As Japanese and European Union leaders announced major stimulus packages to combat a worsening global economy this past week, Canadians were still waiting to see what their own government will do.

Canada, of course, will see a new budget next month that may put Prime Minister Stephen Harper's own government on the line, if opposition members decide he has not provided enough support for the struggling economy.

Economists who spoke to CTV.ca recently were of several minds when asked how the government should provide an economic stimulus to best protect Canada's own economy.

Some said it would not be in the best interests of the prime minister -- nor the country -- to provide spending initiatives, when tax cuts would get the job done better.

Others said that the government needed to spend money to give people access to the support and services that they will need in the months to come.

More spending money, more problems

McGill University economics professor Thomas Velk said the Harper government should bring forward broad-based tax cuts in the next budget that will get people investing, not spending.

"We don't really necessarily need spending," he told CTV.ca in a recent phone interview from Montreal. "What we need is productive investment."

He said putting taxpayer money into infrastructure renewal or bailout plans for struggling industries will waste some of its potential -- but will likely be included in the prime minister's January budget.

"He has to have public works in there, he has to have the bailouts because of political necessity," said Velk.

Simon Fraser University economics professor David Andolfatto agreed that a general stimulus was not the way to go in the next budget.

"We do not need to stimulate the economy, because these things are not stimulative," he told CTV.ca in a phone interview from his office in Burnaby, B.C.

"They actually impose huge burdens on the economy that are paid for over generations."

Yes to stimulus, no to costly, long-term social programs

Sherry Cooper, chief economist for BMO Capital Markets, called on the government in a recent report to "forget old-time fiscal stimulus" involving "large-scale income assistance" that will cost Canada in the long run.

Instead, the government should produce a "timely and targeted and temporary" stimulus that balances Canada's lending and spending needs.

"The fundamental is that we do need fiscal stimulus. Our economy is in a recession, in my view," she said in a recent phone interview from Toronto.

"And I would like to see the fiscal stimulus in the form of government spending for timely projects in the infrastructure realm."

Investing in infrastructure, services and support for workers

Bruce Campbell, executive director of the Canadian Centre for Policy Alternatives, said infrastructure projects are a useful way for the government to provide lengthy employment at a time when jobs are hard to come by.

But unlike economists who favour tax cuts over spending, Campbell said the government should prepare a spending stimulus that will support the increasing number of Canadians who will suffer during the economic downturn.

"The role of government is to cushion the blow," he said. "If it doesn't, it's going to be deeper and longer, the recession."

Improved employment insurance benefits, increased income supplements for seniors and more help for the working poor are examples of the types of spending the government should undertake to protect its citizens, he said.

Steven Staples, president of the left-leaning Rideau Institute, said the government should provide a stimulus package that will get people spending money in Canada.

"You need to make sure that money is spent locally, and the people who tend to do that the most are the people who have the least in society," he told CTV.ca in a phone interview from Ottawa.

For that reason, the government should attempt to provide low-income Canadians with more spending capabilities, Staples said, in order to achieve "the biggest bang for the buck in the economy" with the stimulus package.

Staples said he also supported spending money for support services that will benefit workers -- such as child care for those who still have jobs, and retraining programs for those who don't.

The trouble with bailouts

Staples said politicians must ensure that any bailout package offered to manufacturing businesses pays long-term dividends to the workers, not just to owners and investors.

"We definitely want to not be in a position where we're just writing blank cheques to companies," he said.

"There needs to be assurances that workers are going to benefit, that it's not just going to go to shareholders, and that our communities are strengthened by investment and that it doesn't just go to the bankers."

Andolfatto, Cooper and Velk said politicians need to recognize that some of Canada's traditional major industries -- the auto sector being a prime example -- are in decline.

"What we should focus on is shifting our economic strategy in the directions that the markets tell us to shift, which is to say away from these old-fashioned things," Velk said.

The toughest part of this kind of strategy, Andolfatto said, is that there are real people who get trapped in the decline of once-dominant industries.

"Typically, the people who live in declining sectors, work in declining sectors, experience a disproportionate amount of the pain," Andolfatto added.

For this reason, struggling industries tend to receive assistance from governments that only prolongs the existing problems, he said.

Cooper said the auto industry is an example of the type of business the government should not prop up through unconditional financial support.

While she favours providing the auto sector with short-term financing and incentives for doing business in Canada, Cooper said government bailouts cannot reverse the present tide of industry change.

"If it's necessary to restructure the automobile sector -- and it is -- inevitably that is going to mean some loss of jobs," she told CTV.ca.

"We've already seen that, but more is likely to happen," she said.