Finance Minister Jim Flaherty is wrapping up a two-day meeting in Saskatoon, Saskatchewan, with provincial and territorial finance ministers. The gathering is an annual event, but this year’s has obvious urgency given the state of the global economy, Canada’s susceptibility to declining growth, and the circus the debate over a proper policy response has become.

There’s broad agreement on the general need for fiscal as well as continued monetary stimulus. The Conference Board of Canada on Tuesday issued a report calling for a CAD10 billion to CAD13 billion in new government spending, and Bank of Canada Governor Mark Carney on Wednesday signaled the central bank’s readiness to cut rates even further. (Though Carney indicated measures as drastic as those contemplated by the US Federal Reserve won’t likely be necessary.)

The provinces and territories, as they did during an early November meeting with Prime Minister Stephen Harper, will push for federal spending on shovel-ready infrastructure projects. While there’s broad agreement about the short- and long-term benefits of such efforts, there are differences among the disparate regions up North.

Billions in unplanned spending, now to be included in the budget scheduled to be presented Jan. 27, will push Canada into its first budget deficit in a decade. The federal government has pledged to accelerate CAD6 billion already set aside for 2009 for infrastructure spending, and provincial and territorial finance ministers will be seeking aid for their particular struggling industries.

Last week, Ottawa and Ontario’s provincial government reached agreement on a deal to offer CAD3.3 billion in aid to Canada’s auto industry, contingent on the approval of a proposed USD14 billion US bailout package in Washington. A report from the provincial government warned that more than 580,000 jobs could be lost within five years if The Big Three automakers collapse.

Other provincial finance ministers have indicated support for the automakers deal, but they have needs of their own. British Columbia, Manitoba and Quebec have been pushing for aid for their forestry sector, and Saskatchewan says the agriculture sector is also struggling. The energy industry is also likely to be discussed; Alberta recently sent a letter to Prime Minister Harper requesting help for investment and job creation in the oil and gas sectors.

Flaherty said Wednesday that he and his fellow finance ministers agree shovels have to be in the ground quickly if projects are going to stimulate the economy and help create jobs. He indicated the provinces should also contribute–“to put their own resources where their mouths are,” in his words.

Flaherty and Harper face a great deal of pressure to appease local governments and a litany of industries. To stave off potential defeat next year in the House of Commons, the government will have to introduce measures in the pending Jan. 27 budget that will satisfy the opposition parties.

Flaherty, in an effort to appease opponents and Canadians following the release of the fiscal update, has said the coming budget would include stimuli in an effort to stoke domestic demand. Opposition parties formed a coalition at the beginning of December to dethrone Harper, who suspended Parliament in order to avoid a vote of no confidence. His political survival will once again be in play after the budget is presented.

The top priority of the proposed opposition coalition proposed by the Liberal Party and the New Democratic Party with the support of the Bloc Quebecois is a CAD30 billion package to include: speeding up existing and new municipal and interprovincial infrastructure projects such as transit, clean energy, water, corridors and gateways; housing construction and retrofitting; and investing in manufacturing, forestry and car-making.

New Liberal leader Michael Ignatieff, no fan of the coalition gambit, hasn’t ruled out a compromise, but said it was up to Harper to take the first step.

All interested parties agree that stimulus is necessary, and that it should be timely, targeted and temporary. As well, efforts should include the goal of reestablishing confidence in financial markets.

Flaherty, Harper and the various local governments and industry groups face a daunting task: reducing broad generalities and big dollar figures to policies that will help in the short term and also generate long-term growth. But the various dialogues taking place across Canada suggest a workable plan will be on the table awaiting Parliament once it returns to business.

“I think Canadians expect all of us not to be partisan,” said Flaherty during a press avail in conjunction with his Wednesday meeting with provincial finance ministers. That thought is backed up by recent polling numbers released by Angus Reid and Ipsos-Reid.

If those numbers mean anything, Canadians’ esteem for Harper is receding, but nobody likes the coalition. According to the Angus Reid survey, the Ignatieff-led Liberals are much stronger, with 31 percent support, compared to 37 percent for the Conservatives. Prior to Ignatieff’s ascendance, Liberal support was at 22 percent, compared to 42 percent for the Conservatives.

And for the first time in years the Liberals’ leader had more support as “preferred prime minister” than Harper. Ignatieff is preferred by 28 percent, compared to 27 percent for Harper. Harper hadn’t scored below 30 percent since 2006. In Quebec, results are particularly stark, with 37 percent favoring Ignatieff to 11 percent for Harper.

The Ipsos-Reid survey says: “Opposition to the Liberal-NDP-Bloc collation continues to be strong, even with Mr. Ignatieff as chief, with 57 percent of Canadians indicating that they oppose the coalition.” Roughly the same percentage would want the Governor General to call a new election rather than invite the coalition to govern should the Harper-led minority government be defeated on the budget issue in the House of Commons.

“Unprecedented” is the word of the week, the month, 2008; but let’s not get carried away with the US Federal Reserve’s move yesterday to establish a target range of 0 to 0.25 percent for the fed funds rate.

The actual fed funds rate and short-term Treasury bill rates had been well below the Fed’s previous 1 percent “target” for some time; Tuesday’s announcement was more a recognition of reality than any breaking of new ground.

In addition to opting for a target range rather than a point for fed funds, the Federal Open Market Committee (FOMC) approved a 75 basis point decrease in the discount rate to 0.50 percent and established interest rates on required and excess reserve balances of 0.25 percent.

In announcing its decision, the FOMC said, “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined. Financial markets remain quite strained and credit conditions tight. Overall, the outlook for economic activity has weakened further.”

This marks the first time the fed funds rate has been below 1 percent. And it’s likely to stay near those levels for some time.

The Fed said it “will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.” The statement discussed the prospects for unconventional monetary policy to stimulate the economy. Since early September, the Fed’s balance sheet has grown over USD1 trillion to more than USD2 trillion in total.

“As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant,” the statement said.

The FOMC also said it was looking at the potential benefits of purchasing long-term Treasuries in an effort to influence interest rates favorably. In addition, the Fed said it will implement the Term Asset-Backed Securities Loan Facility to extend credit to households and small businesses.

Other unconventional means of monetary policy will also be considered as the FOMC tries to support financial markets and stimulate the economy “through open market operations and other measures that sustain the size of the Fed’s balance sheet at a high level.”

All 10 members of the FOMC voted in favor of the announced actions.

Crescent Point Energy Trust (TSX: CPG-U, OTC: CPGCF) raised CAD100 million from investors to buy 17 percent stake in Wild River Resources, a private company with properties in the Bakken play in Saskatchewan, and another CAD12.5 million of property acquisitions in the same region. The financing was led by Scotia Capital, BMO Capital Markets and CIBC World Markets. Crescent Point sold 4.5 million trust units for CAD22 each. Crescent Point Energy Trust is a buy up to USD25.

True Energy Trust (TSX: TUI-U, OTC: TUIJF) cut its distribution in half, to CAD0.02 per unit. Hold True Energy Trust.

Great Lakes Hydro Income Fund (TSX: GLH-U, OTC: GLHIF) snapped up two wind farms, one in British Columbia and the other in Sault Ste. Marie, Ontario, from Brookfield Renewable Power for CAD130 million price tag. Great Lakes Hydro is raising CAD75 million by selling units on a bought-deal basis to a syndicate including CIBC World Markets and RBC Capital Markets. The units were priced at CAD16 each. Great Lakes Hydro Income Fund is a buy up to USD18.

Bird Construction Income Fund (TSX: BDT-U, OTC: BIRDF) announced the delay of a construction contract for Petro-Canada Oil Sands’ Fort Hills Mine after Petro-Canada Oil Sands deferred a final investment decision on the project to 2009. Bird Construction was awarded the contract for the design and construction of six buildings at the facility near Fort McMurray, Alberta, on July 23, 2008. The buildings were expected to be completed in 2011. The contribution of the contract to backlog value is approximately CAD100 million, which will remain until Petro-Canada Oil Sands makes a final determination about its plans. Bird Construction Income Fund is a buy up to USD20.

Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF) acquired a 153-suite, 19-story luxury apartment building in Quebec City, Quebec. The property includes 19,500 square feet of commercial space. It’s centrally located with 99 percent occupancy. The CAD17.8 million purchase price was satisfied by the assumption of a Canada Mortgage Housing Corporation-insured mortgage of approximately CAD10.5 million maturing in 2011 with an interest rate of 4.21 percent, a new CAD2.2 million five-year mortgage with an interest rate of 3.62 percent, and the balance from CAP REIT’s acquisition facility. Canadian Apartment Properties REIT is a buy up to USD15.

InnVest REIT (TSX: INN-U, OTC: IVRVF) unitholders may soon be voting on the removal and replacement of four trustees based on a motion made by Royal Host REIT (TSX: RYL-U, OTC: ROYHF). Royal Host owns more than 5 percent of InnVest. InnVest REIT is a buy up to USD6.

Royal Host REIT (TSX: RYL-U, OTC: ROYHF) declared its regular monthly distribution of CAD0.055 per unit payable Jan. 15, 2009, to unitholders of record on Dec. 31, 2008. Royal Host also declared a special distribution of CAD28 million, payable in cash Dec. 31, 2008 to unitholders of record as of Dec. 29. Based on the number of trust units currently outstanding, the special distribution would be CAD1.365 per unit. Hold Royal Host REIT.