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Liberal Leader Stéphane Dion, who this morning refused to say categorically he would never run a deficit if the economy slides, backtracked this afternoon to commit unequivocally that a Liberal government would never cause a deficit.

Quizzed three times by reporters in London, Ont., on Wednesday morning, Mr. Dion insisted he is committed to fiscal discipline, but would not say he would never run a deficit, if a deep recession hits.

But this afternoon in Kitchener, Mr. Dion said a Liberal government would never cause a deficit, but he's not sure whether the Conservatives under Stephen Harper are hiding one that already exists.

“A Liberal government will not cause a deficit. We will not put Canada in a deficit. If the Conservatives have put us in a deficit, created a situation where we are in a deficit today – the first thing I want to know from Mr. Harper: is it the case? Can he say to Canadians what he knows, what he knows exactly about the state of the public finance of the country?”

He said that the first thing the Liberals will do if they win power is to ask for an independent audit of the public finances, to see if the country is in deficit already. He said that when Ontario Premier Dalton McGuinty took over in 2003, he found the former provincial finance minister, Jim Flaherty – now federal finance minister in Ottawa – had left a hidden deficit behind.

“The first thing we'll do, we'll ask for an audit, and independent audit… And we'll see if Mr. Flaherty did to Canada as he did to Ontario, with the Harris government. When he tried to hide a deficit of $5.6-billion for Ontario alone,” Mr. Dion said.

Earlier in the day, Mr. Dion had lauded Liberal budget discipline, and insisted he would manage public finances carefully, but would not state categorically he would not run a deficit if he was prime minister, and the economy slides.

“I will not speculate about how much an economy may go down. I just want to tell you that we need to have strong fiscal discipline. To never over-commit, to come with strong policies that are well-targeted, to never use the money of the taxpayers unwisely,” he told reporters.

Asked twice more if he will commit to keeping Ottawa out of deficit even if the economy falls into deep recession, Mr. Dion refused to say the words. He promised fiscal discipline, prudent budgeting with a $3-billion annual surplus cushion, and rigorous costing of his promised – but not, in so many words, to avoid a deficit at all costs.

Wednesday afternoon, when he ruled out running a deficit, he insisted it was no different from what he had said in the morning.

“Same thing I said this morning, he said. “A Liberal government will never, never cause a deficit. If the Conservatives plunge us into a deficit after their bad policies, well, we'll clean up the public finances with the same courage, the same determination, and the same success in 1993.”

The Liberal campaign had spun into backtrack mode when it became clear his morning statements had opened a flank. Mr. Harper immediately pounced.

"If you look at the tens of billions of dollars of announcements they are making, the only way these can be financed are not simply through big increases in taxes…but it would mean deficits and large deficits, big deficits" said Mr. Harper.

Mr. Dion retorted yesterday that his platform will be fully costed an include an annual $3-billion “contingency” cushion – a feature that Paul Martin usually employed in his budgets – and that Mr. Harper had not such safety measure in his plans. He called on Mr. Harper to commit to including a contingency reserve in his platform.

A refusal to make a commitment may would have undercut the chief tactic Mr. Dion has employed on his campaign this week – invoking the Liberal brand as prudent money managers and deficit cutters in the 1990s in his attacks on Conservative Leader Stephen Harper's management of the economy.

Jean Chrétien and Paul Martin made the no-deficit pledge a potent political advantage since the country climbed out of deficit in 1997, and often used the warning that opponents would plunge the country back into the red to Liberal gain.

Economists don't place the same importance on crossing the red line of a budget deficit, as long as it's only in a small, temporary way – but for more than a decade it has been the third rail of Canadian politics, a symbol of prudent management to maintain hard-won gains. And many believe it now imposes a rigour on federal governments.

It's Mr. Dion who has this week been selling the message that the Tories squandered the surpluses that Liberals left them. He invoked the Liberal fiscal brand in attacking Finance Minister Jim Flaherty and Mr. Harper, who said Tuesday he needed a strong mandate because opposition has "sabotaged" the economy.

"Who sabotaged the economy over two years and a half? It's Mr. Flaherty and Mr. Harper. They received an economy that had a surplus of $12-billion, thanks to the hard work of Canadians and the good sound management of the Liberal government," Mr. Dion said.

"Now we have the worst economic growth of the G8. We are close to a deficit, and close to a recession, thanks to Mr. Harper and Mr. Flaherty."

With a report from Brian Laghi in Welland, Ont.