BRANTFORD, Ontario (Reuters) - Prime Minister Stephen Harper, who opponents say is botching efforts to deal with the global financial crisis ahead of Canada’s October 14 election, announced on Friday measures to loosen credit and said Ottawa would take more steps to aid markets.
The government plans to buy up to C$25 billion ($21 billion) of mortgage securities to help loosen credit conditions during a meltdown that Harper said was unfolding beyond Canada’s control.
Harper -- who has repeatedly insisted the Canadian economy’s fundamentals are sound -- said the move is not a bank bailout like Washington’s plan to buy $700 billion in toxic assets.
“This is a market transaction that will cost the government nothing ... we are simply exchanging assets that we already hold the insurance on and the reason we are doing this is to get out in front,” he told reporters in Brantford, Ontario.
“We have a range of measures that we can take, that we have been taking, and we will continue to take,” he said, declining to give further details.
Polls show Harper’s Conservatives are likely to retain power but may not be able to turn their parliamentary minority into a majority.
Stephane Dion, leader of the official opposition Liberal Party, said the mortgage plan was deeply cynical.
“Many Canadians will believe that the Conservatives are playing partisan politics with their mortgages and savings in the dying days of a federal election,” he said.
Dion proposes to bring in a carbon tax to cut emissions of greenhouse gases. He says the measure would be revenue neutral because it is twinned with cuts in income and corporate taxes, while Harper says it would plunge Canada into a recession.
Harper was speaking at Patriot Forge, a metal pressing company. Company Chairman John Dimitrieff said the carbon tax would hit exports to the United States, which account for 75 percent of the firm’s sales.
“Our competitors manufacture in the United States and they will not have to pay the Dion carbon tax and that will put us at a C$2 million a year disadvantage,” he told reporters, citing the large amount of natural gas the firm uses.
Harper is also involved in an unpleasant spat with Dion over a botched television interview the Liberal leader gave on Thursday about how he would handle the economy. Dion did not understand the question and asked twice for it to be repeated.
Liberals said Harper was mocking Dion, whose first language is French and who has a mild hearing problem.
“The leader of the opposition, when asked a straightforward question about what he would do for the economy, (had) no answer,” Harper said.
“We don’t develop our economic policies in a hypothetical fantasy land. We deal with realities.”
Harper, widely attacked for not sympathizing enough with the plight of ordinary Canadians hit by the market plunge, said he could not promise “that all is going to be roses. There are some challenges ahead”.
He also said the economy would slow for another year but asked not to be held to that prediction.
“We’re in a bunch of unknowns in terms of the financial situation and the problem for the government of Canada is that these things are largely, almost exclusively, outside the country ... but they do affect us,” he said.
Reporting by David Ljunggren; Editing by Peter Galloway