Canada Liberals can lift spending and avoid deficits: Trudeau

By David Ljunggren and Randall Palmer OTTAWA (Reuters) - If Canada's opposition Liberals win the election set for this October they would be able to boost spending on their priorities without necessarily running a budget deficit, party leader Justin Trudeau told Reuters on Tuesday. Trudeau's centrist Liberals are neck and neck with the governing right-of-center Conservatives in the runup to the election. "Within our means there are decisions that can be made around the kinds of investments that actually give us returns, whether it's in education or infrastructure like public transit, without having to fall into deficit," Trudeau said in an interview. Prime Minister Stephen Harper's Conservatives, who have been in power since early 2006, portray management of the economy as one of their strong suits. Trudeau, 43, will have to fend off Conservative criticism that a Liberal government would spend lavishly, leading to big deficits and tax hikes. "I don't think tax hikes need to be part of the mix," said Trudeau, who is the eldest son of former Liberal prime minister Pierre Trudeau. Trudeau has already promised to scrap an income-splitting tax measure that is set to cost the government about C$2 billion ($1.6 billion) per year over five years. He said other ways of freeing up money include ending spending "hundreds of millions of dollars" on ads for government programs and the hiring of external communications consultants. "These are the kinds of things that we will do. The Liberal Party is committed to fiscal responsibility," said Trudeau, who said he could not speculate on whether he would run a deficit because he does not know the state of government finances. The government usually presents its budgets in February or March but Finance Minister Joe Oliver has delayed this year's budget until at least April, citing the effect falling oil prices are having on revenues. "My level of confidence in the numbers that this government is putting forward, particularly in the lead-up to an election, is extremely low," Trudeau said. He said he backs TransCanada Corp's proposed Keystone XL pipeline from the Alberta oil sands to the U.S. Gulf Coast. Washington has yet to approve the project after six years despite heavy pressure from Harper. Trudeau said the pipeline has become a symbol for those frustrated about the government's green policies. Under Harper, Canada pulled out of the Kyoto Protocol on climate change and relaxed environmental regulations to make building major natural-resource projects easier. "I don't blame the United States for looking to Canada and seeing that we have a government that hasn't done anything around environmental oversight or pricing carbon or living up to its international responsibilities," he said. Trudeau said last year that Canada should impose some form of carbon pricing to combat climate change. Last week, he downplayed this idea, noting that major provinces were already taking the lead on carbon pricing. "The federal government is going to have to acknowledge that leadership has been taken out of its hands on that and demonstrate that we are going to be coordinating and building a mechanism to reduce emissions," he said on Tuesday, but did not give details. ($1=$1.24 Canadian) (Reporting by David Ljunggren and Randall Palmer; Editing by Peter Galloway)