By Mark Gollom

During the leaders' debate, Green party Leader Elizabeth May kept flagging an OECD report about Canada's economy, suggesting the survey presented a somewhat critical outlook on the country.

May was referring to the Economic Survey of Canada, 2008. She said the report recommends reducing taxes on income and payroll and adding taxes on carbon instead. Which just happens to be her party's platform.

As well, she said, the report warns that Canada is at risk of Dutch Disease.

The term, according to investorwords.com, refers to the condition when the discovery and exploitation of a natural resource raises the value of a country's currency to the point that it makes that country's manufactured goods less competitive. Alberta's oil wealth versus the slackening Ontario manufacturing sector, the implication was clear.

Although May didn't mention it, the report also said that tax cuts and low economic growth will eat into budget surpluses, raising the prospect of government deficits, which is something all party leaders are adamantly against.

Canada faces significant challenges because of the slowing of the U.S. economy, our biggest trading partner, and the high Canadian dollar, the Organization for Economic Co-operation and Development says.

But this report also offers praise for Canada. It says its economic performance has been "among the best in the OECD as the sound policy framework has enabled the country to take advantage of strong global growth and soaring terms of trade."

It says the economy has adapted well to recent shocks, inflation has been held in check and that surpluses have been used to reduce debt.

Far from being the condemnation of the Harper economics that May says it is, the OECD says Canada's tax cuts "have been a good use of budget surplus" and that tax cuts on corporate income and capital have enhanced business tax competitiveness.

While problems in the U.S. will affect Canada's GDP growth, the report says the economy should rebound somewhat in 2009.

So the reality is, while the report warns of challenges to the economy, it ain't all bad.