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Michael Gottschalk

Prime Minister Stephen Harper is urging fellow leaders of the world's major economies to be patient with current spending programs aimed at resuscitating the international economy before they forge ahead on spending more.

Mr. Harper made the comments this morning as he outlined his priorities in advance of a meeting of the Group of Eight industrial nations.

"My own thought is before there is thought of additional stimulus, I would urge all leaders to focus first on making sure the stimulus that's been announced actually gets delivered," Mr. Harper said this morning before officially arriving at the site of the meeting in this earthquake-ravaged city in central Italy.

The meetings, chaired by Italian Prime Minister Silvio Berlusconi, will focus on a number of separate issues, including the environment, agricultural aid and new financial regulations. Some nations have also advocated for a second package of stimulus spending to boost efforts begun earlier this year.

The Harper government itself has announced it will push out $50 billion in stimulus money over two years to get the economy moving.

On Tuesday, Laura Tyson, an economics professor who is a member of U.S. President Barack Obama's Economic Recovery Advisory Board, said more stimulus spending may be needed.

Speaking at the Nomura Equity Forum in Singapore, she said the $787 billion (U.S.) plan that Congress passed in February may be "a bit too small ... The economy is worse than we forecast on which the stimulus program was based. We probably have already two-and-a-half-million more job losses than anticipated."

Billionaire investor Warren Buffett recently sent a similar message. "It looks like we're going to need more medicine, not less," he told Bloomberg TV on June 24.

The U.S. administration has so far rejected calls for more spending. It argues that the current plans needs more time to work.

Fear of taking on more debt is making many countries reluctant to fund new stimulus programs. The International Monetary Fund said bank bailouts and other recession-fighting measures will leave the debt of the most advanced countries at 114 per cent of GDP by 2014, more than three times the 35 per cent level of the biggest emerging economies, among them China.





Mr. Harper said that despite the myriad of other topics to discuss, getting the economy moving is the key point here. He said the first job is to ensure that banks and financial institutions are functioning in a healthy manner.

"There is still work to be done in that front," he said. "Obviously not in Canada, but around many other countries there are still some important issues to be resolved in the overall functioning of the financial system."

Mr. Harper is concerned that many banks continue to hold an unacceptably high level of toxic assets.

He also said some of the countries at the summit are bowing to protectionist sentiment in their spending packages, something he and others have promised to fight. "It is important that we continue to take efforts to guard against protectionism and to be very leery of the protectionist tendencies we are seeing in some countries' stimulus plans," he said.

The final communiqué is expected to include a pledge to tackle protectionism.

John Kirton of the University of Toronto's G8 Research Group said the issue has been highlighted recently by actions from the Chinese government, which has triggered concerns by expanding government support for its exporters.

"Now that the Chinese have kind of unleashed their own Buy America act, that's big," Mr. Kirton said in a recent interview. "It is becoming a protectionism spiral or threatens to become a systemic problem in a way that it wasn't before."

On another matter, Canadian officials clarified that the country will support a movement to ensure that temperature increases caused by climate change do not exceed two degrees Celsius.

"Canada recognizes the broad scientific view that the increase in global average temperature above pre-industrial levels ought not to exceed two degrees Celsius," Dimitri Soudas said.

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