News

Conservative Leader Stephen Harper walked a fine line last night amid plunging markets, reaching out to reassure spooked investors but warning of more turmoil if his opponents win.

He told the Business News Network that he doesn't see any deficit in the near future, but stopped short of ruling out the longer-term potential to slide into the red.

“There's certainly nothing today that says we should go into deficit,” Mr. Harper said in a televised interview when asked whether a deficit could be an option “in the near future.”

He said that “nothing on the horizon – notwithstanding the storm clouds, and they are significant – indicates to me that we should immediately go into deficit.”

Conservative staff rejected the suggestion that Mr. Harper was opening the door for a deficit down the road, noting that he also said “we're certainly not going to embark on deficits.”

The Tory Leader reminded Canadians of three differences between this country and the United States: Ottawa is running balanced budgets, Canada's banks aren't in crisis like their U.S. counterparts, and the housing lending sector is relatively unscathed.

He made his remarks as economists predicted that Canada is headed for a recession or significant reduction in growth as trade with the United States slows and commodity prices fall, although the country is in a better position to weather the economic storm than its largest trading partner. And the Conservative Leader quickly went on the partisan offensive. At a rally in Laval, Que., he said that the Liberal Party's proposed carbon tax would only deepen market instability.

“What I worry about, my friends, is that this is just the tip of the iceberg if we get a carbon tax on energy or if we get the tax increases the opposition wants to impose on our economy to pay for spending promises we can't afford, he said.

“We have to keep our taxes down. We have to stop the carbon tax. And only electing a Conservative government will ensure that we do.”

The Conservative Leader's remarks came on a day when he struggled to find the right tone to reassure investors.

In the morning, he said Ottawa had a standby plan to help Canadian banks, but his aides later said the remarks were less than what they appeared to be.

The Conservative campaign platform, which is set to be released today, hasn't been revamped to include new measures as a result of the recent market turmoil, spokesman Kory Teneycke said.

“There will be some news out of it, but we are not rolling out some new initiative with respect to what we've seen in the market,” he said.

Although his campaign aides said Mr. Harper will not announce a major new interventionist policy, some acknowledged that he will try to shift the perception of his attitude.

His statement in the English-language leaders' debate that Canadians are not worried about losing their jobs and their houses, but rather about declining stock markets, was a poor choice of words, some Conservative strategists conceded.

They said Mr. Harper's remarks today will be aimed at making Canadians feel he does have their personal economic interests at heart. The underlying message will be that he saw it coming and was acting all along, Conservative strategists said. “We've been building the breakwater for years, seeing the storm coming,” said one.

In the morning, Mr. Harper suggested in French that Ottawa had a standby plan in case Canada's credit system encountered trouble.

“We have other plans, other proposals, if we have to help the banking system, if there are problems in the rest of the world that affect us. But I think we're in a better position than others. I am an optimist, but I think I am also a realist.”

He did not elaborate on these plans, and when pressed for more details, Conservative officials played down his comments, saying that no bailout is in the works.

Aides said Mr. Harper was merely talking about expanded powers granted to the Bank of Canada in the 2008 budget.

Mr. Harper also said he would help, wherever necessary, with co-ordinated action taken by Group of Seven countries to cope with the credit crunch.

Liberal Leader Stéphane Dion said Mr. Harper is the only world leader who fails to see the urgency of government intervention in the growing economic credit crisis.

“It's too little too late. For the last week, we told him that he needs to wake up and say to Canadians that indeed we are in tough times and indeed the government will help you,” Mr. Dion said Monday at a campaign stop in Sydney, B.C.

Also campaigning in B.C., NDP Leader Jack Layton repeatedly drew a contrast between what he called Mr. Harper's “do nothing” approach and his promised hands-on strategies.

“I am going to work until I drop to protect your homes, your savings, your pensions and your jobs from the unfolding financial crisis,” he told supporters at one rally.

“I'll tell you the problem with Stephen Harper's do-nothing attitude – pull one thread and the whole sweater unravels. And it's the working families of Canada who will be left out in the cold.”

He flatly ruled out deficit spending to remedy economic problems.

“We don't believe that's the way to go. We draw our lessons from the many New Democrat governments in Canada, who had the best record in balancing the budget,” he said.

With reports from Campbell Clark in Ottawa, Bill Curry in Sydney, B.C., and Ian Bailey in Vancouver

Week 5 of the campaign

View Larger Map

• For a more detailed view, click on the link above labelled "view larger map."
• Click on placemarkers to learn more about each campaign stop and what happened (all times are local).
• Navigate with the arrow buttons, or zoom in and out with the + or - buttons.
• MAP ARCHIVES: Days 1-3, Days 4-7, Week 2, Week 3, Week 4.