PM vows to continue spending to create jobs

Thu Jan 6, 2011 1:09pm EST
 
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OTTAWA (Reuters) - Canada's Conservative government aims to spend more money on projects that create jobs while "severely" limiting overall spending growth to tackle the budget deficit, Prime Minister Stephen Harper said on Thursday.

Harper said the date of the 2011 budget will be announced shortly after Parliament reconvenes on January 31. If the budget bill is defeated in the House of Commons, an election will be held.

"The policy of the government going forward over the next five years is to limit the growth, severely limit the growth in expenditures," Harper said in a televised news conference after announcing a government investment to improve energy efficiency in a mill owned by Canadian forestry and paper company Domtar Corp in Windsor, Quebec.

Harper said he will focus in 2011 on nurturing economic recovery and getting more people back to work. His government will not make deep spending cuts, nor will it raise taxes, he said. Instead, it will "concentrate new expenditures only on things that are really going to have some impact on job creation and economic growth."

The government typically presents the budget in February or March. In year-end interviews Liberal opposition leader Michael Ignatieff signaled he would vote against the spending plan unless Harper backtracked on corporate tax cuts and scrapped plans to buy new fighter jets.

Because the Conservatives hold a minority of seats in the House of Commons, Harper needs the support of at least one of the three opposition parties to pass key legislation like the budget and stay in power. If the opposition parties join forces to defeat the budget, it would be considered a vote of non-confidence and trigger an election.

The C$24.8 million ($24.8 million) investment in Domtar and six similar announcements on Thursday for mills elsewhere are part of a federal initiative announced in 2009 to help forestry companies improve energy efficiency.

($1=$1.00 Canadian)

(Reporting by Louise Egan; editing by Peter Galloway)