UPDATE: Finance Minister Jim Flaherty defended a section of his fiscal update today by saying now is not the time for political parties to `feather their own nests.'

Incensed opposition parties are threatening to topple the Conservative minority over provisions in the fiscal plan delivered Thursday.

One controversial plan would scrap public subsidies for political parties which critics say would financially cripple every party except the Tories. Flaherty told CTV News the measure would save about $30 million a year and called it `part of participating in the reality of the global slowdown.'

He added that at a time where many Canadians are losing their jobs, politicians, the public service and the parties are being asked `to take a haircut to be part of the restraint that we need.'

As for the possibility of the government being toppled, Flaherty said he could not predict what the Opposition parties might do. (The Canadian Press, ccg)

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So much for a kinder, gentler Parliament.

All three opposition parties are threatening to vote against the Harper government's fiscal update.

It raises the spectre of a showdown that could trigger yet another federal election. The Liberals, NDP and Bloc Quebecois say they can't support the plan because it offers no stimulus package to deal with the economic crisis.

The fiscal update is a confidence measure that must pass or the government will fall.

However, Liberal Leader Stephane Dion did not respond when asked if a handful of his MP's might not show up a vote, allowing the government to survive. The Liberals say they're giving Harper until Monday to reconsider his economic agenda.


(Options)

Should the Harper government's fiscal plan be defeated, New Democrat MP Tom Mulcair says there are other steps that could be taken to avoid an election.

The opposition parties could try to form a coalition government or reach an agreement to put the Liberals into power.

The Liberals are taking the taking the prospect very seriously. Some MP's are even privately discussing ways to dump Leader Stephane Dion without waiting for their party's leadership convention in May.

Sources say former prime minister Jean Chretien has been approached for advice on how to massage Dion's early exit. But sources close to Chretien say he has not been contacted and is in no way involved.

Other sources say NDP Leader Jack Layton has cancelled a trip to Vancouver to take part in the opposition talks that went on through much of yesterday.


(Cuts)

The federal government is making deep cuts to steer clear of a deficit next year but admits it still may not be enough.

Finance Minister Jim Flaherty's mid-year economic report card shows that Canada is falling into a ``technical recession'' of two consecutive negative quarters of growth.

The finance minister says he will save money by selling $2.3 billion dollars in government assets and making $2 billion dollars in spending cuts. As expected, the minister is also proposing political parties give up their estimated $27 million dollars in taxpayer subsidies, based on how many votes they received October 14th.

And he threw in another controversial item -- a temporary removal of the right to strike in the public service.

Projections indicate it will be virtually impossible for the government to avoid a budgetary deficit next year. That's something Stephen Harper and Flaherty said during last month's election campaign that they would not allow.

The government has signalled it will introduce a multi-billion dollar fiscal-stimulus package in next year's federal budget.


(Political Party Financing)

Prime Minister Harper's Conservatives have moved to end public financing of federal political parties.

The move, while hitting the Tories hardest in absolute dollar terms, would gut the opposition parties.

That's because the opposition parties relies on the public subsidy for most of their funding, while the Conservatives rely mainly on private donations.

Liberal MP Bob Rae says it's an attempt by the Tories to destroy their opponents.


(Union)

The country's biggest civil service union is fuming over a Harper government proposal to outlaw strikes by public servants for two years.

The measure was contained in yesterday's fiscal update.

Finance Minister Jim Flaherty says it's part of a plan to limit civil service pay increases to 1.5 per cent in each of the next two years, which the Tories also plan to legislate.

Public Service Alliance of Canada president John Gordon says negotiating wage caps with civil servants is one thing. But he says rolling back agreements and taking away the right to strike ``is entirely another.''


(Pension)

The federal government is doubling the length of time that federally regulated pension plans have to cover potentially huge shortfalls.

Yesterday's fiscal update gives private-sector companies 10 years to make special payments to cover the amount that a plan would be short if it were wound up immediately.

Currently companies have only five years to make the payments.

The changes come with two conditions -- plan members and retirees must agree to the extended schedule or companies must secure a line of credit to cover the five-year difference.

Some private-sector companies with federally regulated plans have lobbied Ottawa for more time to make up shortfalls. (The Canadian Press, ccg)

(Fiscal Update Roundup by Tim Avery and Steve Fairbairn)