The federal Liberals may be headed for more negotiations on their budget bill, amid speculation that it could become the legislation upon which the government may fall.

Talk of a snap election began spreading on Friday, upon reports of explosive new testimony at the sponsorship inquiry.

Although details of the testimony cannot be revealed due to a publication ban, there are reports its disclosure would prove so devastating that Paul Martin's Liberal minority could fall if it became public.

Conservative Deputy House Leader Peter MacKay, speaking on CTV's Question Period on Sunday, said he doesn't think that the testimony will spark a non-confidence motion. But that doesn't mean the Liberals will be let off the hook.

"Will there be further negotiations around the budget that could potentially lead to the election? That still exists," he said.

Spending items, such as the budget, are considered confidence motions, and could trigger a snap election.

NDP Leader Jack Layton, who also appeared on Question Period, pointed out that in a minority government, the two independent seats in parliament and his party come into play.

"It's time for Mr. Martin to start talking with the opposition parties. We'd like to suggest he talk with us about the budget issue," Layton said.

Budget bill

For the past few weeks, opposition parties have been demanding changes to the budget bill, which also include provisions on the Kyoto climate treaty, and the Atlantic offshore revenue deals.

Conservative Leader Stephen Harper has threatened to vote against the bill over a provision that would remove all references to the word "toxic" from the Canadian Environmental Protection Act.

This would broaden the substances that could be regulated under the act to include carbon dioxide.

Previously, Layton and Bloc Quebecois Leader Gilles Duceppe, who both support the Kyoto treaty, said they planned to vote against Bill C-43 because they oppose the budget in general.

MacKay said that he also wants to make sure that the section of the budget bill pertaining the Atlantic offshore revenue deals goes through. "We'll try to have the budget split."

If a snap election were to be called, the Liberals could suffer in Quebec, where media attention on the sponsorship inquiry has been intense.

The Bloc Quebecois could potentially sweep Quebec in an election, according to CTV Ottawa Bureau Chief Robert Fife.

"It could mean that the Conservatives will make real significant gains in Ontario and perhaps parts of Atlantic Canada," he added. "It could mean that the Liberals will be in opposition and the Conservatives would form a minority government."

MacKay says that while Canadians might not want another election so soon, the Liberals have to work with the other parties.

"They are in a minority parliament, they've got to work with others, and if not, they'll have to deal with the consequences, as we all will."

Gomery inquiry

Montreal advertising executive Jean Brault appeared before the inquiry in Montreal Thursday.

His testimony is covered by a publication ban intended to protect his right to a fair trial on criminal-fraud charges related to the now-defunct sponsorship program.

His inquiry testimony could be made public once his trial is over.

Lawyers for the former Groupaction chief petitioned a Montreal court Friday, to have his May trial date pushed back to September.

The court is expected to issue its decision next Wednesday.

Gomery also agreed to a publication ban on testimony from former bureaucrat Chuck Guite and former ad executive Paul Coffin.