• 2003/01/29 - Bank merger hearings off to tough start,  GLOBE AND MAIL
• 2003/01/27 -Chretien faces challenges OTTAWA (CP) -- Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances shou,  The Leader-Post (Regina)
• 2003/01/27 -A FULL AGENDA EXTERNAL AND INTERNAL PRESSURES AND PARTISAN BICKERING WEIGH ON PRIME MINISTER JEAN CHRETIEN AS PARLIAMENT RETURNS TODAY AFTER THE HOLIDAY BREAK. Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances should be enough to,  The London Free Press
• 2003/01/26 - Rock, hard place; As Parliament reopens, PM must deal with a fractious caucus, 10 demanding premiers and the threat of war Ottawa - WEIGHTY MATTERS such as a possible foreign war, domestic health care and the state of the country's finances should be,  The Sunday Herald
• 2003/01/26 - BC-WKND-Parl-Returns, Rpt OTTAWA (CP) _ Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances shoul , cpw
• 2003/01/24 - External and internal pressures weigh on Chretien as Parliament resumes OTTAWA (CP) _ Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances shoul , cpw
• 2003/01/22 -RRSP limit may hit $21,000: Ottawa would lose tax revenue, but lift stock markets and retirement prospects OTTAWA - The federal government is considering raising the limit for RRSP contributions by as much as $7,500 in the upcoming fed,  National Post
• 2003/01/21 - MPs angered: Liberals stunned at PM's financing reform OTTAWA - Liberal MPs reacted with disbelief Monday, after Prime Minister Jean Chretien signalled his intent to make the reform o,  The Telegram (St. John's)
• 2003/01/21 -Chrétien pushes donation changes; Liberals stunned as PM puts party financing reform at top of agenda Liberal MPs reacted with disbelief yesterday, after Prime Minister Jean Chrétien signalled his intent to make the reform of pol,  The Moncton Times and Transcri
• 2003/01/21- Liberals stunned as Chretien puts party financing reform at top of agenda OTTAWA (CP) _ Liberal  MPs reacted with disbelief Monday after Prime Minister Jean Chretien signalled his intent to make the refo , cpw
• 2003/01/21 -Chretien accused of 'bravado': Liberals stunned as PM puts party financing reform at top of agenda OTTAWA - Liberal MPs reacted with disbelief yesterday after Prime Minister Jean Chretien signalled his intent to make the reform, The Kingston Whig-Standard
• 2003/01/16 -Merger-happy execs need to change public opinion MERGER-HAPPY financial-services executives, and their supporters in the national media, still don't get it, do they? They keep g,  The Halifax Daily News
• 2003/01/15 - Manulife-CIBC Liberals not keen on bank-insurer deals , GLOBE AND MAIL
• 2002/12/26 - Battered Grits hope for healing holiday OTTAWA -- Glum Liberals are heading back to their ridings for the holidays hopeful that the parliamentary respite will give them , The StarPhoenix (Saskatoon)
• 2002/12/21- PM's donation plan stuns party,  GLOBE AND MAIL
• 2002/12/13 - LIMITED BANK MERGERS OK - SENATE REPORT,  WORLD REPORT (08:00)
• 2002/12/12 - Bank mergers to get Senate nod; Chamber finance committee to report today Quest for size to compete abroad seen as legitimate A Senate committee is set to agree that mergers among the big banks are a legitimate strategy after hearings on whether they are , Toronto Star
• 2002/12/12 - Chrétien tries to rally MPs after 'toughest fall session' Declaring I,  Toronto Star
• 2002/12/12 -Shell-shocked Liberals head home to regroup after bruising four months: MPs hope busy House schedule in new year will restore confidence in party performance Glum Liberals are heading back to their ridings for the holidays hopeful that the parliamentary respite will give them a chance,  The Ottawa Citizen
• 2002/12/11 -Canadians should expect Grit bickering, Chretien says Leadership bids will bring internal , GLOBE AND MAIL
• 2002/12/09 - POLITICS Lib-er-al: A once great party; name now mud,  GLOBE AND MAIL
• 2002/12/09 -Fundraising reform needed TORONTO -- The reform era in Canadian political fundraising has come and gone. If you were in the bath, you might have missed it,  The Leader-Post (Regina)
• 2002/12/09 -MPs call for aggressive debt repayments: Debt-to-GDP target: 30% OTTAWA - Canada needs to continue to aggressively pay down its $536-billion national debt because of the future financing demand , National Post
• 2002/12/08 -Interview with Roy Cullen and Bob Mills CRAIG OLIVER: Pollsters are warning the Kyoto vote has the ability to split the country. Support for the Kyoto deal is plunging , CTV
• 2002/12/07 -Politicians fail to see the flaws in fundraising The reform era in Canadian political fundraising has come and gone. If you were in the bath, you might have missed it. A week ag,  Times Colonist (Victoria)
• 2002/12/06 -Liberals seen snubbing Senate banking report,  GLOBE AND MAIL
• 2002/12/06 -Paying political IOUs In the last part of the Post's five-part series on Paul Martin, the man most likely to be Canada's next prime minister, Anne Daw,  National Post
• 2002/12/06 -Mr. Martin's virtual cabinet The question, increasingly, is not whether Paul Martin becomes prime minister, but when. Although Mr. Martin is probably more th, National Post
• 2002/12/06 - No problem? That's the problem The reform era in Canadian political fundraising has come and gone. If you were in the bath, you might have missed it. Last Frid, National Post
• 2002/12/02 -An open invitationto buy influence An open invitation to buy influenceFeds may ban corporate, union donations Nov. 29. The Star quotes Toronto-area MP Roy Cullen o, Toronto Star
• 2002/11/30 -Corporate donations ban divides Liberals: Legislation likely next week Liberals are split over the idea of banning corporate donations to political parties, suggesting Prime Minister Jean Chretien wi,  Calgary Herald
• 2002/11/30 -PM faces caucus battle over political finance reform Liberals are split over the idea of banning corporate donations to political parties, suggesting Prime Minister Jean Chretien wi, The Ottawa Citizen
• 2002/11/30 -Chretien faces battle with MPs over ban on corporate donations OTTAWA -- Liberals are split over the idea of banning corporate donations to political parties, suggesting Prime Minister Jean C, Times Colonist (Victoria)
• 2002/11/30 -Corporate, union donations to parties divide Liberals: Proposed bill would limit financial aid in campaigns Liberals are split over the idea of banning corporate donations to political parties, suggesting Prime Minister Jean Chretien wi,  Edmonton Journal
• 2002/11/30 -Chretien torn on whether to ban corporate, union donations, say insiders OTTAWA (CP) _ Prime Minister Jean Chretien is considering legislation to ban corporate donations to federal political parties, a, cpw
• 2002/11/30 -PM could face caucus fight over donations: Proposed ban on corporate contributions may spark new dispute within Liberal party OTTAWA -- Liberals are split over the idea of banning corporate donations to political parties, suggesting Prime Minister Jean C, Vancouver Sun
• 2002/11/26 -TALKBACK ABOUT Cullen INTERVIEW,  AS IT HAPPENS
• 2002/11/25 -LIBERAL BACKBENCH OPPOSITION TO KYOTO GROWING, Source: AS IT HAPPENS
• 2002/11/22 -Chretien gives unruly caucus a directive Kyoto vote will be a confidence motion,, Source: GLOBE AND MAIL
• 2002/11/06 -PM tried for two weeks to avoid vote OTTAWA - Jean Chretien and his closest supporters have spent a considerable amount of time over the past two weeks in secret mee,  National Post
• 2002/11/05 -Clinging to power damages Liberals , The Fredericton Daily Gleaner
• 2002/11/05 -Discussion on House vote,: THE NATIONAL
• 2002/11/01 -DEMOCRACY OVER CONTROL It's called democracy and it's time to use it to select House of Commons committee heads. The time-honoured method in Ottawa is,  The London Free Press
• 2002/11/01 - Chretien battles backbench revolt Key Commons vote delayed until Tuesday, GLOBE AND MAIL
• 2002/11/01 - Bank saga makes Manley look bad Halting of merger plan suggests a chasm,  GLOBE AND MAIL
  

Bank merger hearings off to tough start

OTTAWA A key parliamentary committee kicked off hearings into bank mergers yesterday, with MPs providing early evidence that consolidation-hungry financial institutions won't find the same hospitable environment they enjoyed weeks ago at a parallel Senate committee. Members of the House of Commons standing finance committee indicated yesterday that many of them have the same concerns about bank mergers that they had five years ago, when the federal government rejected two bank merger proposals.

The case against bank mergers -- which seemed to have little impact on the Senate committee, which held hearings late last year -- got off to a strong start before the Commons committee yesterday, as the Canadian Federation of Business emphasized the need for more competition in the banking sector.

The CFIB presented the committee with a survey that found a majority of its members are against bank mergers, with only 10 per cent saying they support mergers under present conditions. The survey, based on 1,943 e-mail responses between Jan. 23 and Jan. 27, also revealed that 58 per cent of respondents wouldn't favour bank mergers without additional competition in the industry.

Catherine Swift, president of the small business group, pointed out that Japan has some of the largest banks in the world but has a long-struggling economy. "Bigness, we don't believe, is a precursor to success."

Ms. Swift said the banking industry already lacks competition, particularly after the merger between Canada Trust Co. and Toronto-Dominion Bank . Allowing more mergers would only reduce access to branches and would reduce competition in the commercial loan business, she said. "This isn't really a competitive industry."

Committee members from three political parties expressed reservations about bank mergers. Shawn Murphy, a Liberal MP from Prince Edward Island, said the big, Toronto-based banks sometimes retreat from industries that are important to local communities.

Paul Crete, a Bloc Quebecois MP from Kamouraska-Riviere-du-Loup, said both banks and credit unions are disappearing in his region.

Roy Cullen, a Liberal who represents the Toronto-area riding of Etobicoke North, suggested the committee should stick to its mandate of helping define the public interest element of bank mergers -- not pronouncing mergers themselves as positive or not.

Gaining the support of a majority of the 18-member committee would appear to be an uphill battle for the banks. Many of the 10 Liberals on the committee question what has changed since their government turned down the two proposals. The two Bloc Quebecois and one New Democratic members are very unlikely to side with the banks.

The Senate committee consists only of Liberals and Conservatives, a number of whom have ties to Canada's big banks. The Commons committee, however, is more diverse and more accountable to constituents. The Senate report, released last month, concluded that Canada's economy would be strengthened by having just three large banks, opening the door to up to two blockbuster mergers. The committee also said Finance Minister John Manley should stay out of the merger approval process unless there's a very good reason to intervene.

Attempts by the banks to merge -- most recently by the Bank of Montreal and the Bank of Nova Scotia -- have been thwarted by Ottawa on at least two occasions. BMO and Scotiabank abandoned their plans in October after the Prime Minister's Office signalled opposition to a deal.

The government attempted to clarify its rules after rejecting the two merger bids in 1998. It erected three key criteria for approval of such a deal: the effect on competition, the effect on the financial viability of the banks and the public interest. The two parliamentary committees were asked by Mr. Manley to look into the public interest element of the government's rules for bank mergers.

====

Chretien faces challenges

OTTAWA (CP) -- Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances should be enough to keep any prime minister busy.

But Jean Chretien has even more to worry about as Parliament returns Monday from its holiday break.

He must also deal with partisan bickering that shows little sign of subsiding as the governing Liberals move toward the November convention where they will choose a new chief.

Certainly his backbenchers are under no illusion that internal feuding so evident in the pre-Christmas session of the Commons will magically disappear in the new year.

"We're in leadership mode, there's going to be debate and disagreement," says Toronto MP Paul Szabo.

"It's probably going to get nasty sometimes ... The challenge is to be sure we continue to do our jobs at the same time."

Chretien has already laid out the key items on his agenda as he enters his final year in power.

At the top of the list is health care, a topic he will hash over with provincial premiers the first week of February in Ottawa.

The prime minister has already waved the carrot of more federal funding, saying he has a "figure in mind" for the budget to be delivered by Finance Minister John Manley later in February.

Chretien hasn't said what that figure is.

He may have more elbow room than anticipated, judging by the latest figures showing the federal surplus reached $8.2 billion in the first nine months of the fiscal year -- more than double the $4 billion Manley had previously forecast for the full year.

But there are more demands than health care on the federal treasury.

The defence lobby has been clamouring for a substantial boost in funding for the long-neglected Canadian Forces, especially with the possibility of war in Iraq.

There has been speculation the government could pump up to $1.5 billion into projects designed to aid children, including enhanced federal tax credits for poor families and more funding for the provinces to spend on day care and other programs.

There is general consensus that health care will still take a big bite of whatever money is available. But Chretien has made it clear he wants something in return -- agreement from the provinces to ensure the cash is well spent and to prove it by publicly accounting for the expenditures.

Health Minister Anne McLellan has laid out the areas Ottawa considers top priorities, among them expanded home care, more 24-hour clinics for primary care, better end-of-life care and coverage of catastrophic drug costs.

Chretien, who has been plagued by backbench dissent on other issues, appears to have his team solidly onside for this one.

A number of Liberals were adamant, in recent interviews, that Ottawa should stand firm against any provincial demand to simply hand over the cash and let the premiers decide what to do with it.

"My concern is, if we just give money to the provinces, quite a bit of it might go into salaries," said Montreal-area MP Nick Discepola.

He worries that doctors and unionized hospital workers are "just waiting to get their share. But that might not solve the problem."

Toronto backbencher Steve Mahoney says his constituents agree that strings should be attached to any new federal funding.

"There is a fear the federal government is just going to cave in to the provinces," says Mahoney. "They're saying don't do it. If you're going to give them money for (CT and MRI) scanners, make sure they're not buying lawn mowers."

Winnipeg MP Reg Alcock, a key organizer for the leadership campaign of former finance minister Paul Martin and no friend of Chretien on most issues, makes an exception for this initiative.

"I think Chretien will have a huge amount of support around health care," says Alcock. "You're going to see a united caucus."

Before the prime minister can even get to his conference with the premiers, however, he may be sidetracked by an even greater issue -- potential hostilities in Iraq.

Chretien has clearly stated he would sign on to military action against Saddam Hussein if it is backed by a mandate from the United Nations.

He has been less clear on what he would do if the UN Security Council is divided and the United States chooses to go it alone, or with help from only a handful of allies.

The word from the backbenches is similarly muddled.

"I've had a lot of feedback (from constituents) and pretty well everyone is saying we shouldn't go to war without a UN mandate," says Toronto MP Roy Cullen.

"And some don't think we should go to war period."

Szabo agrees he's hearing the same thing -- but qualifies it by saying public opinion could change if the UN is deadlocked and if other traditional allies, like Britain, agree to join a coalition with the Americans.

That's what happened in 1999, when Canada participated in the Kosovo war under a NATO banner without United Nations approval.

Chretien has promised a parliamentary debate before any decision is made on whether to deploy troops.

But it would likely be a talkfest in which MPs would voice their opinions without actually voting. That would leave the final decision, as usual, in the hands of Chretien and his cabinet.

Most of the prime minister's political troops accept that fact of life, if somewhat grudgingly.

"When you're declaring war on somebody, my preference would be that there be a vote on it," says Discepola. "But at the end of the day the government has to govern."

====

A FULL AGENDA EXTERNAL AND INTERNAL PRESSURES AND PARTISAN BICKERING WEIGH ON PRIME MINISTER JEAN CHRETIEN AS PARLIAMENT RETURNS TODAY AFTER THE HOLIDAY BREAK.

Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances should be enough to keep any prime minister busy.

But Jean Chretien has even more to worry about as Parliament returns today from its holiday break.

He must also deal with partisan bickering that shows little sign of subsiding as the governing Liberals move toward the November convention where they will choose a new chief.

Certainly his backbenchers are under no illusion internal feuding so evident in the pre-Christmas session of the Commons will magically disappear in the new year.

"We're in leadership mode. There's going to be debate and disagreement," says Toronto MP Paul Szabo.

"It's probably going to get nasty sometimes . . . The challenge is to be sure we continue to do our jobs at the same time."

Chretien has already laid out the key items on his agenda as he enters his final year in power.

At the top of the list is health care, a topic he will hash over with provincial premiers the first week of February in Ottawa.

The prime minister has already waved the carrot of more federal funding, saying he has a "figure in mind" for the budget to be delivered by Finance Minister John Manley later in February.

Chretien hasn't said what that figure is.

He may have more elbow room than anticipated, judging by the latest figures showing the federal surplus reached $8.2 billion in the first nine months of the fiscal year -- more than double the $4 billion Manley had forecast for the full year.

There are more demands than health care on the treasury.

The defence lobby has been clamouring for a boost in funding for the long-neglected Canadian Forces, especially with the possibility of war in Iraq.

There has been speculation the government could pump up to $1.5 billion into projects designed to aid children, including enhanced federal tax credits for poor families and more funding for the provinces to spend on day care and other programs.

There is a consensus health care will still take a big bite of whatever money is available. But Chretien has made it clear he wants something in return -- agreement from the provinces to ensure the cash is well spent and to prove it by publicly accounting for the expenditures.

Health Minister Anne McLellan has laid out the areas Ottawa considers top priorities, among them expanded home care, more 24-hour clinics for primary care, better end-of-life care and coverage of catastrophic drug costs.

Chretien, who has been plagued by backbench dissent on other issues, appears to have his team solidly onside for this one.

A number of Liberals were adamant, in recent interviews, that Ottawa should stand firm against any provincial demand to simply hand over the cash and let the premiers decide what to do with it.

"My concern is, if we just give money to the provinces, quite a bit of it might go into salaries," said Montreal-area MP Nick Discepola.

He worries doctors and unionized hospital workers are "just waiting to get their share. But that might not solve the problem."

Toronto backbencher Steve Mahoney says his constituents agree that strings should be attached to any new federal funding.

"There is a fear the federal government is just going to cave in to the provinces," says Mahoney. "They're saying don't do it. If you're going to give them money for (CT and MRI) scanners, make sure they're not buying lawn mowers."

Winnipeg MP Reg Alcock, a key organizer for the leadership campaign of former finance minister Paul Martin and no friend of Chretien on most issues, makes an exception for this initiative.

"I think Chretien will have a huge amount of support around health care. You're going to see a united caucus."

Before the prime minister can even get to his conference with the premiers, however, he may be sidetracked by an even greater issue -- potential hostilities in Iraq.

Chretien has clearly stated he would sign on to military action against Saddam Hussein if it is backed by a mandate from the United Nations.

He has been less clear on what he would do if the UN Security Council is divided and the United States chooses to go it alone, or with help from only a handful of allies.

The word from the backbenches is similarly muddled.

"I've had a lot of feedback (from constituents) and pretty well everyone is saying we shouldn't go to war without a UN mandate," says Toronto MP Roy Cullen. KEYWORDS=FEDERAL GOVERNMENT

====

Rock, hard place; As Parliament reopens, PM must deal with a fractious caucus, 10 demanding premiers and the threat of war

Ottawa - WEIGHTY MATTERS such as a possible foreign war, domestic health care and the state of the country's finances should be enough to keep any prime minister busy.

But Jean Chretien has even more to worry about as Parliament returns Monday from its holiday break.

He must also deal with partisan bickering that shows little sign of subsiding as the governing Liberals move toward the November convention where they will choose a new chief.

Certainly his backbenchers are under no illusion that internal feuding so evident in the pre-Christmas session of the Commons will magically disappear in the new year.

"We're in leadership mode, there's going to be debate and disagreement," says Toronto MP Paul Szabo.

"It's probably going to get nasty sometimes. . . . The challenge is to be sure we continue to do our jobs at the same time."

Chretien has already laid out the key items on his agenda as he enters his final year in power.

At the top of the list is health care, a topic he will hash over with provincial premiers the first week of February in Ottawa.

The prime minister has already waved the carrot of more federal funding, saying he has a "figure in mind" for the budget to be delivered by Finance Minister John Manley later in February.

Chretien hasn't said what that figure is.

He may have more elbow room than anticipated, judging by the latest figures showing the federal surplus reached $8.2 billion in the first nine months of the fiscal year - more than double the $4 billion Manley had previously forecast for the full year.

But there are more demands than health care on the federal treasury. The defence lobby has been clamouring for a substantial boost in funding for the long-neglected Canadian Forces, especially with the possibility of war in Iraq.

There has been speculation the government could pump up to $1.5 billion into projects designed to aid children, including enhanced federal tax credits for poor families and more funding for the provinces to spend on day care and other programs.

There is general consensus that health care will still take a big bite of whatever money is available. But Chretien has made it clear he wants something in return - agreement from the provinces to ensure the cash is well spent and to prove it by publicly accounting for the expenditures.

Health Minister Anne McLellan has laid out the areas Ottawa considers top priorities, among them expanded home care, more 24-hour clinics for primary care, better end-of-life care and coverage of catastrophic drug costs.

Chretien, who has been plagued by backbench dissent on other issues, appears to have his team solidly onside for this one.

A number of Liberals were adamant, in recent interviews, that Ottawa should stand firm against any provincial demand to simply hand over the cash and let the premiers decide what to do with it.

"My concern is, if we just give money to the provinces, quite a bit of it might go into salaries," said Montreal-area MP Nick Discepola. He worries that doctors and unionized hospital workers are "just waiting to get their share. But that might not solve the problem."

Toronto backbencher Steve Mahoney says his constituents agree that strings should be attached to any new federal funding.

"There is a fear the federal government is just going to cave in to the provinces," says Mahoney. "They're saying don't do it. If you're going to give them money for (CT and MRI) scanners, make sure they're not buying lawn mowers."

Winnipeg MP Reg Alcock, a key organizer for the leadership campaign of former finance minister Paul Martin and no friend of Chretien on most issues, makes an exception for this initiative.

"I think Chretien will have a huge amount of support around health care," says Alcock. "You're going to see a united caucus."

Before the prime minister can even get to his conference with the premiers, however, he may be sidetracked by an even greater issue - potential hostilities in Iraq.

Chretien has clearly stated he would sign on to military action against Saddam Hussein if it is backed by a mandate from the United Nations.

He has been less clear on what he would do if the UN Security Council is divided and the United States chooses to go it alone, or with help from only a handful of allies.

The word from the backbenches is similarly muddled.

"I've had a lot of feedback (from constituents) and pretty well everyone is saying we shouldn't go to war without a UN mandate," says Toronto MP Roy Cullen.

"And some don't think we should go to war period."

Szabo agrees he's hearing the same thing - but qualifies it by saying public opinion could change if the UN is deadlocked and if other traditional allies, like Britain, agree to join a coalition with the Americans.

That's what happened in 1999, when Canada participated in the Kosovo war under a NATO banner without United Nations approval.

Chretien has promised a parliamentary debate before any decision is made on whether to deploy troops.

But it would likely be a talkfest in which MPs would voice their opinions without actually voting. That would leave the final decision, as usual, in the hands of Chretien and his cabinet.

Most of the prime minister's political troops accept that fact of life, if somewhat grudgingly.

"When you're declaring war on somebody, my preference would be that there be a vote on it," says Discepola. "But at the end of the day the government has to govern."

Some backbenchers are less willing to leave it to the boss on other matters - such as Chretien's crusade to reform political party financing.

The prime minister has been considering either an outright ban or drastic limits on corporate donations, a move that worries many Liberals who note that business contributions made up 60 per cent of the money raised by the party in the 2000 election campaign.

Chretien's avowed aim is to counter the public perception that it's too easy to buy influence in Ottawa, and his proposed legislation would apply to all parties, not just his own.

But he has raised the hackles of rank-and-file MPs by saying he considers this a matter of confidence - implicitly suggesting that if his backbenchers vote against him they will precipitate an unwanted snap election.

====

BC-WKND-Parl-Returns, Rpt

OTTAWA (CP) _ Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances should be enough to keep any prime minister busy.

But Jean Chretien has even more to worry about as Parliament returns Monday from its holiday break.

He must also deal with partisan bickering that shows little sign of subsiding as the governing Liberals move toward the November convention where they will choose a new chief.

Certainly his backbenchers are under no illusion that internal feuding so evident in the pre-Christmas session of the Commons will magically disappear in the new year.

``We're in leadership mode, there's going to be debate and disagreement,'' says Toronto MP Paul Szabo.

``It's probably going to get nasty sometimes.... The challenge is to be sure we continue to do our jobs at the same time.''

Chretien has already laid out the key items on his agenda as he enters his final year in power.

At the top of the list is health care, a topic he will hash over with provincial premiers the first week of February in Ottawa.

The prime minister has already waved the carrot of more federal funding, saying he has a ``figure in mind'' for the budget to be delivered by Finance Minister John Manley later in February.

Chretien hasn't said what that figure is.

He may have more elbow room than anticipated, judging by the latest figures showing the federal surplus reached $8.2 billion in the first nine months of the fiscal year _ more than double the $4 billion Manley had previously forecast for the full year.

But there are more demands than health care on the federal treasury.

The defence lobby has been clamouring for a substantial boost in funding for the long-neglected Canadian Forces, especially with the possibility of war in Iraq.

There has been speculation the government could pump up to $1.5 billion into projects designed to aid children, including enhanced federal tax credits for poor families and more funding for the provinces to spend on day care and other programs.

There is general consensus that health care will still take a big bite of whatever money is available. But Chretien has made it clear he wants something in return _ agreement from the provinces to ensure the cash is well spent and to prove it by publicly accounting for the expenditures.

Health Minister Anne McLellan has laid out the areas Ottawa considers top priorities, among them expanded home care, more 24-hour clinics for primary care, better end-of-life care and coverage of catastrophic drug costs.

Chretien, who has been plagued by backbench dissent on other issues, appears to have his team solidly onside for this one.

A number of Liberals were adamant, in recent interviews, that Ottawa should stand firm against any provincial demand to simply hand over the cash and let the premiers decide what to do with it.

``My concern is, if we just give money to the provinces, quite a bit of it might go into salaries,'' said Montreal-area MP Nick Discepola.

He worries that doctors and unionized hospital workers are ``just waiting to get their share. But that might not solve the problem.''

Toronto backbencher Steve Mahoney says his constituents agree that strings should be attached to any new federal funding.

``There is a fear the federal government is just going to cave in to the provinces,'' says Mahoney. ``They're saying don't do it. If you're going to give them money for (CT and MRI) scanners, make sure they're not buying lawn mowers.''

Winnipeg MP Reg Alcock, a key organizer for the leadership campaign of former finance minister Paul Martin and no friend of Chretien on most issues, makes an exception for this initiative.

``I think Chretien will have a huge amount of support around health care,'' says Alcock. ``You're going to see a united caucus.''

Before the prime minister can even get to his conference with the premiers, however, he may be sidetracked by an even greater issue _ potential hostilities in Iraq.

Chretien has clearly stated he would sign on to military action against Saddam Hussein if it is backed by a mandate from the United Nations.

He has been less clear on what he would do if the UN Security Council is divided and the United States chooses to go it alone, or with help from only a handful of allies.

The word from the backbenches is similarly muddled.

``I've had a lot of feedback (from constituents) and pretty well everyone is saying we shouldn't go to war without a UN mandate,'' says Toronto MP Roy Cullen.

``And some don't think we should go to war period.''

Szabo agrees he's hearing the same thing _ but qualifies it by saying public opinion could change if the UN is deadlocked and if other traditional allies, like Britain, agree to join a coalition with the Americans.

That's what happened in 1999, when Canada participated in the Kosovo war under a NATO banner without United Nations approval.

Chretien has promised a parliamentary debate before any decision is made on whether to deploy troops.

But it would likely be a talkfest in which MPs would voice their opinions without actually voting. That would leave the final decision, as usual, in the hands of Chretien and his cabinet.

Most of the prime minister's political troops accept that fact of life, if somewhat grudgingly.

``When you're declaring war on somebody, my preference would be that there be a vote on it,'' says Discepola. ``But at the end of the day the government has to govern.''

Some backbenchers are less willing to leave it to the boss on other matters _ such as Chretien's crusade to reform political party financing.

The prime minister has been considering either an outright ban or drastic limits on corporate donations, a move that worries many Liberals who note that business contributions made up 60 per cent of the money raised by the party in the 2000 election campaign.

Chretien's avowed aim is to counter the public perception that it's too easy to buy influence in Ottawa, and his proposed legislation would apply to all parties, not just his own.

But he has raised the hackles of rank-and-file MPs by saying he considers this a matter of confidence _ implicitly suggesting that if his backbenchers vote against him they will precipitate an unwanted snap election.

Some of the loudest opposition to the party financing reforms has come from Martin supporters, but most deny they are motivated by leadership politics.

``Declaring this a mater of confidence is just foolish posturing,'' says Alcock. ``People are tired of being sort of bullied around, they're not prepared to accept it any more, whether they're Martin supporters or not.''

Even some Liberals willing to entertain the idea of radical reform can't understand why Chretien is pushing the issue so hard, at the possible cost of splitting the party.

``I can see why he wants to do it, and I think there are good reasons for doing it,'' says MP John Godfrey. ``But I wouldn't go to the wall for it.''

====

External and internal pressures weigh on Chretien as Parliament resumes

OTTAWA (CP) _ Weighty matters such as a possible foreign war, domestic health care and the state of the country's finances should be enough to keep any prime minister busy.

But Jean Chretien has even more to worry about as Parliament returns Monday from its holiday break.

He must also deal with partisan bickering that shows little sign of subsiding as the governing Liberals move toward a November convention where they will choose a new chief.

Certainly his backbenchers are under no illusion that internal feuding so evident in the pre-Christmas session of the Commons will magically disappear in the new year.

``We're in leadership mode, there's going to be debate and disagreement,'' says Toronto MP Paul Szabo.

``It's probably going to get nasty sometimes. . . . The challenge is to be sure we continue to do our jobs at the same time.''

Chretien has already laid out the key items on his agenda as he enters his final year in power.

At the top of the list is health care, a topic he will hash over with provincial premiers the first week of February in Ottawa.

The prime minister has already waved the carrot of more federal funding, saying he has a ``figure in mind'' for the budget to be delivered by Finance Minister John Manley later in February.

Chretien hasn't said what that figure is.

He may have more elbow room than anticipated, judging by the latest figures showing the federal surplus reached $8.2 billion in the first nine months of the fiscal year _ more than double the $4 billion Manley had previously forecast for the full year.

But there are demands other than health care on the federal treasury.

The defence lobby has been clamouring for a substantial boost in funding for the long-neglected Canadian Forces, especially with the possibility of war in Iraq.

There has been speculation the government could pump up to $1.5 billion into projects designed to aid children, including enhanced federal tax credits for poor families and more funding for the provinces to spend on day care and other programs.

There is general consensus that health care will still take a big bite of whatever money is available. But Chretien has made it clear he wants something in return _ agreement from the provinces to ensure the cash is well spent and to prove it by publicly accounting for the expenditures.

Health Minister Anne McLellan has laid out the areas Ottawa considers top priorities, among them expanded home care, more 24-hour clinics for primary care, better end-of-life care and coverage of catastrophic drug costs.

Chretien, who has been plagued by backbench dissent on other issues, appears to have his team solidly onside for this one.

A number of Liberals were adamant, in recent interviews, that Ottawa should stand firm against any provincial demand to simply hand over the cash and let the premiers decide what to do with it.

``My concern is, if we just give money to the provinces, quite a bit of it might go into salaries,'' said Montreal-area MP Nick Discepola.

He worries that doctors and unionized hospital workers are ``just waiting to get their share. But that might not solve the problem.''

Toronto backbencher Steve Mahoney says his constituents agree that strings should be attached to any new federal funding.

``There is a fear the federal government is just going to cave in to the provinces,'' says Mahoney. ``They're saying don't do it. If you're going to give them money for (CT and MRI) scanners, make sure they're not buying lawn mowers.''

Winnipeg MP Reg Alcock, a key organizer for the leadership campaign of former finance minister Paul Martin and no friend of Chretien on most issues, makes an exception for this initiative.

``I think Chretien will have a huge amount of support around health care,'' says Alcock. ``You're going to see a united caucus.''

Before the prime minister can even get to his conference with the premiers, however, he may be sidetracked by an even greater issue _ potential hostilities in Iraq.

Chretien has clearly stated he would sign on to military action against Saddam Hussein if it is backed by a mandate from the United Nations.

He has been less clear on what he would do if the UN Security Council is divided and the United States chooses to go it alone, or with help from only a handful of allies.

The word from the backbenches is similarly muddled.

``I've had a lot of feedback (from constituents) and pretty well everyone is saying we shouldn't go to war without a UN mandate,'' says Toronto MP Roy Cullen.

``And some don't think we should go to war period.''

Szabo agrees he's hearing the same thing _ but qualifies it by saying public opinion could change if the UN is deadlocked and if other traditional allies, like Britain, agree to join a coalition with the Americans.

That's what happened in 1999, when Canada participated in the Kosovo war under a NATO banner without United Nations approval.

Chretien has promised a parliamentary debate before any decision is made on whether to deploy troops.

But it would likely be a talkfest in which MPs would voice their opinions without actually voting. That would leave the final decision, as usual, in the hands of Chretien and his cabinet.

Most of the prime minister's political troops accept that fact of life, if somewhat grudgingly.

``When you're declaring war on somebody, my preference would be that there be a vote on it,'' says Discepola. ``But at the end of the day the government has to govern.''

Some backbenchers are less willing to leave it to the boss on other matters _ such as Chretien's crusade to reform political party financing.

The prime minister has been considering either an outright ban or drastic limits on corporate donations, a move that worries many Liberals who note that business contributions made up 60 per cent of the money raised by the party in the 2000 election campaign.

Chretien's avowed aim is to counter the public perception that it's too easy to buy influence in Ottawa, and his proposed legislation would apply to all parties, not just his own.

But he has raised the hackles of rank-and-file MPs by saying he considers this a matter of confidence _ implicitly suggesting that if his backbenchers vote against him they will precipitate an unwanted snap election.

Some of the loudest opposition to the party financing reforms has come from Martin supporters, but most deny they are motivated by leadership politics.

``Declaring this a matter of confidence is just foolish posturing,'' says Alcock. ``People are tired of being sort of bullied around, they're not prepared to accept it any more, whether they're Martin supporters or not.''

Even some Liberals willing to entertain the idea of radical reform can't understand why Chretien is pushing the issue so hard, at the possible cost of splitting the party.

``I can see why he wants to do it, and I think there are good reasons for doing it,'' says MP John Godfrey. ``But I wouldn't go to the wall for it.''

====

RRSP limit may hit $21,000: Ottawa would lose tax revenue, but lift stock markets and retirement prospects

OTTAWA - The federal government is considering raising the limit for RRSP contributions by as much as $7,500 in the upcoming federal budget, government sources said yesterday.

The measure, under debate in the Finance Department, could raise the annual limit on the popular tax shelter to $21,000 in an attempt to boost moribund financial markets and ensure people have adequate retirement savings, advocates of the proposal said.

Limits on contributions to Registered Retirement Savings Plans have been frozen since 1996 when, in an effort to combat the deficit, Paul Martin, then finance minister, cut the limit to $13,500 from $14,500.

Under the current rules, individuals can contribute up to 18% of their earned income, up to a maximum of $13,500. RRSPs allow taxpayers to defer taxation on income and were established to encourage people to save. The money saved in RRSPs is taxable when they are cashed, at which time it is assumed people will be retired and have little or no other taxable income.

The RRSP limits are already scheduled to rise to $14,500 in 2004 and $15,500 in 2005.

However, John Manley, the Finance Minister, is considering a more dramatic increase in response to criticisms of the current RRSP rules, sources said.

The government has resisted the change, as higher contribution limits are perceived to be of more benefit to the wealthy.

Trends, however, are forcing the government to contemplate dramatic changes, sources said, though they added no final budget decisions have been made.

While Canadians are living longer and retiring in greater numbers than ever before, Ottawa believes they are not doing enough to ensure they have adequate income for retirement.

In 2001, Canadians saved 4.6% of their disposable income, down from 9.2% in 1995.

Nick Discepola, Liberal MP and vice-chairman of the Commons finance committee, believes it is time to change the RRSP limit and argues that it benefits more than just wealthy Canadians.

The Commons finance committee, in its pre-budget report to Mr. Manley, suggested the government increase the contribution limits to $19,000 in the next budget.

"If we can get Canadians to save [for their retirement] ... it is not an advantage just for richer Canadians," Mr. Discepola said.

He said while the contribution limit has been frozen for the past decade, average incomes have risen. As well, more Canadians are becoming entrepreneurs who must make their own retirement provisions and need more flexibility.

Mr. Discepola said there is also concern about Canadians withdrawing from financial markets because of low interest rates and the poor performance of stocks.

Raising the RRSP limit would cost the government in lost tax revenue, however Mr. Discepola said Ottawa will get at least some of that back eventually, when people have significant retirement incomes.

The Cabinet is expected to discuss the issue tomorrow when it deals with the upcoming budget and proposed measures being contemplated by the government.

Canada's mutual fund and pension industries have argued for a doubling of the contribution limit to $27,000, saying only such a dramatic move would help to close the gap with countries such as the United States and Britain.

Statistics Canada said that there were fewer Canadians contributing to their RRSPs in the 2001 tax year and individuals contributed less money. However, those declines followed record-high levels for both contributions and contributors in 2000, the federal agency said.

In 2001, Statistics Canada said, only 17% of taxpayers put enough money into their RRSPs to reach their annual limit and fill any room left over from previous years. The median contribution was $2,600, down from $2,700 in 2000.

Only 34% of those who filed tax returns in 2001 made any RRSP contributions.

In 1999, only 10% of tax filers with room maximized their RRSP contributions, down slightly from 11% the previous year. About 59% of tax filers did not use any of their RRSP room in 1999.

Roy Cullen, a Liberal MP and former parliamentary secretary to the Minister of Finance, said demographic factors are sparking the need to change the RRSP rules.

"Some of these things need to change to keep pace with inflation and, if we can encourage people to save, it will take some of the pressures off [the Canada Pension Plan]," Mr. Cullen said.

It is time for Parliament to re-examine the whole area of pensions and income preservation, he said. Registered Pension Plan (RPP) limits, offered by companies to employees, also should be looked at.

"We've had a lot of discussions and representations from companies that these plans have reached the limits now and they need to increase the pensionable earnings limits," he said.

====

RRSP limit may hit $21,000: Ottawa would lose tax revenue, but lift stock markets and retirement prospects

OTTAWA - The federal government is considering raising the limit for RRSP contributions by as much as $7,500 in the upcoming federal budget, government sources said yesterday.

The measure, under debate in the Finance Department, could raise the annual limit on the popular tax shelter to $21,000 in an attempt to boost moribund financial markets and ensure people have adequate retirement savings, advocates of the proposal said.

Limits on contributions to Registered Retirement Savings Plans have been frozen since 1996 when, in an effort to combat the deficit, Paul Martin, then finance minister, cut the limit to $13,500 from $14,500.

Under the current rules, individuals can contribute up to 18% of their earned income, up to a maximum of $13,500. RRSPs allow taxpayers to defer taxation on income and were established to encourage people to save. The money saved in RRSPs is taxable when they are cashed, at which time it is assumed people will be retired and have little or no other taxable income.

The RRSP limits are already scheduled to rise to $14,500 in 2004 and $15,500 in 2005.

However, John Manley, the Finance Minister, is considering a more dramatic increase in response to criticisms of the current RRSP rules, sources said.

The government has resisted the change, as higher contribution limits are perceived to be of more benefit to the wealthy.

Trends, however, are forcing the government to contemplate dramatic changes, sources said, though they added no final budget decisions have been made.

While Canadians are living longer and retiring in greater numbers than ever before, Ottawa believes they are not doing enough to ensure they have adequate income for retirement.

In 2001, Canadians saved 4.6% of their disposable income, down from 9.2% in 1995.

Nick Discepola, Liberal MP and vice-chairman of the Commons finance committee, believes it is time to change the RRSP limit and argues that it benefits more than just wealthy Canadians.

The Commons finance committee, in its pre-budget report to Mr. Manley, suggested the government increase the contribution limits to $19,000 in the next budget.

"If we can get Canadians to save [for their retirement] ... it is not an advantage just for richer Canadians," Mr. Discepola said.

He said while the contribution limit has been frozen for the past decade, average incomes have risen. As well, more Canadians are becoming entrepreneurs who must make their own retirement income provisions and need more flexibility.

Mr. Discepola said there is also concern about Canadians withdrawing from financial markets because of low interest rates and the poor performance of investments such as stocks.

Raising the RRSP limit would cost the federal government in lost tax revenue, however Mr. Discepola said Ottawa will get at least some of that back eventually, when people have significant retirement incomes.

The Cabinet is expected to discuss the issue tomorrow when it deals with the upcoming budget and proposed measures being contemplated by the government.

Canada's mutual fund and pension industries have argued for a doubling of the contribution limit to $27,000, saying only such a dramatic move would help to close the gap with countries such as the United States and Britain.

Statistics Canada said that there were fewer Canadians contributing to their RRSPs in the 2001 tax year and individuals contributed less money. However, those declines followed record-high levels for both contributions and contributors in 2000, the federal agency said.

In 2001, Statistics Canada said, only 17% of taxpayers put enough money into their RRSPs to reach their annual limit and fill any room left over from previous years. The median contribution was $2,600, down from $2,700 in 2000.

Only 34% of those who filed tax returns in 2001 made any RRSP contributions.

In 1999, only 10% of tax filers with room maximized their RRSP contributions, down slightly from 11% the previous year. About 59% of tax filers did not use any of their RRSP room in 1999.

Roy Cullen, Liberal MP and former parliamentary secretary to the Minister of Finance, said demographic factors are sparking the need to change the RRSP rules.

"Some of these things need to change to keep pace with inflation and, if we can encourage people to save, it will take some of the pressures off the public retirement income system [the Canada Pension Plan]," Mr. Cullen said.

Mr. Cullen said it is time for Parliament to re-examine the whole area of pensions and income preservation for the Canadian public. Registered Pension Plan (RPP) limits, offered by companies to employees, also should be looked at again, Mr. Cullen said.

"We really need to look at the RPP pension plan contribution limits as well because we've had a lot of discussions and representations from companies that these plans have reached the limits now and they need to increase the pensionable earnings limits," he said.

"I have some sympathy with that. We want to get people to save for their retirement and increase corporate contributions [to pension plans] as well," he said.

====

MPs angered: Liberals stunned at PM's financing reform

OTTAWA - Liberal MPs reacted with disbelief Monday, after Prime Minister Jean Chretien signalled his intent to make the reform of political party financing a test of loyalty to his leadership and a matter of confidence in his government.

Ontario backbencher Dan McTeague, who has crossed verbal swords with Chretien on a host of issues, accused the prime minister of resorting to "brinksmanship and bravado" in an effort to whip fractious MPs into line.

"Are you going to run the government for the next year by the petulant use of confidence at every turn?" asked McTeague. "How far do we want to go on this?"

Chretien, in an interview with Southam News, said he considers party financing reform "one of the cornerstones of our program" and indicated that Liberals will be expected to toe the party line when the issue comes before Parliament.

"It's a vote of confidence, no doubt about it," he said.

The implication was that, if the government lost such a vote, Chretien would have no choice but to call an election -- a warning he has issued before as a tactic to quell backbench dissent.

Nick Discepola, a Montreal-area MP, noted there are no hard and fast rules about what constitutes a confidence matter in the House of Commons.

But he suggested that status should be reserved for major items like the federal budget and related money bills. If it is to be extended to other issues, said Discepola, the decision should be based on more than "the whim of the prime minister."

"I don't believe for a moment we should go to the Canadian electorate because we couldn't get a law through on party financing."

Don Boudria, the government House leader in the Commons, is expected to introduce sweeping amendments to the Canada Elections Act soon after MPs resume sitting Jan. 27.

Details of the proposed legislation haven't been made public, but senior sources let it be known more than a month ago that Chretien was thinking about banning all donations by corporations and labour unions.

Insiders say now he's leaning instead toward a "drastic" limit.

The limit could be as low as $1,000. That would mean small businesses could continue to donate to MPs at the local riding level, but major companies would no longer be able to give hefty amounts to national war chests.

The rules would apply to all federal parties, not just the governing Liberals. The intent would be to counter public perceptions that it's too easy for monied interests to buy influence in Ottawa.

The proposals have sparked heated internal debate, with much of the opposition coming from MPs who support former finance minister Paul Martin, the front-runner in the race to succeed Chretien as Liberal leader.

"I sort of wonder what problem it is we're trying to fix," said Toronto MP Roy Cullen.

====

Chrйtien pushes donation changes; Liberals stunned as PM puts party financing reform at top of agenda

Liberal MPs reacted with disbelief yesterday, after Prime Minister Jean Chrйtien signalled his intent to make the reform of political party financing a test of loyalty to his leadership and a matter of confidence in his government.

Ontario backbencher Dan McTeague, who has crossed verbal swords with Chrйtien on a host of issues, accused the prime minister of resorting to "brinksmanship and bravado" in an effort to whip fractious MPs into line.

"Are you going to run the government for the next year by the petulant use of confidence at every turn?" asked McTeague. "How far do we want to go on this?"

Chrйtien, in an interview, said he considers party financing reform "one of the cornerstones of our program" and indicated that Liberals will be expected to toe the party line when the issue comes before Parliament.

"It's a vote of confidence, no doubt about it," he said.

The implication was that, if the government lost such a vote, Chrйtien would have no choice but to call an election a warning he has issued before as a tactic to quell backbench dissent.

Nick Discepola, a Montreal-area MP, noted there are no hard and fast rules about what constitutes a confidence matter in the House of Commons.

But he suggested that status should be reserved for major items like the federal budget and related money bills. If it is to be extended to other issues, said Discepola, the decision should be based on more than "the whim of the prime minister."

"I don't believe for a moment we should go to the Canadian electorate because we couldn't get a law through on party financing."

Don Boudria, the government House leader in the Commons, is expected to introduce sweeping amendments to the Canada Elections Act soon after MPs resume sitting Jan. 27.

Details of the proposed legislation haven't been made public, but senior sources let it be known more than a month ago that Chrйtien was thinking about banning all donations by corporations and labour unions.

Insiders say now he's leaning instead toward a "drastic" limit on such contributions.

The limit could be as low as $1,000. That would mean small businesses could continue to donate to MPs at the local riding level, but major companies would no longer be able to give hefty amounts to national war chests.

The rules would apply to all federal parties, not just the governing Liberals. The intent would be to counter public perceptions that it's too easy for monied interests to buy influence in Ottawa.

The proposals have sparked heated internal debate, with much of the opposition coming from MPs who support former finance minister Paul Martin, the front-runner in the race to succeed Chrйtien as Liberal leader.

"I sort of wonder what problem it is we're trying to fix," said Toronto MP Roy Cullen, who has been cool to the reform plan.

He acknowledged, however, that backbenchers may have little choice but to fall into line.

====

Liberals stunned as Chretien puts party financing reform at top of agenda

OTTAWA (CP) _ Liberal MPs reacted with disbelief Monday after Prime Minister Jean Chretien signalled his intent to make the reform of political party financing a test of loyalty to his leadership and a matter of confidence in his government.

Ontario backbencher Dan McTeague, who has crossed verbal swords with Chretien on a host of issues, accused the prime minister of resorting to ``brinksmanship and bravado'' in an effort to whip fractious MPs into line.

``Are you going to run the government for the next year by the petulant use of confidence at every turn?'' asked McTeague. ``How far do we want to go on this?''

Chretien, in an interview with Southam News, said he considers party financing reform ``one of the cornerstones of our program'' and indicated that Liberals will be expected to toe the party line when the issue comes before Parliament.

``It's a vote of confidence, no doubt about it,'' he said.

The implication was that, if the government lost such a vote, Chretien would have no choice but to call an election _ a warning he has issued before as a tactic to quell backbench dissent.

Nick Discepola, a Montreal-area MP, noted there are no hard and fast rules about what constitutes a confidence matter in the House of Commons.

But he suggested that status should be reserved for major items like the federal budget and related money bills. If it is to be extended to other issues, said Discepola, the decision should be based on more than ``the whim of the prime minister.''

``I don't believe for a moment we should go to the Canadian electorate because we couldn't get a law through on party financing.''

Don Boudria, the government House leader in the Commons, is expected to introduce sweeping amendments to the Canada Elections Act soon after MPs resume sitting Jan. 27.

Details of the proposed legislation haven't been made public, but senior sources let it be known more than a month ago that Chretien was thinking about banning all donations by corporations and labour unions.

Insiders say now he's leaning instead toward a ``drastic'' limit on such contributions.

The limit could be as low as $1,000. That would mean small businesses could continue to donate to MPs at the local riding level, but major companies would no longer be able to give hefty amounts to national war chests.

The rules would apply to all federal parties, not just the governing Liberals. The intent would be to counter public perceptions that it's too easy for monied interests to buy influence in Ottawa.

The proposals have sparked heated internal debate, with much of the opposition coming from MPs who support former finance minister Paul Martin, the front-runner in the race to succeed Chretien as Liberal leader.

``I sort of wonder what problem it is we're trying to fix,'' said Toronto MP Roy Cullen, who has been cool to the reform plan.

He acknowledged, however, that backbenchers may have little choice but to fall into line. ``The reality is that, if the prime minister calls it a confidence issue, I guess it is.''

Even some Chretien loyalists are surprised he would elevate party fundraising to the top of the government agenda _ along with issues such as health care, the coming budget and whether to go to war with Iraq.

Political financing simply hasn't registered with the general public as a key issue, said MP Steve Mahoney.

``I've been sitting here in my constituency office all day, answering letters and returning phone calls. None of them are about this.''

Privately, some backbenchers say they believe Chretien is using the issue to reassert control over his caucus, following the embarrassing pre-Christmas parliamentary session in which Martin supporters threatened to break ranks on a variety of issues.

Others speculate that Chretien is trying to repair damage done to his image by repeated opposition charges of patronage, pork-barrelling and favouritism during his decade in power.

Many of the allegations flowed from advertising contracts awarded to Liberal-friendly firms in Quebec, ostensibly to fight separatism. Others centred on federal grants and loans to businesses in Chretien's riding.

``His credibility has been affected by the scandals,'' said one MP who asked not to be named. ``This has nothing to do with other members of Parliament. We're the scapegoats.''

Chretien's defenders say he wants to reform party financing because it's the right thing to do. They say he's in a unique position to do it, since he doesn't have to worry about financing another campaign.

Chretien alluded to that fact in the Southam News interview, suggesting his decision to step down, far from leaving him a lame duck, has freed him from the normal political constraints.

``In a way I'm in a very good position,'' he said. ``I don't need anybody anymore.''

Stephen LeDrew, the Liberal Party's national president, admitted Monday the party could be headed for a major blowup over leadership ground rules at a key meeting in Ottawa this weekend of the party's 54-member national executive. But he expressed hope that warring organizers from the different leadership camps can reach a compromise over the explosive issue of membership forms, the Toronto Star reported Tuesday.

``It's going to be all settled,'' LeDrew predicted. ``We need a few people to go out there and flap their gums a little bit and we need some more yammering by constitutional lawyers. And then we'll get it all settled.''

Meanwhile, LeDrew called an all-out ban on contributions from unions and businesses ``an affront to democracy,'' the Toronto Sun said Tuesday.

LeDrew said Chretien's plan would unfairly restrict all Canadian businesses from being able to voice their anger at government policies by financially backing the opposition.

``If there's a corner store that doesn't like some government policy and wanted to support somebody running against the local member of Parliament, they won't be able to do so,'' he told the Sun.

====

Chretien accused of 'bravado': Liberals stunned as PM puts party financing reform at top of agenda

OTTAWA - Liberal MPs reacted with disbelief yesterday after Prime Minister Jean Chretien signalled his intent to make the reform of political party financing a test of loyalty to his leadership and a matter of confidence in his government.

Ontario backbencher Dan McTeague, who has crossed verbal swords with Chretien on a host of issues, accused the prime minister of resorting to "brinksmanship and bravado" in an effort to whip fractious MPs into line.

"Are you going to run the government for the next year by the petulant use of confidence at every turn?" asked McTeague. "How far do we want to go on this?"

Chretien, in an interview with Southam News, said he considers party financing reform "one of the cornerstones of our program" and indicated that Liberals will be expected to toe the party line when the issue comes before Parliament.

"It's a vote of confidence, no doubt about it," he said.

The implication was that, if the government lost such a vote, Chretien would have no choice but to call an election - a warning he has issued before as a tactic to quell backbench dissent.

Nick Discepola, a Montreal-area MP, noted there are no hard and fast rules about what constitutes a confidence matter in the House of Commons.

But he suggested that status should be reserved for major items like the federal budget and related money bills. If it is to be extended to other issues, said Discepola, the decision should be based on more than "the whim of the prime minister."

"I don't believe for a moment we should go to the Canadian electorate because we couldn't get a law through on party financing."

Don Boudria, the government House leader in the Commons, is expected to introduce sweeping amendments to the Canada Elections Act soon after MPs resume sitting Jan. 27.

Details of the proposed legislation haven't been made public, but senior sources let it be known more than a month ago that Chretien was thinking about banning all donations by corporations and labour unions.

Insiders say now he's leaning instead toward a "drastic" limit on such contributions.

The limit could be as low as $1,000. That would mean small businesses could continue to donate to MPs at the local riding level, but major companies would no longer be able to give hefty amounts to national war chests.

The rules would apply to all federal parties, not just the governing Liberals. The intent would be to counter public perceptions that it's too easy for monied interests to buy influence in Ottawa.

The proposals have sparked heated internal debate, with much of the opposition coming from MPs who support former finance minister Paul Martin, the front-runner in the race to succeed Chretien as Liberal leader.

"I sort of wonder what problem it is we're trying to fix," said Toronto MP Roy Cullen, who has been cool to the reform plan.

He acknowledged, however, that backbenchers may have little choice but to fall into line. "The reality is that, if the prime minister calls it a confidence issue, I guess it is."

More than half the money Chretien raised from corporations for his personal re-election in 2000 came from businesses that donated more than $2,000 each, Elections Canada records show.

Elections Canada records show Chretien received nine business donations over $1,000 for his personal re-election in 2000. They were: $5,000 from Kruger Inc.; $5,000 from Mergatech-Electra-Inc.; $5,000 from Wesley Clover Corp.; $3,000 from Onex Corp.; $2,500 from Pluritec Ltee; $2,000 from Pluri Design Canada Inc.; $2,000 from CanWest Global Com. Corp.; $2,000 from Consultant Mesar Inc.; and $2,000 from Societe Laurentide Inc.

====

Merger-happy execs need to change public opinion

MERGER-HAPPY financial-services executives, and their supporters in the national media, still don't get it, do they? They keep going back to the idea, seeming to hope against hope that somebody in high Ottawa places will turn them loose despite strong opposition in the Liberal caucus and public opinion running overwhelmingly against mergers.

Well, it's just not going to happen -- at least not in the short term.

The issue came to the fore again this week with word that the hostile bid by Manulife Financial Corp. for Canada Life Financial Corp. has come on the heels of a scotched deal to get a friendly merger of Manulife with Canadian Imperial Bank of Commerce -- a sort of ``consolation prize,'' as one analyst described the insurance-takeover attempt.

What makes talks between a large insurance company and one of the Big Five banks all the more ludicrous is that while there is an established -- if still somewhat fuzzy -- process to allow bank mergers, the ``cross-pillar'' mergers are still prohibited under federal rules laid down in 1999.

And there's obviously no thought being given in Ottawa to changing that ban. Federal finance Minister John Manley noted this week that when he asked last fall that two parliamentary committees further clarify the public review process for bank mergers, he did not expand that request because ``there was no great wish to see changes to the rules in general with respect to cross-pillar mergers.''

A large hurdle facing financial services executives seeking approval for mergers of any kind is the level opposition within the Liberal caucus -- opposition that is likely only to grow if cross-pillar deals are attempted.

``Caucus is really strong on this -- they don't want to see any part of it,'' Ontario MP Roy Cullen, a member of the Commons finance committee, said this week.

The problem at that level is the amount of support backbench MPs get from people at the consumer level of the insurance industry -- brokers and agents -- who are extremely active politically and are understandably fearful of having to compete with banks.

That's why banks are still banned from selling all but a very few insurance products through their branches, and burdened with restrictions preventing them from using confidential bank customer information to target people for insurance sales pitches.

There's also no indication that strong public opposition to bank and/or cross-pillar mergers is weakening.

Put simply, most Canadians don't trust bank bosses or the senior executives of large insurance companies to do anything that might end up being in consumers' best interests.

And that opinion is not going to change simply because these executives and their supporters in the national newspapers keep insisting that the mergers are inevitable, as columnist Andrew Willis of The Globe and Mail tried to do yesterday with this warning:

``There's a logjam of deals now building in financial services, with market forces being held back by an overly cautious, directionless government,'' he wrote. ``At some point, that logjam is going to break.''

Not, it sez here, unless public opinion can be changed, and the lobbying effort of insurance agents and brokers overcome.

And the only way to do that is for the banks to somehow convince the public that mergers are in their interest, too.

Good luck to them on that.

jmcleod@hfxnews.ca

====

Manulife-CIBC
Liberals not keen on bank-insurer deals

OTTAWA The federal government says there's even less appetite within its ranks for mergers between banks and insurance companies than for two banks combining forces -- a proposal that the government has already rejected twice. When asked yesterday if a so-called "cross-pillar" merger would be less likely to gain government approval than a bank merger, Finance Minister John Manley pointed out that there's an established process to allow bank mergers, whereas cross-pillar mergers are prohibited.

In October, Mr. Manley asked two parliamentary committees to further clarify the public review process into bank mergers. He said he did not expand that request because "there was no great wish to see changes to the rules in general with respect to cross-pillar mergers."

Mr. Manley said he could not comment on a report yesterday in The Globe and Mail that outlined Manulife Financial Corp.'s talks to acquire Canadian Imperial Bank of Commerce ,which would have been the first such deal of its kind in Canada.

Liberal MPs, meanwhile, say the issue of cross-pillar mergers hasn't been raised in caucus very often recently, but there's undoubtedly much concern about any development that would potentially reduce competition or services.

"Caucus is really strong on this -- they don't want to see any part of it," said Roy Cullen, MP for the Toronto riding of Etobicoke North and a member of the House of Commons finance committee.

Mr. Cullen said there are two major obstacles preventing MPs from supporting mergers, such as Manulife's proposal to acquire CIBC last fall.

There's great concern about the big banks expanding their breadth, he said.

It would also be difficult to allow banks to sell insurance because of the political strength of the insurance industry at the riding level.

There are no champions for cross-pillar mergers within caucus, Mr. Cullen said.

Some MPs mentioned concerns about "tied" selling, where, for example, a bank customer seeking a loan would be encouraged to buy other products as part of the loan application process.

"I'd like to see our financial institutions be world-class players, but I'm not prepared personally, and I think caucus is of the same mind, willing to do that, if it means our domestic consumers are getting shafted."

Murray Calder, MP for the Ontario riding of Dufferin-Peel-Wellington-Grey and chairman of the Liberals' rural caucus, said cross-pillar mergers could pose particular problems for those seeking service in rural and remote communities.

"It gives banks an unfair advantage. Sometimes in small-town Ontario, you've got one bank."

Dan McTeague, who represents Pickering-Ajax-Uxbridge, said Canadians would likely have a big problem handing greater concentration to the insurance industry, particularly because it has boosted a number of premiums in recent years.

"I've never known concentration to yield public benefit."

regulation

Corp.; Canadian Imperial Bank of Commerce

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Battered Grits hope for healing holiday

OTTAWA -- Glum Liberals are heading back to their ridings for the holidays hopeful that the parliamentary respite will give them a chance to regroup after a bruising four months that has left the ruling party's reputation for discipline and prudent fiscal management in tatters.

And many are hoping a busy schedule early in the new year -- a first ministers' meeting on health care reform followed by a February budget -- will help get the Liberals back on track.

At their final caucus meeting of the year on Wednesday, backbenchers continued to fume over the latest botch-up -- last week's revelation that the cost of the controversial federal gun registry is ballooning towards $1 billion.

But the bulk of MPs appeared determined to stop the finger-pointing over who's to blame for the cost overrun. And many called for an end to the bitter infighting that has turned every problem over the past few months into a full-scale crisis for the government.

"It's been tough," acknowledged Mississauga MP Steve Mahoney.

"But we're going to come back in February. We're going to have a budget. There's going to be a lot of priorities (to set), there'll be some blood on the floor or the walls."

"We've had our share of (bad) moments," agreed Toronto MP Roy Cullen. "What I think we're trying to do now is get that behind us, get on with the business of government and maybe reflect over the holidays on some of the great strengths we have."

In particular, Cullen said Liberals can be proud that, due to their economic management, the government will be able "to invest a large amount into the health care system" in the budget.

Talking points issued on small plasticized cards to all Liberal MPs on Wednesday, for use in year-end interviews, also sought to re-emphasize the government's record of fiscal management. Among the "achievements" cited for this year are economic growth outstripping all other G-7 countries, improved productivity, a 25 per cent drop in child poverty, a fifth consecutive balanced budget and a dropping unemployment rate.

During the caucus meeting, MPs said Prime Minister Jean Chretien promised another balanced budget next year but warned that tough choices will have to be made because there is not enough money to meet all the demands for increased funding for things like health care, defence, children and municipalities.

Chretien's advice to backbenchers, according to one MP, was: "Enjoy Christmas, enjoy your families, get some rest. We've got a lot of work to do when you get back."

Some of the turmoil within the government's ranks has been motivated by backbenchers hoping to pressure Chretien to retire sooner than his planned departure date of February 2004. But Cullen said it's time to accept Chretien's timetable and rally behind him for the next 14 months.

"I think we need to sort of buckle down and work under that premise because otherwise I think we're just damaging ourselves as a party and maybe not providing Canadians with the kind of government they deserve," he told reporters.

Montreal MP Carole-Marie Allard said Liberals were given "a wake-up call for unity" in two byelections recently in Quebec. The Liberals should have been able to defeat the Bloc Quebecois in both but she said divisions in the ruling party hurt its chances.

"It's sad because we were so close."

Tory Leader Joe Clark said the fall session of Parliament has been "directionless" with only 14 of 42 sitting days devoted to debating government legislation, most of which was recycled from the last session of Parliament.

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PM's donation plan stuns party

With a report from Campbell Clark

OTTAWA Liberal MPs and officials predicted further mayhem and division in the party yesterday over Prime Minister Jean Chretien's widely opposed plan to ban corporate donations to political parties. Stephen LeDrew, party president, warned the Prime Minister that the proposal will not fly.

"I can't believe the PM is doing this because of the reaction of caucus and the party," Mr. LeDrew said. "Taxpayers are going to get it in the neck. And I'm not certain, unless there is a debate, whether taxpayers are in agreement that they should be shelling out not only on Halloween but every day of the year to pay for political parties."

Citing government sources, The Globe and Mail reported yesterday that Mr. Chretien is ready to plow ahead and, if necessary, lead the party in an election if the donations ban is defeated in the House.

A number of Liberal MPs are staunchly opposed to a prohibition on companies and unions giving to political parties. Many fear that parties could run out of money if they are forced to rely solely on individuals for their fundraising -- even if Mr. Chretien's plan includes increased support from government coffers.

A senior source said the Prime Minister believes the move would "remove a taint" from the political process. But there is much wider support in the Liberal Party for a cap on corporate donations, rather than a ban.

Liberal MP Joe Comuzzi suggested yesterday that Mr. Chretien's move could lead to further splits in the party, which is trying to regroup after a year of infighting over leadership and parliamentary reform.

"We don't need that. We're trying to settle the waters, and this stuff keeps rearing its head," Mr. Comuzzi said.

Referring to the Prime Minister's threat of leading the party in a snap election, another MP asked: "Has he lost it, or what?"

Liberal MP Walt Lastewka said any perceived conflict of interest surrounding corporate donations involves ministers who may receive funds from companies that deal with their departments.

"Why are they giving everybody the broad brush if the problem is there in the cabinet, or a perceived problem in the cabinet? Fix it there."

John Harvard, a Liberal MP for Winnipeg and chairman of the party's western caucus, said he favours a ban on corporate donations, but large numbers of his colleagues oppose it. He predicted that Mr. Chretien's plan will create large-scale division in the Liberal caucus.

"The principle is sound. I'm a little curious about the timing, mainly because it will be seen perhaps creating some strong debate or division within the caucus. And of course with [Mr. Chretien's] impending departure, he's not being seen to really care about it."

Some of the strongest opponents of a ban are supporters of former finance minister Paul Martin's bid for leadership of the Liberal Party. The perception in the Martin camp is that Mr. Chretien is moving to clean up his reputation after numerous scandals.

But a ban would hurt the ability of the next Liberal leader to clear the party's debt, estimated at more than $5-million.

"I don't know what the problem is we're trying to deal with and why Canadian taxpayers need to subsidize political parties," Liberal MP Roy Cullen said, adding that the plan looks more and more like it is designed to hurt Mr. Martin.

"I know there are some of my colleagues who are quite convinced that this is something to get at Paul. I'm not quite so convinced that that's behind it, although [Mr. Chretien] coming back now, when it was off the table -- some bells are ringing now."

The Chretien government has been hit with scandals involving juicy contracts to advertising firms that were generous donors to the Liberal Party. The Prime Minister also has been at the centre of a storm involving Liberal backers and fundraisers in his riding.

"My understanding is that [Mr. Chretien's advisers] figure it's going to help the PM's legacy by cleaning up any problems he had with donations to Grand Mere and everything else," a senior Liberal said.

Opposition to the ban will not come as a surprise to Mr. Chretien. Liberal House Leader Don Boudria has been consulting on the issue and faced stiff opposition to a ban. He is examining the option of a cap on corporate donations.

Some Liberal MPs, such Mr. Lastewka, said yesterday that they would be pleased with that option.

reform

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LIMITED BANK MERGERS OK - SENATE REPORT

JUDY MADDREN: Canada's big banks are welcoming a report from the Senate in Ottawa. Yesterday the Senate Banking Committee gave the green light to the idea of bank merges. It said one or two mega mergers would be in the public interest. Susan Murray reports.

SUSAN MURRAY (Reporter): Big banks should not uncork the champagne just yet. They did get the blessing of the senate banking committee should they want to merge. But then again that's no big surprise. The chair Senator Leo Kolber.

LEO KOLBER (Chair, Senate Banking Committee): We said that we were predisposed towards viewing bank mergers as being in the public interest. We did not hear compelling evidence to the contrary.

MURRAY: However, the Commons Finance Committee may hear some contrary evidence as it now considers bank mergers. One of its members Roy Cullen says elected politicians must consider several difficult issues.

Roy Cullen (Member, Commons Finance Committee): Questions of customer access, service, small business lending and a whole range of issues that are in the public interest. So I think that elected people have a role to play in that.

MURRAY: And the Liberal caucus may once again play a key role. Back in 1998, a special task force of Liberal MPs rejected the idea of bank mergers and one of its members Peter Adams hasn't changed his mind.

PETER ADAMS (Liberal MP): I have a change of view? I would say no. In my riding there's no mood for large bank mergers.

MURRAY: And the mood of the new finance minister is also unclear. The old one, Paul Martin had said no to mergers. Now John Manley is handling the file and he'll be eyeing public sentiment now that he's made it clear he intends to run for Liberal leader. Susan Murray, CBC News, Ottawa.

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Bank mergers to get Senate nod; Chamber finance committee to report today Quest for size to compete abroad seen as legitimate

A Senate committee is set to agree that mergers among the big banks are a legitimate strategy after hearings on whether they are in the public interest, an opposition senator said yesterday.

"It's a unanimous report saying that the mergers are a legitimate business strategy for banks," Conservative Senator David Angus said. Sources in the government and in the Liberal Party said the report, due for release today, is likely to find a receptive audience in the party caucus and perhaps with Finance Minister John Manley and Junior Finance Minister Maurizio Bevilacqua, although that will depend on the merits of specific proposals.

The report follows a request from Manley asking the Senate and House of Commons finance committees to help define the public-interest element of the federal government's process for assessing bank mergers.

The Commons finance committee is expected to give bank executives a rough ride when hearings begin early in the new year.

The Big Five banks are minnows on a world scale, barely ranking among the top 60 banks. Bankers pleaded their case before Senate hearings that ended last week.

Policymakers from the Liberals and the opposition said they were convinced bank mergers are in the public interest based on the argument that size matters when competing in global markets, and they will say that clearly in their report to cabinet.

"It's toned down a lot .... We (Conservatives) would highlight more clarity is needed," Angus said, adding the committee members were "absolutely" unanimous on the importance of economies of scale to make the banks bigger global players.

When the hearings were called in October, they raised hopes that the federal government would lift its opposition to such mergers. But that hope was dashed later by reports that Prime Minister Jean Chretien had quashed a merger plan between the Bank of Montreal and Bank of Nova Scotia.

Two proposed mergers in 1998, one between the Royal Bank of Canada and Bank of Montreal, and the other between the Canadian Imperial Bank of Commerce and Toronto Dominion Bank, were scuttled by then finance minister Paul Martin because of public disapproval of the plans.

Liberal members of Parliament may have been swayed by the hearings chaired by Senator Leo Kolber, who was a director of the TD, the country's second-largest bank and 59th worldwide, for 28 years.

"I think they might be marginally (more open to mergers)," said Liberal MP Roy Cullen, who sits on the House of Commons finance committee.

"I think the work that Senator Kolber's done may help in that regard because I think he's focusing on an important issue: Do banks need to be larger to be more internationally competitive?" Cullen added. Government sources said Manley and Bevilacqua are prepared to listen to arguments on a case-by-case basis, even though mergers are a tough sell with a public that fears rising costs and fewer bank branches.

Angus conceded that the finance minister's hands may be tied until Chretien retires in February, 2004, and the industry is wary of mixed signals from government.

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Chrйtien tries to rally MPs after 'toughest fall session'

Declaring "I don't have any more room for scars," Prime Minister Jean Chretien tried yesterday to rally a Liberal caucus reeling from weeks of internal feuding and public fiascos.

In the weekly closed-door meeting, Liberal MPs warned that the $1 billion gun registry scandal and other financial foul-ups may be badly damaging the party's reputation with Canadians.

The Liberals need to reassure Canadians that the government is not throwing away taxpayers' money, MPs reportedly said in the closed-door meeting.

Chretien was told "this thing (the $1 billion price tag for the gun registry) has put in very serious doubt our ability to measure up to the public's expectation that we are good managers of the economy," said one MP after the meeting.

"This puts in doubt all our other projections about how we want to unveil programs."

Another MP, Mississauga West's Steve Mahoney, said afterward that MPs are determined to find out why the expenses for the gun registry got out of control.

"We want to know if there was overspending, where was it and what caused it, that sort of thing," he told reporters.

The caucus, divided and bruised by weeks of infighting and administrative miscues, was handed a laminated "talking points" card yesterday by party whip Marlene Catterall (Ottawa West-Nepean) outlining the government's accomplishments.

The list included a strong economy, the parliamentary approval of Kyoto environmental accord and the commitment to bolster medicare after the Romanow report on health care.

Chretien, who has been hearing calls for his early retirement, told the caucus he has no intention of stepping down before his planned departure in 2004.

He also sought to reassure Liberals about the government's performance in the past few months and urged them to put aside their internal differences and work together to promote his government's programs, sources reported.

But the last official gathering of caucus before the holiday was viewed by many MPs as an escape from recent problems.

These have included the resignation of former solicitor-general Lawrence MacAulay (Cardigan) over conflict-of-interest, the gun registry fiasco, federal-provincial squabbling over Kyoto, a backbench MPs' revolt over parliamentary reform and the uproar when a Chretien aide called U.S. President George W. Bush a "moron."

"This has probably been the toughest fall session that we have incurred in our 10 years in government," said Ajax MP Dan McTeague. "We've had a few hits to the body, and we have got to clean up some of the management" of government programs, said MP Roy Cullen (Etobicoke North).

Friction between Chretien loyalists and MPs who support leadership hopeful Paul Martin has also complicated the government's efforts to deliver on its policies.

Asked if the infighting is hurting the Liberals, Industry Minister Allan Rock told reporters: "I don't think it's ever good for the government. But we're going through a period of transition" toward choosing a new party leader.

But some MPs said after the meeting that the government is adrift as the Liberals wait for Chretien to complete his long pre-retirement period.

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Shell-shocked Liberals head home to regroup after bruising four months: MPs hope busy House schedule in new year will restore confidence in party performance

Glum Liberals are heading back to their ridings for the holidays hopeful that the parliamentary respite will give them a chance to regroup after a bruising four months that has left the ruling party's reputation for discipline and prudent fiscal management in tatters.

Many members of parliament are hoping a busy schedule early in the new year -- a first ministers' meeting on health-care reform followed by a February budget -- will help get the Liberals back on track.

At their final caucus meeting of the year yesterday, backbenchers continued to fume over the latest botch-up -- last week's revelation that the cost of the controversial federal gun registry is approaching $1 billion.

But most MPs appeared determined to stop the finger-pointing over who's to blame for the cost overrun. And many called for an end to the bitter infighting that has turned every problem over the past few months into a full-scale crisis for the government.

"It's been tough," acknowledged Mississauga MP Steve Mahoney. "But we're going to come back in February. We're going to have a budget. There's going to be a lot of priorities (to set), there'll be some blood on the floor or the walls."

"We've had our share of (bad) moments," agreed Toronto MP Roy Cullen. "What I think we're trying to do now is get that behind us, get on with the business of government and maybe reflect over the holidays on some of the great strengths we have."

In particular, Mr. Cullen said Liberals can be proud that, due to their economic management, the government will be able "to invest a large amount into the health-care system" in the budget.

Talking points issued on small plasticized cards to all Liberal MPs yesterday, for use in year-end interviews, also sought to re-emphasize the government's record of fiscal management.

Among the "achievements" cited for this year are economic growth outstripping that of all other G7 countries, improved productivity, a 25-per-cent drop in child poverty, a fifth consecutive balanced budget and a dropping unemployment rate.

During the caucus meeting, MPs said Prime Minister Jean Chretien promised another balanced budget next year but warned that tough choices will have to be made because there is not enough money to meet all the demands for increased funding for things like health care, defence, children and municipalities.

Mr. Chretien's advice to backbenchers, according to one MP, was: "Enjoy Christmas, enjoy your families, get some rest. We've got a lot of work to do when you get back."

Some of the turmoil within the government's ranks has been motivated by backbenchers hoping to pressure Mr. Chretien to retire sooner than his planned departure date of February 2004. But Mr. Cullen said it's time to accept Mr. Chretien's timetable and rally behind him for the next 14 months.

"I think we need to sort of buckle down and work under that premise, because otherwise I think we're just damaging ourselves as a party and maybe not providing Canadians with the kind of government they deserve," he told reporters.

Montreal MP Carole-Marie Allard said Liberals were given "a wake-up call for unity" in two byelections earlier this week in Quebec. The Liberals should have been able to defeat the Bloc Quebecois in both, but she said divisions in the ruling party hurt its chances.

"It's sad because we were so close."

In the Commons, Tory leader Joe Clark said the fall session of Parliament has been "directionless" with only 14 of 42 sitting days devoted to debating government legislation, most of which was recycled from the last session of Parliament.

He demanded the resignation of Government House leader Don Boudria, whom he blamed for being unable to stickhandle the government's agenda through the divisions in the Liberal caucus.

Outside the Commons, Mr. Clark said the Liberals are "split six ways to Sunday."

"It becomes more and more clear that this is a government that cannot govern," he said.

But Mr. Boudria countered that the divisions have been "blown out of proportion."

Similarly, Hamilton MP Stan Keyes, national caucus chairman, blamed the media for characterizing one Liberal MP's call for a minister's resignation last week as a full-scale caucus rebellion.

"That's going to be the story and then there are interpretations that spin from that and that caucus is divided and there are all kinds of problems in the Liberal party and, oh no, we're going to hell in a hand basket. Which is clearly not the case," Mr. Keyes said.

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Canadians should expect Grit bickering, Chretien says
Leadership bids will bring internal strife,
PM says, but he will not quit any earlier

OTTAWA BUREAU CHIEF Canadians should expect increasing internal bickering by the Liberals as the leadership campaign heats up, Prime Minister Jean Chretien said yesterday.

But Mr. Chretien said he has no intention of stepping down earlier than planned, in February, 2004, despite constant carping that the lengthy time before his departure is hurting the party. The government has taken a pounding this fall with an increasingly unruly back bench and sniping between back-bench MPs and ministers as the Prime Minister's tight grip has eased since he announced his retirement date.

However, Mr. Chretien said that some internal strife is to be expected as MPs take sides in the leadership contest and prospective candidates engage in open disagreement.

"The candidates, if they are attacked, defend themselves. It's natural," Mr. Chretien said after a cabinet meeting yesterday.

"It's democracy;