March 29, 2011 / 5:45 PM / 6 years ago

Parties differ on how to cut budget deficit

<p>Canada's Liberal Party leader Michael Ignatieff speaks to students during a campaign stop at Sheridan College in Oakville March 29, 2011. Canadians will head to the polls in a federal election May 2. REUTERS/Mike Cassese</p>

OTTAWA (Reuters) - The two main parties contesting Canada’s election have the same fundamental economic goals -- cutting the budget deficit chief among them -- but two very different approaches.

The May 2 election pits the incumbent right-of-center, tax-cutting Conservatives against the centrist Liberals, who say Canada can afford new spending programs if it scraps expensive programs favored by the government.

The Conservatives -- in power since 2006 with two successive minority governments -- are well ahead in the polls and look set to retain power.

The policy gulf between the two was evident on Tuesday when the Conservatives touted tax breaks for small businesses, while the main opposition Liberals promised an annual C$1 billion ($1 billion) fund to help students go to university.

Prime Minister Stephen Harper used a campaign event to accuse the Liberals and the two other opposition parties of planning what he called reckless spending programs.

“They’re going to promise everybody billions and billions and billions of dollars and ... they’re going to raise taxes to pay for it,” he said in Regina, Saskatchewan.

Last year Canada ran up a record C$55.6 billion deficit on the back of a two-year stimulus program to fend off the worst of the recession. Ottawa says the budget deficit this fiscal year will hit C$40.5 billion and forecasts the government should be back in the black by 2015-16.

Harper said the economic recovery was still fragile and told Canadians that if they did not return a majority Conservative government the alternative would be a “reckless” and “very dangerous” high-spending coalition of opposition parties under the control of Liberal leader Michael Ignatieff.

“The Ignatieff-led coalition’s high-tax agenda would kill jobs, stall our economic recovery and jeopardize the financial security of hard-working Canadian entrepreneurs and families,” he said.

Ignatieff, who has denied he plans to form any kind of coalition, said Canada could afford to invest more in education if it killed some of the Conservatives’ spending plans.

The Liberals say if they win power they will roll back some corporate tax cuts as well as scrap plans to buy fighter jets and build prison cells.

“If you’re going to spend C$30 billion on jets, if you’re going to spend C$15 billion on prisons, if you’re going to cut corporate tax rates when they’re already competitive, you’re not going to be able to fund post-secondary education,” Ignatieff told reporters in Toronto.

The Liberals like to point out that when they took power in 1993 from the then Conservative government, they were faced with a record budget deficit, which they paid off in five years.

($1=$0.98 Canadian)

Reporting by David Ljunggren; editing by Peter Galloway

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