'Prime Minister' Dion would bring higher interest rates, deficit: Harper

Stephen Harper repeatedly raised the possibility of "Prime Minister" Stéphane Dion succeeding him in 24 Sussex Drive while campaigning Thursday, while warning the Liberal leader's spending proposals would lead to higher interest rates through raising taxes and running deficits.

Speaking in British Columbia, the Conservative leader also said there was "no question, no possibility" that the government would have to bail out Canada's banks as other countries have been forced to do amid the global financial turmoil stemming from the U.S. credit market crisis.

Harper cited a new report by the World Economic Forum released Thursday that describes Canada's banking system as the strongest in the world.

"The banks aren’t seeking to be bailed out, and the government won’t be bailing them out. So that isn’t going to happen," he told reporters in Richmond, B.C..

But Harper said it was "disappointing" that Canada's banks only reduced their lending rates by a quarter of a percentage point, rather than the full half-point cut imposed by the Bank of Canada on Wednesday.

He added that the government will take action to ensure that Canadians will not feel the squeeze of banks tightening the amount of long-term lending in the wake of a virtual freeze on inter-bank lending around the world.

"I will just say that I am confident that as the situation evolves, the costs of credit will continue to fall for Canadian consumers, and credit will continue to be available for reasonable credit requirements," he said.

Harper then pivoted to an attack on the platform of his Liberal opponent, whose support has drawn closer to the Conservatives in polls in recent days.

"If you elect a Prime Minister Dion, who will impose and raise carbon taxes, interest rates will be going up. That is the difference," he said.

Dion: Harper 'indifferent' to Canadians' concerns over jobs, savings

The Liberal leader, in a speech on Thursday to the Halifax Chamber of Commerce, accused Harper of having "no plan" to deal with the global crisis, while also saying he broke promises on key issues such as the Atlantic accords on energy royalties.

He also said Canada's banks were so strong in the face of the global financial turmoil because of decisions by the Liberal government of Jean Chrétien, which resisted calls for unwise deregulation.

"I agree with him on one thing; there is a choice between him and me as prime minister," Dion told reporters after his speech.

"I will be a prime minister that will not be indifferent, that will care and will help us for our pensions, our mortgages, our savings. And I will be a prime minister that will work for our children to have a richer Canada, a fairer Canada and a greener Canada."

Harper's comments came after he announced a re-elected Conservative government would invest $10 million over next two years to support a national framework on lung diseases in Canada as well as $50 million for a four-year study on neurological diseases such as Alzheimer's.