The American financial crisis has quickly reverberated on the campaign trail, with Conservative Leader Stephen Harper saying that the Canadian economy is surviving the turmoil and that fears of a recession are in the past.
“I don't think the atmosphere should turn to one of complete doom and gloom,” Mr. Harper told reporters this morning as he kicked off the second week of the Conservative Party's re-election campaign.
“My own belief is if we were going to have some kind of big crash or recession, we probably would have had it by now.”
Later today, Mr. Harper took his fight for re-election to economically banged-up southern Ontario, aiming to wrest away seats he needs for his majority from local Liberals.
Mr. Harper warned a crowd of about 600 party faithful in London that Ontario would be particularly hard-hit by Stéphane Dion's Green Shift, saying the carbon tax portion of the policy would hurt Ontario's manufacturing sector.
“The carbon tax will badly hurt the economy of Southwestern Ontario,” Mr. Harper said.
But Mr. Harper may find himself with a challenge on that front, given the battering Ontario's manufacturing industry has taken over the past few years. He was also reminded in a Liberal advertisement released to the media yesterday of remarks uttered by his finance minister, Jim Flaherty, who said earlier this year that, if he was advising international investors on where to put their money, Ontario would be the last place.
The speech took place in the riding of London North Centre, currently held by Liberal Glen Pearson. Southwestern Ontario is seen as ripe territory for potential growth, often voting Progressive Conservative before that party merged with the Canadian Alliance. There are currently two Liberals, one Tory and one NDP representing London.
Mr. Harper's response to the collapse of a second large U.S. investment house Monday, and the opportunistic takeover of a third, comes as the Toronto stock market tumbled, the Canadian dollar continued to lose value and the price of oil closed below $100 U.S. a barrel for the first time in six months.
The TSX pared 515.55 points, as the demise of the Lehman Brothers brokerage and the sale of Merrill Lynch deepened worries about the U.S. economy and its impact around the world.
The Canadian market fell more than four per cent and is down 18.7 per cent from its most recent high June 18.
Mr. Harper said that, although there are significant problems in the United States, its economy is still resilient and not in recession.
“I wouldn't throw in the towel on any of this quite yet,” he said.
Mr. Harper has pitched his party as the best-placed to handle turbulent economic waters, particularly in opposition to Liberal Leader Stéphane Dion's Green Shift, which includes a tax on carbon. However, his declaration that the fears of a recession are behind the country may somewhat undercut that argument.
Speaking in Ottawa, Mr. Harper used the U.S. financial crisis to argue that the ideas of his opponents are unworkable in the current climate.
“This is not a time for wild experiments and new taxes or grand new spending schemes,” he said. “Governments must be able to act with prudence during a difficult economic time.”
Mr. Dion shot back by suggesting Mr. Harper has been a rudderless economic manager who spent on election-minded gimmicks but led Canada's economy to a performance that lags even the troubled U.S.
Mr. Dion said the Liberal Green Shift would cut taxes on areas that would stimulate the economy – incomes, savings, and business profits.
“The difficulties in the United States are something that we worry about. But still, they are outperforming the economy of Canada today. Their first six months [of 2008] have been better than ours in terms of economic growth.”
