Ignatieff: "I’m going to be looking at the unemployment numbers first and deficit second."

I and Global National Ottawa Bureau Chief Jacques Bourbeau had a year-end interview Thursday with Liberal leader Michael Ignatieff at his official residence at Stornaway. We have one story up already from that interview, Liberal government would focus on jobs, not deficit. Later this weekend, Global National will air other excerpts and I'll have additional stories out of that interview up at our Web sites. In the meantime, here is a transcript of the excerpt in which he talks about the fiscal policy priorities of a Liberal government. Jacques had asked if Canadians did, in fact, find much of a difference in the Liberal and Conservative approach to restoring the federal fiscal balance:

MICHAEL IGNATIEFF, Leader of the Official Opposition: Well there’s one place where there’s an emerging big difference and that’s payroll tax. You said in your question: They’re not going to raise taxes. Uh-uh. They are going to raise taxes. They’re going to raise payroll taxes big-time in 2011. And every employer, especially the small ones, we talk to say this is a job killer. So one of the big issues we’ve got is — yeah, we’ve got to get back into balance but is the smart way to do it to raise payroll taxes which will kill jobs. My vision of what’s going to happen in 2010 and 2011 is we’re going to have a lot of unemployment out there. We’re going to have a jobless recovery or we’re going to have a recovery where there’s still a lot of people looking for jobs. The worst thing you could do is make it more difficult for employers to take on labour. So one of the things where I think we’ve got to go as a party is say, ok, how do we create incentives for employers to hire people, especially young people. We’ve got 16 per cent unemployment for young Canadians.

People coming out of college and high school have got the highest unemployment rates in the country. Can we create some incentives for employers that say, you know, take on a worker and we won’t jack up your payroll tax. That’s the kind of thing that makes a difference.

They think the deficit’s the only issue you have to worry about and we’re saying unemployment’s the issue you have to worry about. That’s a differentiator. If I’m prime minister, I’m going to be looking at the unemployment numbers first and deficit second.

JACQUES BOURBEAU, Ottawa Bureau Chief, Global National: But regarding the deficit, if you’re saying payroll tax hikes aren’t the answer, then what is the answer? Because most experts are saying, in the next four or five years, we are going to have a significant structural deficit and Canadians at some point are going to look around and see who has a solution they think is viable. So what is it?

IGNATIEFF: Let’s remember where we are. We’re not in 1993. The debt-to-GDP ratio is significantly lower than it was in 1993. Why? Because of Jean Chretien and Paul Martin. We’re in a different situation in 2010 and 2011 because Liberals managed the public finances of the country well. I think we can take a little longer to pay this deficit down. We should be very careful about payroll taxes which will make the unemployment situation worse. We need to focus infrastructure investment we’re making to create jobs, to focus on the unemployment issue and that begins to create some difference.

But look: We don’t know where we’re going to be in 2010-2011. We need to look at the books. Every Liberal who has been in government knows what the problem of the deficit is when you start paying interest charges, more and more interest charges, and you can’t invest in schools, you can’t invest in roads, you can’t invest in the things you want to do because you’re paying back the banks. But we’re not there yet. We’re not there yet. So prudent fiscal management, good structural investment that creates jobs — and my sense is that that the tradeoff is: Do you focus on the unemployment problem or do you focus on the deficit problem? We focus on the unemployment problem and we think we can pay down the deficit on a different gradient.

But remember: I’m being asked to solve this problem – I mean, hello? Jim Flaherty dumped us in the middle of this. We gave them a $12 billion dollar surplus when we left office in 2006 and they jumped us into a close to $60-billion deficit. You ask them to fix it.

DAVID AKIN, National Affairs Correspondent, Canwest News Service: I find this interesting because we’re going to have this debate when the budget comes out. And the last Liberal government kept a $3 billion contingency fund —

IGNATIEFF: — and that’s gone.

AKIN: Exactly. And the Conservatives took over and said you need to use all that to pay down the debt. So, there again Liberals were saying the debt wasn’t a screaming problem, we can pay it down on a slower scale. The Conservatives wanted to accelerate that. Same thing now. The Conservatives are saying, we want to be quicker getting out of deficit at the cost perhaps of some other policy priorities. So when they present the budget with a time horizon to still get out of deficit in five years, can we still say that Liberals will demand other benchmarks have to be hit first before we start projecting — it could be 2015, 2016 —

IGNATIEFF: With respect, this is a moving target. Every time these guys give us numbers, they give you a different for when they’re out of deficit. They give you a different number. The thing is moving all the time. We can’t even have a serious discussion here. In 2009, they said we’d be out in 2013. In the middle of the summer, they said, well, it’s actually going to be 2015. Now they’re saying some other number. They don’t have a plan to get us out of deficit. So the burden is not on me — I’m in the opposition — they’ve got to give Canadians a credible plan on deficit reduction and they don’t have any.

Every time Jim Flaherty gets up, it’s a different story. So I’ll look at their budget this time and we’ll see what story they’re telling Canadians in 2010 whenever the budget comes.

AKIN: The reason I think this is important is because we go back to the political stability issue. You and your party are going to have to decide whether or not to support the next budget at some point. Now, the Tories are telegraphing that they announced this year’s budget essentially last year. But it sounds like there’s two things that will be important for you to address. As you mentioned — the payroll tax, as you called it and this idea of a fixed timeline (on deficit reduction). Is that roughly the area — aside from the actual details in the budget — those two big goals …

IGNATIEFF: Well those are issues but, you know, we’re dealing with the Conservative Party of Canada here. We’re dealing with Stephen Harper. The capacity for poison pills, for game-playing, for omnibus budget bills that freight in some other thing that you never even saw coming. I’ve been around long enough to know I’m not telling you what I’m going to do because I’ve got to look at this thing and see what it is. Every time there’s some kind of weird curveball you never anticipated. You talk about stability. I want stability as much as the next person but to have stability, you don’t play games with budgets. The last omnibus budget bill, it was like a dumpster. They had a whole bunch of stuff piled in there. So I’d like them to not offer us a dumpster next time. I’d like a nice little slim book that gives me a clear up and down choice and I’ve indicated some of the things I expect.