Stephen Harper and Michael Ignatieff have reached a deal that will head off a summer election, agreeing to jointly appoint a working group that will recommend ways to boost employment insurance benefits.
The deal means the Liberals will pass the government's spending bill on Friday, ensuring the government's survival for the summer.
Emerging from his national caucus meeting late this morning surrounded by MPs, Mr. Ignatieff characterized the pact as a win for all Canadians.
"We have found a way to make progress for Canadians on employment insurance and we've found a way to hold this government accountable," the Liberal Leader said. "And I feel this is a good day for our country but more importantly it's a good day also for this system of Parliament."
The Prime Minister was similarly upbeat. "The good news we have today for people is that the breakthrough we actually have is a willingness of the government and the Official Opposition to work together on an important public policy matter," Mr. Harper told reporters gathered outside the House of Commons.
"I think it's always preferable that parties work together in these difficult times and that's what Canadians want."
Conservative operatives, meanwhile, could not resist a shot at Mr. Ignatieff, immediately sending a release to key supporters saying "the Liberals have reversed themselves on EI reform."
The Liberal Leader has called for a national, 360-hour eligibility requirement for employment insurance, and only weeks ago called EI reform his party's line in the sand. The Prime Minister rejected the proposal and said he'd fight an election on it.
At the post-caucus scrum, Mr. Ignatieff was asked if he'd been bullied into backing down. "Do I look like I've been steamrolled? Next question," the Liberal Leader shot back.
The New Democrats, who had formed a coalition with Mr. Ignatieff's predecessor, Stéphane Dion, that sought to topple the Harper Conservatives this winter, disagreed.
"This working-group talk-fest is cold comfort to the 1.5 million unemployed Canadians dealing with a deeply flawed EI system," NDP Leader Jack Layton said in a statement. "Ignatieff did nothing to fix EI, nothing to create jobs, nothing to stimulate the economy.
"How did the Official Opposition fail Canadians so badly? Did Michael Ignatieff get steamrolled or does he just agree with Harper's policies? "
Both the Liberals and Conservatives put water in their wine: The agreement sets a Sept. 28 deadline for a panel to recommend ways to create a national standard for EI, as well as opening the system to self-employed workers. Mr. Harper and Mr. Ignatieff will each appoint three members of the panel.
The Liberal Leader named MPs Michael Savage and Marlene Jennings, along with Kevin Chan, his head of policy - and a former senior bureaucrat with the Privy Council under the Harper government.
Mr. Harper said Human Resources Minister Diane Finley would be on the panel and that his government would decide on its other appointments in short order.
Although both parties agreed to work in good faith to make positive change for jobless Canadians, a disagreement could set the stage for a fall election. And no expansion of the EI system will be in place for at least four months, while unemployment is expected to climb.
The Harper Conservatives have also agreed to support the Liberal opposition day motion that will go to a vote Friday. The motion calls for a further accountability report on infrastructure stimulus spending that is to be tabled in Parliament during the last week of September, which is to be followed by an opposition day in which the Liberals, if they don't like what they see, could call for a vote of no-confidence.
In effect, this would provide another trigger for the Liberals to try to defeat the government. It would take all three opposition parties voting together to defeat the minority Harper government.
The Liberal motion also calls for the opposition days to be spread out more uniformly throughout the session so that the government cannot jam them all at the end of a sitting as they have done, slotting oppositions days last week and into this week as the House is poised to adjourn.
Aides to Mr. Harper and Mr. Ignatieff's officials spoke this morning to iron out the proposal, after two meetings between the leaders yesterday.
They held a one-hour meeting at 24 Sussex Dr. last night, which followed an earlier hour-long tête-à-tête in Mr. Harper's Langevin Block office across the road from Parliament Hill.
While yesterday's afternoon meeting was taking place, there was little let-up in election posturing.
During Question Period, cabinet ministers road-tested attack points, saying that killing the government would interrupt the flow of stimulus money.
"If the opposition votes to bring down our government, negotiations on infrastructure contribution agreements between the various levels of government will immediately cease," Treasury Board President Vic Toews told the House of Commons.
Liberal House Leader Ralph Goodale shot back that the votes to take place on Friday will have no affect on stimulus, noting that the budget was approved in February, and that billions in approved expenditures are sitting idle.
A poll earlier this week found that 78 per cent of Canadians surveyed are opposed to an election, while only 14 per cent said it's a good idea.
Campbell Clark