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Economic woes bedevil Ottawa

Harper meets with finance minister, bank governor amid criticism

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OTTAWA -- Prime Minister Stephen Harper met with his finance minister and the Bank of Canada governor Tuesday as opposition parties said the Conservative government's focus on austerity could drive the country into a recession.

The charge was immediately rejected by Harper, who told the House of Commons the governing Tories are pursuing an economic plan that is widely respected.

Moreover, he said while his government is now implementing an "expansionary" spending policy, it is determined to eventually cut costs so the deficit can be eliminated.

The NDP and Liberals dismissed that defence, citing economic experts who have compared Harper to Herbert Hoover, the U.S. president who helped plunge his country into the Great Depression through austerity measures.

The political battle is being played out after Harper identified the economy as his priority this autumn, and in the wake of his recent warnings that the country's economic stability could be in danger in the face of a looming global economic slowdown.

Late Tuesday afternoon, Harper met in his parliamentary office with Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney. The gathering came after Flaherty and Carney attended meetings with their international counterparts last week in Washington, D.C.

They briefed Harper on those sessions as the prime minister plans for a crucial gathering of G20 leaders in Cannes, France, in early November. Harper is calling for a co-ordinated international approach to deal with the looming global economic storm.

During a brief photo op at the start of the meeting, Harper noted he was in the U.S. last week -- in New York City -- and had discussions on the economy.

"I think we're all finding that people are pretty positive about what we're doing here, but we're in a world picture that is not so positive and that clearly is going to demand that we spend a little bit of time looking at it," he said.

Harper wants deficit-ridden G20 nations to adhere to promises made at the 2010 G20 summit in Toronto to reduce both their deficits and debts by agreed-upon targets.

Earlier Tuesday, Harper and Flaherty came under fire in the Commons for failing to produce an economic plan that will create jobs.

"The prime minister has taken no action to deal with the upcoming economic crisis," said interim NDP Leader Nycole Turmel. "Since Parliament has returned, there has been no initiative, no action plan."

She said the consensus among economists is the Canadian economy will slow down and face another recession -- noting a senior economist had already compared Harper to Hoover.

"Why won't the prime minister bring forward a job-creation plan?"

Harper said the government has one of the best job-creation records "in the entire industrialized world" and won't adopt the NDP's solution -- taxes on large corporations that the Conservatives say would kill jobs.

Interim Liberal Leader Bob Rae cited an economist who has written that Harper's "near-term fiscal tightening" shows he has learned nothing from Hoover's response to the Depression.

Harper again rejected the criticism.

"In fact we are running a very expansionary fiscal policy right now. But we are obviously undertaking good management, some modest savings to ensure that as the economy recovers, that we will in fact balance our budget and retain our fiscal advantage."

Under its budget plan, the government will slash $4 billion annually from government programs. The cabinet will spend this autumn deciding where the cuts should occur, and their decisions will be revealed in the 2012 budget.

Rae told reporters in addition to "fiscal discipline," Harper's government needs to boost the economy, creating jobs and more revenues for the government treasury.

"I don't think you can tighten your belt into growth," Rae said. "Their plan is completely incoherent... One day it's cuts, cuts, cuts, and the next day they say they're going to be flexible."

Last week, during speeches in the Canadian Parliament, Harper joined British Prime Minister David Cameron in issuing gloomy warnings that the world could be on the cusp of another recession unless key nations adopt some necessary economic measures.


-- Postmedia News

Republished from the Winnipeg Free Press print edition September 28, 2011 A3

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