OCTOBER 30 2008 16:12h
During the election campaign, both Harper and Flaherty promised not to run a deficit over the next four years.
Finance Minister Jim Flaherty, who has become the face of Canada's effort to fend off the growing financial turmoil, stayed in his post as expected. He is due to attend a series of international meetings in the next few weeks on the crisis that is striking Canada with increasing severity.
"The economy ... will be job Number One in every aspect of our government," Harper told a news conference.
Harper added several junior ministers to the cabinet, with almost a third of all the jobs going to women. He made the changes after the ruling Conservatives retained power in the Oct. 14 election with a strengthened minority.
During the election campaign, both Harper and Flaherty promised not to run a deficit over the next four years, but they have since quickly changed their tune.
Harper said Ottawa was on track to record a small surplus this year but he declined to say what would happen after that, citing what he said was increased uncertainty in the Canadian and world economies.
"We will not be making any economic predictions in the near future ... We've put a high value on keeping the budget balanced but the truth of the matter is we're less certain about the future than we were even a few weeks ago," he said.
Some leading economists say the government will definitely go into the red next year, possibly as much as C$10 billion ($8.2 billion), as corporate tax revenues plunge.
Going into the red has traditionally been politically dangerous in Canada, which spend several painful years in the 1990s eliminating a C$42 billion deficit.
The official opposition Liberals said the new cabinet would continue to leave Canada vulnerable, saying the government's decision to cut taxes over the last two years had made it harder to avoid a deficit.
"It will be difficult for Mr. Harper's cabinet members to establish themselves as competent economic managers unless they correct the fiscal irresponsibility that brought our economy to the brink of deficit in the first place," said Liberal finance spokesman Ralph Goodale.
Harper changed industry ministers, moving Tony Clement into the job from health, while the previous minister, Jim Prentice, moved to the environment ministry.
In a surprise move, Stockwell Day moved to the trade minister's job from the public safety portfolio. Lawrence Cannon becomes the foreign minister, moving from transport, to replace the retiring David Emerson.
Gary Lunn was demoted from the natural resources portfolio and made a junior minister for sport. He was replaced by Lisa Raitt, a newly elected legislator who was formerly the head of the Toronto Port Authority.
Another new parliamentarian, Leona Aglukkaq from the vast northern territory of Nunavut, was given the challenging position of health minister. She had been minister of health in Nunavut.