Cabinet shuffle focuses on deficit-taming

Tue Jan 19, 2010 1:42pm EST
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By Randall Palmer

OTTAWA (Reuters) - Prime Minister Stephen Harper shuffled his cabinet on Tuesday to put more focus on the economic recovery and he made clear the government would have to restrain the growth of spending.

As expected, Harper left Finance Minister Jim Flaherty at his post. He also moved Stockwell Day from the Trade Department to the Treasury Board, where he will be responsible for helping to tame the budget deficit.

Canada is set to run a C$55.9 billion ($54.3 billion) deficit this year and does not expect to be in the black for at least five years.

Harper says Ottawa can eliminate the deficit without raising taxes -- an assertion some economists insist is wrong.

"As we look ahead ... (to) the need for deficit reduction once the economy has recovered, it will be essential for government to constrain the growth of spending," he said.

In the past, Flaherty had said constraining spending growth was an option that would be used only if the deficit was not eliminated through economic growth and by the scheduled end of the government's two-year plan of stimulus spending in 2011.

Harper spokesman Dimitri Soudas said that due to the fragile economy the prime minister wanted to keep his main economic team in cabinet intact .

"Mr. Flaherty is the minister of finance (because) we're still going through the biggest world economic recession...He's been a very good finance minister," Soudas told reporters.   Continued...