Under fire from the opposition for not doing enough to stem a weakening economy, the Tories linked large federal surpluses with higher taxes in question period Monday.
After a week off from the House of Commons, the Liberals came back to Parliament attacking the Tories for what they said was "incompetence" in handling the economy.
The Liberals said they had left the incoming Conservative government with a $12-billion surplus and "the strongest economy in the G-8" after the last election.
Opposition Leader Stephane Dion said, "yet in two years they destroyed the framework (left by the Liberals). Was this their plan all along, so they can cut government services?"
Government House Leader Peter Van Loan responded: "(The Liberal Party) likes big surpluses because they like high taxes."
The Tories accused the Liberal leader of refusing to cut taxes, specifically the GST.
"(Dion) wants to increase the GST -- one per cent for social housing, one per cent to reduce corporate taxes, one per cent for the child tax benefit, one per cent for other things," Van Loan said.
Liberal Deputy Leader Michael Ignatieff shot back that the Tories appear to have a deliberate strategy to cut government services.
"The prime minister's mentor, Tom Flanagan, has talked openly about tightening the screws on the federal government ... Is this the government's secret agenda," asked Ignatieff.
Speaking on CTV's Mike Duffy Live Monday evening, Jim Flaherty said the "Liberals are badmouthing our economy. It's almost like they wish we have an economic slowdown."
Flaherty argued that Canada's surplus was shrinking because his government had cut taxes and are "budgeting close to the line."
"There isn't a big pile of money that (Liberals) can go spend on favorite projects," he said.
Flaherty also repeated his earlier assertions that the government will not go into deficit spending if the economy weakens -- as analysts expect -- over the next two years. Flaherty's comments came in the wake of last week's report by the Bank of Canada that lowered economic growth projections.
It lowered its economic growth forecast to 1.4 per cent. In January, it had predicted annual economic growth of 1.8 per cent.
Mark Carney, the central bank's governor, said Canada's economy will pick up in the second half of the year after a slow first half.
The report noted that Central Canada's manufacturers -- and the export sector -- will be especially hard hit as the U.S. economy takes a dip.
In his February budget, Flaherty had predicted a $2.3-billion budget surplus for 2008. But that projection was based on a 1.7 per cent economic growth rate.
