MONTREAL -- World leaders wrestling with mounting debt face a false choice between fiscal discipline and economic growth, Prime Minister Stephen Harper said Monday.
In a speech to an international economic conference in Montreal, the Conservative prime minister said the choice does not need to be between austerity and prosperity.
"The Canadian approach is what the world needs, a practical approach and an approach that works,'' he told the annual International Economic Forum of the Americas.
Ottawa instituted a modest stimulus package after the 2008 financial and economic crisis, but has been cutting spending and expects to balance its budget in 2015.
It's a message Harper says he intends to take as Canada's position at the upcoming G20 summit in Mexico.
The prime minister spoke as a couple dozen protesters peacefully marched under the watchful eye of riot police outside the downtown hotel hosting the conference.
Montreal has been gripped by months of demonstrations since the Quebec government announced an increase in post-secondary tuition fees.
Quebec Premier Jean Charest accused the students, who tried to block access to last weekend's Canadian Grand Prix, of hurting Quebec by their actions.
Political, economic and regulatory officials from around the world are meeting at the four-day conference amid the financial crisis in Europe and concerns about economic growth around the world.
Harper said Canada's strong record of fiscal discipline is one reason it has weathered the economic crisis much better than others, fully recovering lost jobs.
"As Canadians neither are we able, nor do we desire to, impose our views on the world, But Canada can demonstrate through our actions a model that works.''
Despite its relatively strong performance, the country is part of the global economy and is sometimes at the mercy of challenges, particularly these days in the Eurozone.
The prime minister applauded European efforts last weekend to shore up Spain's banking system, saying he encouraged by the agreement.
"These are the kinds of measures that the Europeans themselves are able to undertake and that they must undertake to move their economy forward,'' he said.
Canada and the United States are among the countries that have refused to provide funding to help Europeans get past their financial challenges.
In Ottawa, Finance Minister Jim Flaherty said he was also encouraged by Europe's decision to take the steps the Canadian government has long advocated.
"This doesn't solve the problem but it's a step in the right direction,'' he told reporters.
Flaherty added that it's up to Europeans to determine if the money should go to unhealthy banks.
Earlier, Bank of Canada governor Mark Carney told the conference that Europe was taking important steps to resolve weaknesses in its banking system that threaten one of the world's largest economic powerhouses.
"This weekend's agreement to recap the Spanish banking system marks important progress towards greater financial and fiscal union that will reinforce the monetary union and it's further evidence of Europe's resolve to address its problems,'' he told the international forum.
He said efforts to strengthen the financial reforms can be combined with bold steps in Europe to rebuild the single European financial market on a more robust foundation, including consideration of a banking union.
Carney said moves to centralize and recapitalize banks on a European rather than national basis will help to ``break the increasingly toxic links between banks and sovereigns.''
Failures will happen, but the goal of global reform is to lower their impact. That's one of the reasons for ending Too Big to Fail, a policy that bailed out large U.S. banks and put the brunt of the burden on taxpayers instead of bondholders, shareholders and management.
Bank of France governor Christian Noyer agreed with Harper that there's no contradiction between fiscal consolidation and long-term growth. He said fiscal efforts made in the euro area are already bearing fruit by cutting its deficit while having strong fiscal consolidation.
"What the euro area really needs today is to make progress towards a more coherent and integrated economic and financial union,'' he said.
Haruhiko Kuroda, president of the Asian Development Bank said further deterioration in Europe could drag the world economy back into recession.
He called Spain's recent decision to recapitalize its banking sector by borrowing money a significant step forward and could pave the way toward a banking union or fiscal union.
Spain became the fourth European country to seek a bailout, receiving up to US$125 billion for its banks in a deal announced on the weekend following help provided for Greece, Ireland and Portugal.
At the height of the 2008 financial meltdown, California became a poster child for living beyond one's means, as Governor Arnold Schwarzenegger declared a financial emergency over the state's $11.2 billion deficit. Though austerity measures have quelled the fears of credit ratings agency Standard & Poor's, which recently upgraded California's rating to "positive," cuts to public spending will be painful, with the axe set to fall everywhere from state parks to universities. Photo: Protestors carry signs as they demonstrate against proposed cuts to Medical and Medicare outside San Francisco city hall on September 21, 2011 in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
With a debt-to-GDP ratio of around 60 per cent, the UK's financial situation is much better than many of its international peers. But in the wake of record-breaking budget deficits and continued economic unrest, the country's centre-right government is pursuing the most far-reaching austerity program in generations. The proposed cuts, which are expected to total 126 billion ($197 billion) pounds by 2016-2017, include axing 600,000 public sector jobs. Photo: A protester holds up a smoke bomb during a mass demonstration against government financial cuts in central London, on March 26, 2011. (CARL COURT/AFP/Getty Images)
Amid growing unease among international lenders and an annual budget deficit estimated at between six and eight per cent of GDP, Spain's government last year set the stage for an 8.9-billion-euro ($11.5 billion) austerity package, the first in a wave of spending cuts and tax hikes expected to amount to 16.5 billion euros in 2012. But after allegedly dragging its heels in advance of a regional election, Spain is reportedly in danger of receiving a fine from the European Union for not doing more to reduce its deficit. Photo: Thousands of police, teachers and hospital staff stage a mass protest march in Barcelona on January 2012 in growing anger at spending cuts hitting key services in Spain's Catalonia region. (JOSEP LAGO/AFP/Getty Images)
When bond yields began to drift perilously north -- a telltale sign of waning confidence among international lenders -- Italy set about reducing its debt-to-GDP ratio of 120 per cent. The 30-billion euro ($39 billion) austerity package approved in December under interim Prime Minister Mario Monti, who took over from Silvio Burlosconi at the height of the crisis, includes measures to reduce tax evasion, health care cuts and hiking the retirement age for state workers to 66. Photo: A hand with a heart painted holds a cigarette as dozens of anti-capitalist 'Indignant' protestors demonstrated on January 14, 2012 in Saint Peter's Square at the Vatican. (TIZIANA FABI/AFP/Getty Images)
After the government's efforts to bail out six of the country's biggest banks sent the deficit soaring -- and prompted a 67.5 billion euro bailout -- Ireland embraced belt-tightening with gusto, reducing its annual budget deficit from 32 per cent of GDP in 2010 to 10 per cent. The latest austerity program announced in December includes tax hikes, a reduction in the child benefit and cuts to public sector wages and jobs. Photo: A protester holds up two Irish flags in front of the General Post Office in Dublin on November 27, 2010 against savage cutbacks. (PETER MUHLY/AFP/Getty Images)
Tough austerity measures have sparked growing unrest in Portugal, where tax hikes and spending cuts have done little to wrench the country out of financial turmoil. Despite dodging bankruptcy in 2011 by accepting a 78 billion euro ($102 billion) bailout, Portugal remains mired in recession, as government readies to pursue even more significant belt-tightening this year. Photo: A worker speaks in a megaphone in front of the Finance Ministry in protest against government austerity measures during a demonstration launched by Portugal's biggest trade union called Portuguese General Workers Confederation (CGTP) in Lisbon, on February 11, 2012. (PATRICIA DE MELO MOREIRA/AFP/Getty Images)
At the epicentre of the eurozone debt crisis, Greece, where the debt-to-GDP ratio is estimated at 160 per cent, has had little choice but to pursue an unrelenting and aggressive belt-tightening campaign. With talks underway to secure a second massive bailout -- and amid yet another wave of violent protests -- the country recently approved another 3.3 billion euros ($4.3 billion) in spending cuts, expected to come at the expense of government wages, jobs and pensions. Photo: Protesters clash with riot police at Athens touristic Monastiraki area near the Acropolis on October 19, 2011. (LOUISA GOULIAMAKI/AFP/Getty Images)