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OTTAWA — Conservatives are winning plaudits on the No. 1 issue facing voters, even as anxiety grows over job security and the duration of the economic slump, says Finance Minister Jim Flaherty.
“I think we're getting credit for being realistic for recognizing what was coming,” Mr. Flaherty told The Canadian Press on the eve of Sunday's federal election call.
“We saw the economic slowdown coming and we acted. Had we not created that large stimulus (last October), I think people recognize that things would be significantly slower than they are right now in Canada, including Ontario.”
Last fall, Mr. Flaherty tabled measures to reduce business, personal and sales taxes, a package that the Finance Department says helped pump $21-billion into the economy this year.
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But despite the stimulus, the Canadian economy has gone from strength to teetering on the brink of a technical recession, with first-half growth in 2008 falling into negative territory for the first time in more than a decade.
Meanwhile, Canada's seemingly unstoppable job-creation machine has stalled, going from churning out an average of 30,000 new jobs a month to basically treading water since February. Last month, 15,000 new jobs were added after dropping 60,000 workers the previous two months.
Asked about the seeming incongruity of those numbers with recent polls indicating the Stephen Harper Tories are anywhere from eight to 10 percentage points ahead of the Liberals, Mr. Flaherty said Canadians are realistic about Canada's ability to buck a global slowdown, particularly the U.S. slump.
During the winter, Mr. Flaherty launched a campaign-style attack on the economic policies of Ontario Premier Dalton McGuinty, a Liberal, saying the province's high business taxes were discouraging investment.
In the interview, Mr. Flaherty refused to repeat his strong words about the province's government, although he made clear he still supported lower corporate taxes and opposed using government funds to bail out troubled companies.
The Prime Minister's announcement of $80-million in aid to the Ford Motor Co. engine plant in Windsor, Ont., did not qualify as a bail-out, he said, because it will go to future jobs, not protecting current ones.
Mr. Flaherty said the Conservatives have nothing to regret about how they've managed the economy.
But Liberal Leader Stéphane Dion has served notice he intends to make economic “mismanagement” a top issue in the campaign, blasting the government for its “laissez-faire, I don't care” approach to the crisis in the Ontario auto sector.
Mr. Dion called the economy the worst since 1991, when Brian Mulroney governed with a majority Conservative caucus,
“Every time Canada is governed by a Conservative government, the economy stalls, jobs are lost and deficits appear on the horizon,“ he said. “Tory times are tough times.
“It's always the way. . . . Liberals cleaned up the fiscal mess Conservatives left the last time (in 1993) and we will do it again.”
Public opinion polls, however, still give the Conservatives the nod entering the campaign on the question of which party is most trusted in managing the economy.
Mr. Flaherty said Canadians will have a clear choice about which economic policies are preferable, repeating the often-made Conservative charge that Mr. Dion's Green Shift environment plan would impose a massive new tax on Canadians.
By contrast, Mr. Flaherty said he considers enacting structural changes to business and personal taxes the government's most important contribution to the economy, saying the action was preferable to the U.S. plan of mailing government cheques worth hundreds of dollars to over 100 million Americans.
The package, along with increased exports because of the weaker U.S. currency, helped drive GDP growth to 3.3 per cent in the second quarter, well above Canada's 0.3 per cent advance.
“For one quarter,” Mr. Flaherty said dismissively. “These are one-time cheques. The changes we've made help this year, certainly, but they will help every year going into the future.”
The main regret of his two-and-a-half year minority government, he said, was not cutting personal taxes deeper. He said his government, if it wins the election, would lower income taxes to make them more competitive with the U.S. “in the next few years.”
Mr. Flaherty insisted that despite the slumping economy, the government is on track to record a surplus this fiscal year and predicted it would be “modestly larger” that the $2.3-billion he forecast in the 2008 budget.
