As part of our 2008 federal election coverage, Investment Executive explores the positions of the major federal political parties on the top issues affecting the financial services industry.

Here we look at where the parties stand on the economy.

In the midst of this financial storm, all eyes are on the parties to state their positions on economic reforms. The choice will boil down to two approaches: radical and new, or tried and blue?

Stephane Dion, leader of the Liberal Party of Canada, announced a new five-point “action plan” for the economy at the French-language party leaders debate in Ottawa on Oct. 1.

Within a month of being sworn in by the Governor General, Dion says he will call on the heads of Canada’s key regulatory agencies to asses Canada’s economic situation — the Office of the Superintendent of Financial Institutions, Canadian Deposit Insurance Corp., the Canadian Mortgage and Housing Corp. and the Bank of Canada.

Other “action plan” tactics include consulting with private sector economists to assess the situation, convening a meeting with Canada’s first ministers and having the Department of Finance prepare a fiscal update within 21 days of the Liberals taking office. Prior to this new economic game plan, the Dion government was more focused on creating greener jobs for Canadians, with their proposed $1-billion Advanced Manufacturing Prosperity Fund.

It’s a rash approach to dealing a credit crisis that started over a year ago, according to a statement issued by Finance Minister Jim Flaherty on the Conservative Party of Canada’s Web site on October 7.

Credit crunch or not, the Conservatives will continue to follow their “real plan” for the economy, said Flaherty — a balanced budget, lowering taxes, investing in foreign sectors and keeping inflation low.

To grow the Canadian economy, the Conservatives plan to invest $300 million into rural communities, over the next four years, through funding Western Economic Diversification Canada, the Economic Development Agency for Quebec Regions and the Atlantic Canada Opportunities Agencies.

Making Canada a global powerhouse is also a part of the Conservative’s plan. Tactics include expanding pipeline networks in Canada’s Far North to increase oil and gas exports, opening-up the airline and uranium industries to foreign investors, and building offices in emerging markets around the world — Mongolia, China, Mexico, Brazil and India. Lastly, the Conservatives say they will halt any foreign takeovers that threaten national security from happening.

To survive the credit crisis, Elizabeth May, leader of the Green Party of Canada, says her government will focus on helping the Canadians keep food on the table.

“Canadians shouldn’t pay for the greed of the marketplace,” May said, in a statement issued on Oct. 10 on the Green Party Web site. With a market slowdown on the horizon, May promises Canadians a boost in employment insurance, with larger payments and extended eligibility to 40% of workers, who are currently unemployed, but do not qualify for the benefit. The Green Party also promises to keep interest rates from skyrocketing, by regulating the spread between the Prime Rate and mortgage rates.

During this credit crunch, the Green Party has made little mention of their original economic platform. They still propose what they feel is a more accurate measure of economic output than Gross Domestic Product, since it does not account for social inequalities and preservation of natural resources. By creating another measure of economic health called Canadian Index of Well-being, a Green government can more accurately measure the effectiveness of taxation and revenue sharing between provincial governments, the party says.

While the New Democratic Party of Canada has no new policies to offer in the midst of this crisis, Jack Layton criticized the Conservatives for not paying attention to the needs of the average family, in an NDP press release on Oct. 9. A Layton government proposes a “new energy” economy, where pollution decreases and green jobs increase, by creating an annual $750 million Green-Collar Jobs Fund.

All parties intend on running a balanced budget for the most part. Currently, Canada has $458 billion in outstanding loans, investments and foreign exchange accounts.

The Conservatives have stated they will continue to meet their 2007 goal of reducing debt by $13.8 billion in 2009, of which $10.2 billion has already been paid.

Running a balanced budget, the Liberals first plan on restoring the Contingency Reserve to $3 billion in the case of a national emergency. However, if no emergencies occur, any rainy day dollars left over will go towards debt reduction. To prepare for drastic climate changes, any surpluses collected after the Contingency Reserve fund is met will be used for infrastructure investments.

@page_break@The NDP says it will only operate in a deficit if there’s an emergency, such as SARS or a war.

Like the NDP, the Green Party has no specific debt reduction schedule outlined in its platform. However, it proposes a gradual reduction of debt, increasing only after funding for critical environmental and social programs is met.

IE