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Canada's Harper says surging NDP a danger to economy

Fri, 29 Apr 2011 01:53 GMT

Source: reuters // Reuters

* Polls point to minority Conservative government

* Conservatives say NDP ideologically out of step

* NDP says would clarify foreign takeover rules (Adds Layton interview, new Harper comments, previous Niagara Falls)

By Allan Dowd

QUEBEC CITY, April 28 (Reuters) - Canadian Prime Minister Stephen Harper, his ruling Conservatives under siege from the left-leaning New Democrats, warned on Thursday the opposition party would wreak havoc with a fragile economy if it gained power in a May 2 federal election.

Harper, who has led the country since early 2006, said an NDP government would not last long but would "do a lot of destruction" while in office. The NDP has never held power nationally.

"The NDP approach to issues like trade has not changed since the Cold War. It is an ideological throwback. Bad for the economy. Bad for Canada." Harper told a crowd in Niagara Falls, Ontario.

The NDP's sudden rise in the polls -- it is now second to the Conservatives -- has shaken up an election campaign that was expected to produce a government headed by the Conservatives or the Liberals, the only parties that have ever governed Canada.

The NDP is proposing significantly higher taxes and spending than the other two main parties, and the possibility that it could seize the reins of government has ruffled some financial feathers. [ID:N27126329]

Unusually for Western economies, all three of the major parties pledge to balance the budget in several years.

Polls indicate the Conservatives would win the most seats on May 2. But if they win fewer than half, as in 2006 and 2008, they would need the support of another party to retain their minority government.

If the Conservatives lose power, the NDP could get the chance to form a minority government, with support from other parties, a scenario that was unimaginable only a week or so ago.

Harper warned that the world would be "astounded" if an NDP-led government were to take power, and said it would send the wrong message to the international investment community.

"You know, the leading party of the opposition is now a party that doesn't believe in trade," Harper told Postmedia News in an interview while headed to a rally in Quebec, where the NDP has been gaining strength.

NDP GAINS IN QUEBEC

NDP leader Jack Layton told Reuters on Thursday the NDP would clarify laws on foreign takeovers, offering investors a new degree of predictability, and said he opposed a takeover bid for Toronto Bourse owner TMX Group <X.TO> by the London Stock Exchange <LSE.L>.

"Rather than these ad-hoc flare-ups, we'd be better to put in place procedures and definitions that would give certainty," Layton said of Canada's current rules that require the deal be a somewhat loosely-defined "net benefit" to Canada.

The NDP, which promises to raise corporate taxes while cutting small business taxes, is about 7 or 8 percentage points behind the Conservatives in the polls. [ID:N28201032] Pollster Nik Nanos said the NDP was set to win the second most seats after the Conservatives.

Liberal leader Michael Ignatieff, almost totally eclipsed by Layton during the campaign, said the NDP's plan to increase spending by about C$70 billion ($74 billion) was unaffordable.

"It's time for Mr. Layton to get under the microscope," Ignatieff said in Quebec City.

Layton, however, is exulting in the new-found attention and he sought to turn the barrage to his own advantage.

"We see these other parties on the attack," Layton said in the northern city of Yellowknife, adding that his party wanted to attack poverty, climate change and unemployment.

The New Democrats still face the challenge of getting out their vote, given that they have a weaker organizational structure, especially in Quebec, where the party has also been taking support from the separatist Bloc Quebecois party. (Additional reporting by Rod Nickel and David Ljunggren; writing by Randall Palmer, Allan Dowd; Editing by Paul Simao) ($1=$0.95 Canadian)