Flaherty to axe subsidies to political parties in fiscal update: sources

The Conservatives are poised to eliminate the public subsidies that Canada's five major political parties receive, a move that would save $30 million a year but could cripple the opposition.

Sources told CBC News and other media outlets Wednesday that the subsidy cut is one of the key elements of the fiscal update that Finance Minister Jim Flaherty will present Thursday in Ottawa.

Parties currently receive $1.95 for every vote they receive in a federal election, provided they win at least two per cent of the nationwide popular vote. The annual subsidy is used to pay for staff and expenses.

On the surface, it would appear Prime Minister Stephen Harper's Conservatives have the most to lose if subsidies were cut because they garnered the most votes in the October election. The Conservatives earned $10 million in subsidies, compared to $7.7 million for the Liberals, $4.9 million for the NDP, $2.6 million for the Bloc Québécois and $1.8 million for the Greens.

But because the Conservatives have such a strong fundraising base, their subsidy represents only 37 per cent of the party's total revenues.

By comparison, the subsidy amounts to 63 per cent of the Liberals' funding, 86 per cent of the Bloc's, 57 per cent of the NDP's and 65 per cent of the Greens'.

Ploy aimed at 'bankrupting the Liberal party'

"It's a very cynical ploy on Mr. Harper's part obviously geared toward bankrupting the Liberal party more than helping out the Canadian taxpayer," said Green Leader Elizabeth May.

Liberals said the fiscal update should focus on specific measures to help Canadians rather than on party subsidies.

"Is this really what we should be talking about, or should we be talking about the real measures that are going to help [Canadians] have a more secure job, more secure pensions and [allow their] savings to grow or at least be more secure?" Liberal MP Gerard Kennedy said.

But Vic Toews, a Conservative and president of the Treasury Board, rejected the suggestion that a subsidy cut would mostly affect the opposition.

"It would hurt us the most," said Vic Toews, although he would not officially confirm that subsidy cuts were part of the fiscal update.

A steady stream of leaks about the content of the fiscal update has been funneled to the media in recent days. The details suggest the Conservatives want to portray themselves as willing to share in Canadians' economic pain.

"I urge the member to wait until tomorrow, and we will see who wants to lead by example," House Leader Jay Hill said Wednesday in Ottawa.

Other items expected in the update:

• Cuts to substantial salary increases for federally appointed judges.
• Measures to rein in spending by MPs and top civil servants, such as new restrictions on travel and expenses.
• Elimination or trimming of the roughly $6,500-per-MP salary increase scheduled to go into effect April 1, at a cost of $2 million.
• Cancellation of Christmas bonuses for management-class civil servants and executives of Crown corporations.
• Temporary relief for Canadians from mandated withdrawals from registered retirement income funds (RRIFs), a measure estimated to be worth about $135 million.
• A likely concession that Canada is heading for both a recession and a deficit.

Thursday's update will not contain the multi-billion-dollar stimulus package being prepared to help Canadians weather the global financial crisis. That measure will be announced in the budget early next year.

"Tomorrow's statement, as I said to the House before, is not a mini-budget. It is an economic update," Flaherty said.

Thursday's measures — particularly the controls on MP and bureaucrat expenditures — were dismissed by opposition parties as symbolic gestures that pale compared to the responses from other nations.

"They're into the gimmicky stuff, and they're not acting quickly enough on the substantive issues that are affecting people," said Vancouver Liberal MP Ujjal Dosanjh.

Since the economic slowdown accelerated into a global crisis earlier this fall, international governments have created stimulus packages to help their economies. The U.S. has already begun spending or committed to spend $1.5 trillion US, while Britain has put up $418 billion, Germany $213 billion, Japan $275 billion and China $600 billion.

Canada has announced no new stimulus, although it injected more than $100 billion into domestic money markets to ensure banks have sufficient capitalization to continue lending to homeowners and businesses.