OTTAWA (Reuters) - The extraordinary economic turmoil facing Canada and the world may require up to five years of “big, comprehensive” stimulus and other measures, Prime Minister Stephen Harper said on Friday.
“We’re in an unprecedented period. We’re going to work on the assumption that it is going to be a tough time, that we should not underestimate the actions we need to take,” Harper said after participating in a business round-table in Montreal.
“We’ll take big, comprehensive actions. We’ll assume that we’re probably going to have to look at a period of three to five years of such actions. It won’t necessarily be that long, but we’re not going to underestimate the situation. We’re going to do whatever is necessary.”
He and Finance Minister Jim Flaherty have been preparing the ground for the January 27 federal budget which will end 12 years of surpluses, despite their assurances before the October federal election that deficits would not be necessary.
Flaherty told reporters in Toronto on Friday that he would be budgeting for substantial deficits.
“There is a recognition that we have a synchronized global recession. We are in uncharted waters. There’s a high degree of uncertainty,” he said.
Asked if the Conservative government might cut checks to Canadians -- as President George W. Bush did last year in a bid to stimulate the U.S. economy -- Flaherty indicated he was leaning more toward tax cuts.
“I‘m not going to start ruling out options. I can tell you what we’ve in fact been looking at is what we’ve been hearing from Canadians in consultations like this,” Flaherty told reporters before heading into pre-budget consultations.
“That is that we should be looking at, of course, infrastructure spending ... and tax measures.”
Harper said he saw signs of consensus both in Canada and abroad on the need to co-operate in taking bold action.
“All political parties, all government, both domestic and around the world, are getting the message, they have to work together on a concerted strategy,” he said.
The minority Conservative government was nearly toppled last month over a fall fiscal and economic statement, which opposition parties complained was wildly unrealistic and offered no stimulus plans, and contained a series of blatantly partisan measures they would not accept.
That political storm has subsided, particularly after the main opposition Liberal Party picked a new, more cautious leader, Michael Ignatieff, who has said he would not automatically vote against the January budget.
Harper met with Ignatieff in December and said they would meet again in the run-up to the budget.
The prime minister’s latest comments on the economy and the upcoming budget come on a day when 34,400 Canadian job losses and 524,000 U.S. job losses were reported for December.
“Obviously the (Canadian) figures are troubling. Every time a Canadian loses his job, this is something that really does preoccupy us,” Harper said.
“What I think is more troubling are figures in the United States, which really do indicate the period of difficulty we are entering in terms of the global economy.”
Editing by Rob Wilson