Conservative Leader Stephen Harper walked a fine line Monday evening in the wake of plunging markets: reaching out to reassure spooked investors but at the same time warning them off voting for rival parties –saying they can expect more turmoil if his opponents win.
Appearing on the Business News Network, he said he doesn't see any deficit in the near future, but his comments 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 an interview on BNN after being asked whether a deficit could be an option “in the near future.”
Mr. Harper 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 he was leaving open the door for a deficit further down the road, though, noting Mr. Harper also said “we're certainly not going to embark on deficits.”
The Conservative Leader reminded Canadians of three differences between this country and the U.S. today. He noted that the federal government is running balanced budgets, that Canada's banking system is not in crisis like its counterpart in the United States and that the housing lending sector is also relatively unscathed.
“I think we do need to remind them of some of the differences with the U.S. We are not in deficit. We don't have a mortgage crisis or banking crisis as they do in the United States. We've actually been so far this year creating jobs,” he said.
But Mr. Harper then quickly went on the partisan offensive. At a Laval, Que., rally Monday night, he warned a Tory crowd that electing rivals such as the Liberals with their proposed carbon tax would only deepen market instability.
“Today we have seen more instability in the stock market. We have seen stocks tumble, especially in the commodity and energy sectors,” he told the Montreal rally.
“What I worry is this is just the tip of the iceberg if we get a carbon tax on energy or the tax increases the Opposition wants to impose on our economy to pay for spending promises we cannot afford, Mr. Harper said.
Mr. Harper's statements followed a news release from federal Finance Minister Jim Flaherty which also sought to calm Canadian investors, who saw their investments plummet again Monday.
The message from the Tory Finance Minister was that Canada's banks are far sturdier than the U.S. banking system.
“Canada's financial system has handled the persistent global market turmoil very well. Canada's banks and other financial institutions are sound and well-capitalized, and are less leveraged than their international peers,” Mr. Flaherty said.
“Canada's mortgage system is sound. The Canadian housing finance market does not have a large sub-prime component and has not witnessed the proliferation of products and marketing practices that have led to the serious problems being experienced in the United States. Canadian households have smaller mortgages relative to both the value of their homes and to their disposable incomes than U.S. households,” he said.
“According to the International Monetary Fund, the rise in Canadian house prices in recent years was fully supported by sound economic factors, such as low interest rates, rising incomes and a growing population.
Separately, the Tories emphatically played down statements made Monday morning by Mr. Harper, in which he spoke of plans to aid banks if the U.S.-led financial meltdown – or efforts to counter it – spill over heavily into this country.
They said he was merely talking about expanded powers granted to the Bank of Canada in the 2008 budget and nothing more. “We have provided more freedom to the Bank of Canada … in Budget ‘08.”
