Harper aims to unveil fiscal stimulus package in late January

The federal government may have to produce sector-by-sector stimulus measures to ease Canada's economic pains in the weeks ahead, but the "big stuff" will have to wait for the Jan. 27 budget, Prime Minister Stephen Harper said Tuesday.
Prime Minister Stephen Harper, right, speaks with CBC Chief Correspondent Peter Mansbridge on Tuesday. ((CBC))

The federal government may have to produce sector-by-sector stimulus measures to ease Canada's economic pains in the weeks ahead, but the "big stuff" will have to wait for the Jan. 27 budget, Prime Minister Stephen Harper said Tuesday.

Harper said the Bank of Canada's decision Tuesday to slash a key interest rate to its lowest level in 50 years was a good step, but the government will likely need to take additional fiscal policy action to deal with the economic crisis.

"I've been very clear about this and so has the minister of finance," the prime minister said in an interview with the CBC's Peter Mansbridge. "We are going to need some fiscal stimulus. We don't want to lose our long-run financial strength.

"Big stuff's going to have to be done in the budget."

Harper acknowledged that the government may have to take some swift action "sectorally" in the interim, noting that officials are carefully watching what's happening with the auto sector in the United States.

"We don't want to be in a situation where we would put ourselves, our [auto] sector, at a severe disadvantage because we're not necessarily doing what they're doing or not moving along similar lines," he said.

But the prime minister stressed that his government must not allow Canada to enter into a permanent or long-term deficit. The federal government projected balanced budgets and small surpluses through 2012-13 in its fiscal update last month, but warned world economic uncertainty makes it impossible to rule out future deficits.

"We're prepared to do both, some short-term actions, but also making sure that we're staying on a good long-term financial path."

Late-January budget key to government tide

Most measures to deal with the economy won't be announced until the minority Conservative government tables its budget on Jan. 27 — a day after Parliament resumes following its prorogation last Thursday.

If the opposition parties vote against the budget, as they threatened to do with the fiscal update, the country could find itself facing another general election or see the Conservatives replaced by a Liberal-NDP coalition government.

Opposition parties have lambasted the Tories for failing to include a stimulus package for the slumping economy in the fiscal update, accusing the Conservatives of using tumultuous times to try to push through ideologically driven measures they said attacked women and public servants.

Harper on Tuesday defended his government's approach to the economy, saying the fiscal update was never meant to be a platform for their entire plan.

"We didn't promise a full budget. We promised some immediate actions, some actions in the interim which had to be done immediately," he said, without providing details of what his larger budget might include.

Harper said he hoped to be able to sit down with the next Liberal leader and discuss how the parties could work together in dealing with the economic crisis. ((CBC))

Before any conclusion can be reached on whether or not the House of Commons has lost confidence in the government based on its approach to the economy, Harper said the government must first be allowed to table the "first full step, or the first next step, in its economic plan."

"I don't think we want to be in a position, and I don't think Canadians would expect Parliament to be in a position, to express judgment on an economic plan before the government has had a chance to put it into practice," Harper said, pointing out that the House had only sat for two weeks since the Oct. 14 federal election before it was suspended.

When questioned about why he wouldn't allow his government to be put to a confidence test when he asked Gov. Gen. Michaëlle Jean to prorogue Parliament, Harper pledged to hold one once his government has laid out a "wide range of measures" in its budget.

PM invites opposition to make suggestions

Until then, Harper repeated his invitation to the opposition parties to offer specific suggestions for managing the economy.

"We have a right to that input. Some of the opposition parties are saying they want to run the government. That's fine. Precisely what is it you want to do?" Harper asked.

Disgruntled by Finance Minister Jim Flaherty's fiscal update, the Liberals and NDP formed a coalition with the intention of toppling the Conservative government, using the support of the Bloc Québécois, on matters of confidence.

Harper suggested Tuesday that the coalition had little to do with frustrations over his approach to the economy, but was in fact a conspiracy on the part of opposition parties to bring down the recently elected Conservatives.

"I think, frankly, after the election — if not before the election — the opposition parties decided that they would work against the government as an essentially unified front," Harper said.

He went on to accuse NDP Leader Jack Layton and Bloc Leader Gilles Duceppe of backing the Liberal party into a corner where it was forced to either vote against the government or be "condemned as sellouts."

Future of coalition in question

The future of the coalition, however, has since come into question after embattled coalition and Liberal Leader Stéphane Dion announced Monday he will step down earlier than planned to make way for a replacement.

His presumed successor, Michael Ignatieff, as well as some other Liberal MPs, have signalled they could be willing to work with the Tories on the economy.

Ignatieff — who some say has been lukewarm to the coalition deal — has suggested he'd be willing to listen to Harper if the Conservatives seek cooperation.

Bob Rae's announcement Tuesday that he is dropping out of the Liberal leadership race has left Ignatieff, a former Harvard professor, as the sole candidate to ascend to the party's top job. New Brunswick MP Dominic LeBlanc announced Monday he was ending his campaign and throwing his support behind Ignatieff.

CBC's Rosemary Barton reported Tuesday that some NDP MPs are privately expressing concern about Ignatieff's expected rise to leader, worried it could mark the demise of the coalition.

Harper called on all the "big national parties" to work together going forward, suggesting that he too was looking forward to a better relationship with Dion's replacement. 

"I hope the next Liberal leader, the first thing he'll do, will be willing to sit down with me and have that kind of discussion."

The full one-on-one interview with Harper can be heard on CBC's The National on Wednesday night.