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The Bloc and Parti Québécois vowed yesterday to use the billions in new federal transfers to Quebec to fight for the province's secession from Canada, while the Liberal Party of Quebec said the funding is proof that federalism works.

Overall, Ottawa is increasing transfers to Quebec by a total of $9-billion over the next three years, as the cash increases from the current level of $13-billion a year to more than $16-billion in three years.

With an election in the province less than a week away, the major political parties are fighting to take credit for the increased funding and to propose the best way to spend it. The party that wins that battle, they hope, will also win next Monday's vote.

By coming out in favour of the budget yesterday, the Bloc will allow it to pass through the minority Parliament, arguing it comes close enough to satisfying the separatists' bottom line of an extra $3.9-billion a year.

Still, the budget is forcing separatists into a delicate balancing act as they try to play down its impact while denying any glory to Quebec Liberal Leader Jean Charest.

"Quebeckers do need this money. Students are waiting for this money. People on waiting lists in the health-care system are waiting for this money. So we need this money as soon as possible . . . but the debate is far from over," PQ Leader André Boisclair said.

Bloc Leader Gilles Duceppe added: "A sovereigntist government will know how to use that money to realize its program and ensure that Quebec is better positioned to become an independent country."

Mr. Charest, on the other hand, hopes to ride on the coattails of the budget in his bid to win a majority federalist government next Monday. He is taking full credit for the "significant" step taken by Ottawa toward solving the fiscal imbalance and he will argue that the budget is proof that his government can achieve concrete results by working within Canada.

Mr. Charest stressed the importance of his leadership in solving the fiscal imbalance, saying the coming vote leaves Quebeckers with a crucial choice.

"At the end of the day, as we look at our choice on the 26th of March, what kind of government do we want? Do we want a government that can continue to defend, with a great deal of firmness, our interests within Canada . . . or do we want the Parti Québécois, who wants to start another round of referendums? That's the choice," he said.

An hour before the budget was delivered in the House of Commons, the Liberals already had new campaign posters stating: "The fiscal imbalance is our success." However, Mr. Charest denied being tipped off on what the budget contained.

The new funding will also allow the Action Démocratique du Québec, which is moving up in the polls, to finally present its fiscal framework to the province today.

ADQ Leader Mario Dumont said that all the major political actors in Quebec deserve credit for obtaining the increased transfers. Mr. Dumont said the turning point came when Prime Minister Stephen Harper acknowledged the existence of the fiscal imbalance in December of 2005 and vowed to fix it.

"Stephen Harper kept his word," said Mr. Dumont, who wanted to ensure that Mr. Charest did not get credit for the new funds.

"Mr. Charest can't get elected on his own record so he's trying to do it using Mr. Harper's record," Mr. Dumont said.

The three parties will continue to call for increased federal transfers, but they will have to contend with Finance Minister Jim Flaherty's assertion during a news conference that discussions on future transfers to the provinces are "finished."

The Bloc and the PQ were particularly disputing the notion that the provinces now have everything they need, stating the financial transfers need to be permanent.

The Conservative Party hopes that the budget will also reinforce its presence in Quebec, while undermining the relevance of the Bloc as the opposition.

25%: Proportion of Prince Edward Island's provincial revenues that come from equalization payments.

$2.1 - BILLION: Increase in federal equalization over the next two years.

6: Number of provinces expected to receive equalization payments

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'We can't let $3-billion [get] away. We'll take the money.' BLOC LEADER GILLES DUCEPPE ON MONEY EARMARKED FOR QUEBEC

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