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Ignatieff gives Newfoundland MPs blessing to oppose budget

OTTAWA - Liberal Leader Michael Ignatieff dodged some friendly fire and took a shot at Stephen Harper as he gave his Newfoundland MPs a "one-time" pass to break ranks and vote against the federal budget.

OTTAWA - Liberal Leader Michael Ignatieff dodged some friendly fire and took a shot at Stephen Harper as he gave his Newfoundland MPs a "one-time" pass to break ranks and vote against the federal budget.

The Liberals say they will support the Conservative budget in a key parliamentary vote tonight so that the country isn't plunged into political instability in the midst of an economic crisis.

But Ignatieff is making an exception for his six MPs from Newfoundland and Labrador to let them protest the government's "radical" cuts in federal transfer payments to the province.

"This is not just about Newfoundland and Labrador, this is about the way Stephen Harper runs this federation," Ignatieff said.

"This tendency for unilateral, surprise action is damaging to the national unity of our country.

"Tonight, they will have a one-time vote against the budget in order to send a clear signal to Newfoundland and Labrador and the rest of the country that this is no way to run a federation."

Ignatieff said he met Harper on Tuesday and asked him to "pause" the controversial measure, but the prime minister refused.

The Liberal leader's decision manoeuvres him out of an awkward political fix.

Four of the Newfoundland MPs had already said they would vote against the budget, reluctantly defying Ignatieff's authority as he faced his first test of control over an often-fractious caucus.

By agreeing to a compromise, he avoids the dual daggers of disciplining his MPs and alienating Newfoundland voters.

The Newfoundlanders insist that the budget singles out their province and robs it of some $1.6 billion in federal funding.

Critics accuse Harper of using the budget to settle a political score with Newfoundland Premier Danny Williams, who launched an "Anybody But Conservative" campaign during the federal election.

Williams hailed Ignatieff's decision.

"He shows real courage this early in his leadership to be making a move like that. The MPs are being allowed to do what they need to do on behalf of their province and I think the fact that a national leader recognizes that is very important."

Williams accused Harper of being divisive, a threat to national unity, and of pitting provinces against each other.

"I'm a big boy. I understand that if you give an elbow, you're going to get an elbow back. But you don't get hit over the head with a sledgehammer, and that's what this guy does.

"The Conservative party has to dump Harper or otherwise they're going to find themselves back in a phone booth with a caucus of a couple of people."

The budget is poised to win approval in principle despite mounting anxiety among Liberals about propping up the minority government.

A Liberal amendment to the budget sailed through the House of Commons on Monday night, supported by the Tories.

The amendment - requiring the government to submit periodic progress reports on the budget - was passed by a vote of 214 to 84, with the NDP and Bloc Quebecois voting against it.

The amendment was the price Ignatieff set for his party's support in the main budget vote tonight.

On Monday, Ignatieff suggested he could defeat the government in future if it continues to refuse to rectify the transfer payment problem.

He noted that regional fairness is one of the issues that must be addressed in the progress reports demanded by the Liberals, the first of which is due in late March.

There's still no sign that the government is willing to bend on the issue, which involves a change to the complicated formula for calculating equalization payments to have-not provinces.

Newfoundland no longer collects equalization but Williams said the change reduces related payments under the 1985 Atlantic Accord, which determines the province's share of offshore oil revenues. He said Newfoundland will lose $1.5 billion in offset payments and another $80 million in health care transfers.

Finance Minister Jim Flaherty, who held a private briefing for opposition MPs on the matter, said the change stems from his decision to cap the growth of equalization payments to the rate of economic growth. And he said he won't back off that to satisfy one province.

After being briefed, Liberal finance critic John McCallum said it appears Newfoundland will lose $1 billion over three years - not the $1.5 billion estimated by Williams.

Nevertheless, he said the province has been unfairly penalized, unlike Nova Scotia and Manitoba for whom Flaherty has agreed to cushion the blow from the equalization changes.

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