By Julian Beltrame, The Canadian Press

OTTAWA - It couldn’t be done in good times, but the prospect of impending bad times is being cited as the best opportunity for breaking the ideological logjam that has characterized inter-provincial negotiations on the economy.

Finance Minister Jim Flaherty and his provincial counterparts meet Monday for the first time since the federal election - and, more importantly, since the October collapse in financial and equity markets - with a full agenda of troubles to tackle.

And although no one is making concessions going in, officials and other observers say the chances of movement, while still slight, are better than at previous such meetings.

The meeting is the first in a series that culminates with a summit of the 20 leading economies in Washington on Nov. 15 and include a meeting on the economy between Prime Minister Stephen Harper and the provincial premiers in Ottawa next Monday, Nov. 10.

The meetings come as the global and Canadian economies edge towards recession, joining the United States, which is already there.

“Let there be no question, this is a crisis facing the world,” said Tom d’Aquino, president of the Canadian Council of Chief Executives, which represents the leaders of Canada’s largest corporations.

“There is a need for co-ordination in order that we come up with good strategies. Good strategies are not possible if they are made in panic mode or if they are done in isolation.

“At the very least, the finance ministers should set the ground to fast-forward already planned infrastructure projects to create jobs and spark economic activity during the slump.” With the manufacturing industry in Ontario and Quebec shedding thousands of jobs and energy and resources-based industries in the West also under pressure from falling commodity prices, the Canadian economy has slowed to a crawl and isn’t expected to recover until 2010.

In a revised economic outlook released Friday, TD Bank said reduced business spending and an expected drop in exports to the battered U.S. economy will likely shrink Canada’s economy by the end of the fourth quarter.

Technically, a recession is defined as two successive quarters of negative economic growth.

“We now deem it likely that the Canadian economy will formally tip into a recession at the end of this year, due predominantly to forecast revisions in two areas: exports and business investment,” TD said.

At Monday’s finance ministers’ meeting, Ontario will be pressing hard for Ottawa to join its efforts to help reassemble the crashing auto assembly and parts sector, which employs about 100,000 Ontarians.

Last week, Jim Prentice, who was industry minister at the time, threw cold water on the Automotive Parts Manufacturers Association’s plea for as much as $1 billion in short-term loans, saying the industry should instead access funds from existing sources.

However, the province may be holding out for a more receptive response from veteran Ontario cabinet minister Tony Clement, who recently took over from Prentice at Industry, a key economic portfolio.

Canadian Manufacturers and Exporters head Jayson Myers says the likelihood that the U.S. administration will be moving to bail out Detroit’s troubled Big Three automakers - General Motors, Ford and Chrysler - should make it easier for the Harper government to break with ideological purity.

Ottawa’s big issue going into the meeting is reining in projected growth in equalization payments to provinces, a move Ontario sees as being directed at Queen’s Park now that Canada’s largest province is on the brink of qualifying as a receiver of equalization payments rather than giver.

“We still want it to grow and it will continue to grow, but we need to make sure the growth is sustainable, affordable and fair for everyone,” said an official with Flaherty’s office.

Ontario Finance Minister Dwight Duncan has rejected the idea the province could be unilaterally denied equalization, as was done in the late 1970s - the only other time the province qualified under the formula.

The federal government is also hoping the financial crisis will have concentrated provincial minds around the concept of a national securities regulator for all jurisdictions.

Supporters of the idea say it will cut costs for companies hoping to list on Canadian stock markets and boost regulation of various industries to prevent white collar fraud that has hurt investors and undermined confidence in Canadian capital markets.

Media reports have suggested Quebec’s finance minister, Monique Jerome-Forget, the proposal’s staunchest opponent, may have softened her stance, although her public pronouncements have continued to be hawkish.

Global Insight’s Dale Orr, a private sector economist who supports a common regulator, said he understands Flaherty’s attempt to link the stock-market meltdown to the regulatory issue, but said the connection is tenuous at best.

“This started with the subprime mortgage mess in the U.S., which doesn’t have a lot to do to how you regulate stock exchanges,” he explained. A single regulator, however, could be useful in easing investment decisions in Canada at a time of economic uncertainty, he added.

With an economy possibly headed for recession - Friday’s Statistics Canada report said the Canadian economy shrank by 0.3 per cent in August - many of the governments will be taking comfort in the shared misery of knowing most could face future budgetary deficits.

Flaherty offered an olive branch to his counterparts last week in a major speech in Toronto, in which he pledged not to cut transfers to provinces in an effort to balance the budget.

“We will not balance our budget on the backs of the provinces and territories,” he said. “Those payments go for education, for health care, for social services, for the needs of communities … we will not do that.”

D’Aquino said the financial ministers must also show they understand the seriousness of the situation by agreeing to co-operate on shared approaches to help Canadians through tough times.”

So far, provinces have moved in different directions, with Ontario saying it will run a deficit to keep spending going in a flagging economy. In the West, Saskatchewan and B.C. plan to cut taxes to stimulate the economy.

On Tuesday, Quebec will provide a fiscal update on the province’s economy, which could serve as the minority Liberal government’s economic platform for an election expected to be called Wednesday.

Courtesy of:  http://ca.news.yahoo.com