As a nerd who specializes his geekdom in areas of political history, I am very interested in the current matters of confidence and coalition in Ottawa.
First I must point out to my friends in the media that in their coverage, they've missed the most recent example of coalition in Canada - the NDP-Liberal coalition in Saskatchewan formed in 1999. Also, I'm surprised they've not referred to the long lasting Liberal-Conservative coalitions in BC from the 30s into the 50s or the Liberal-Progressive coalitions of Manitoba. There is lots of precedent for coalition in Canada at the provincial level. However, there is little precedent for the situation before us today.
The most analagous Canadian example is the King-Byng affair of 1926 but it is still not a very good example. In that case, the incumbent Liberals won less seats than the Conservatives in the 1925 election but neither had a majority, the second largest party - the Liberals - continued in office with the support of the third-party Progressives. When that government was on the verge of falling - it had not actually fallen - Prime Minister King went to the GG and asked for an election. The GG's correct response was that the government had not fallen, the election had been only 9 months earlier, and a larger single party was willing to form a government.
In the situation before us today, the party with the most seats would be defeated and a coalition of two parties who, even taken together, have considerably fewer seats, would propose to govern. That is quite a different situation. Moreover, Harper's last minority began with 124 seats and, in terms of share of seats in the commons, it was the smallest majority ever. The Liberal-NDP coalition minority would beat that record having only 114 seats or 37% of the total.
I've not researched it, but the only comparable example I can think of would be the 1975 dismisal of Prime Minister Gough Whitlam in Australia. In that case, Whitlam's budget had been defeated in the Senate and the opposition argued that that was an expression of non-confidence, while Whitlam said only the House could weigh in on a matter of confidence. Whitlam refused to resign or call for elections as, in his view, he enjoyed the confidence of parliament due to his support in the lower house. The GG disagreed, fired Whitlam and named the opposition leader as PM. As Whitlam had a majority in the lower house, the new PM's first act was to call for an election.
That doesnt quite map on to the situation before us, but it is the closest example I can think of.
Anyway, all that aside, due to the unprecedented proximity of the potential loss of confidence to the last election, the GG would likely have to give the Liberal-NDP coalition a shot despite its lack of historical precedent either for or against.
On to the make up of the coalition itself, I think that there is a fairly easy way to iron out a coalition agreement without getting bogged down in details.
There should be a cabinet of 30 - 20 of whom are Liberals, including the PM, and 10 of whom are New Democrats. Portfolios should be chosen by the parties in order with the NDP chosing the first portfolio and the Liberals picking the next two and continuing until the 29 non-prime ministerial posts are assigned.
An agreement should be made that ministers would enjoy their regular authority over matters of administration but that decisions of the cabinet would require a formal vote with a 2/3s majority in favour. This would prevent the need for policy matters to be totally hashed out in advance as the government would need some degree of consensus between the two partners going forward.
This sort of agreement would allow the parties to focus on their response to the economic situation, including measures that would allow for the Bloc to support the measure and subsequently the government on and on subsequent matters of confidence without having the agreement fall apart on the details.