January 19, 2008 / 12:17 AM / in 10 years

Canada Liberals eye election, promise factory aid

<p>Liberal leader Stephane Dion speaks during a news conference in Ottawa January 9, 2008. REUTERS/Chris Wattie</p>

OTTAWA (Reuters) - Canada’s opposition Liberals promised on Friday to boost aid to the manufacturing sector if elected, and asserted their chances of displacing Conservative Prime Minister Stephen Harper have improved.

Liberal leader Stephane Dion announced that if elected his government would set up a C$1 billion ($970 million) fund to support major investments in manufacturing and research and development.

He also said he would try to go faster than Harper’s government in bringing corporate tax rates down.

“If fiscal resources permit, I would accelerate the implementation of corporate tax cuts,” he said in the prepared text of a speech he was giving in the steel town of Hamilton, Ontario.

Dion has been keeping Harper, elected with a minority in January 2006, in power by abstaining on key confidence votes but in a La Presse newspaper interview published on Friday he left open the possibility of voting against the next budget, expected in the first half of March or possibly late February.

“We cannot rule out the possibility of voting against the budget. The context has changed from the autumn. I‘m not saying there necessarily have to be elections,” La Presse quoted him as saying.

“I am saying that even if people don’t want elections they increasingly expect they will take place. Also, we think our chances of winning are bigger now because people are already listening.”

Dion’s party faced ridicule for abstaining during the autumn session but opinion remains divided about triggering an election given that most polls show another minority Conservative government could well be elected.

Dion sought to eliminate one vulnerability by ruling out, in his La Presse interview, the idea of putting the federal Goods and Service Tax back up to 7 percent from 5 percent, the level to which Harper has cut it.

He says it was the wrong tax to reduce, and he had earlier toyed around with the idea of reversing the cuts, but he told La Presse: “We won’t do that.”

In his speech in Hamilton, he lambasted Finance Minister Jim Flaherty for not being willing to make direct corporate subsidies, such as in an auto plant in Windsor, Ontario, that Ford Motor of Canada has closed.

“What a mistake! Countries like the United States are investing strategically to attract private new investment in order to bring the best jobs and the best facilities to their country,” he said.

“If the Harper government is not prepared to do the same, then the most advanced technologies -- the cutting-edge green technologies of tomorrow -- are going to be built in the United States instead of Canada.”

Flaherty had said governments should not be picking winners and losers but should instead give broad-based tax relief, in this case to the corporate sector in general.

($1=$1.03 Canadian)

Editing by Renato Andrade

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