a mixed bag of promises with something for everyone and it projected Canada would be out of deficit and carrying a surplus by 2015-2016.

The budget contained some measures that were on the NDP's list of budget priorities, including an extension of the home energy retrofit program and more financial support for seniors. It didn't meet other demands from the NDP such as reforms to the Canada Pension Plan and lifting the sales tax from home heating costs. It had some measures in common with Liberal proposals, including loan forgiveness for new doctors and nurses in rural areas and a tax credit for volunteer firefighters.

The olive branches to the opposition parties were not enough to win their support and the budget was quickly denounced by the NDP, Liberals and Bloc Quebecois. The March budget never did come to a vote in the House of Commons, however, because the government fell on a motion of non-confidence.

The NDP now forms the Official Opposition, but with a majority government, the Conservatives don't need their support, or any other party's to get the budget passed.

Flaherty said Wednesday he has received no demands from the opposition parties for this budget, and while there should be "appropriate debate" on it, it shouldn't take too long to get it through the House of Commons.

"I'm glad it's likely to be passed. That's new, we haven't had that luxury in what, five years, more than five years, but it's likely to be passed," he said.

The Conservatives' platform in the spring election was largely comprised of the commitments made in the budget. Harper told Canadians he needed a majority government in order to implement the budget plan, and on May 2, he won that mandate.

Flaherty said Canadians endorsed the Conservatives' plan to focus on the economy, jobs and on implementing the budget plan.

"We thank Canadians for their trust. We are working to meet our commitments to them," he said.

The finance minister said he will be meeting in the next week with private sector forecasters to determine if any numbers need to be revised from March's budget forecasts for 2011. He said he expects them to be largely the same, but if required those revisions will be among the "tweaks" to the document.

"Basically this is the March 22 with a couple of additions from the platform the HST in Quebec and the phasing out of the political subsidy," said Flaherty, adding that $2.2 billion is the figure discussed for the tax compensation.