Canada's deficit plan will target public spending

Mon Feb 22, 2010 4:49pm EST
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By Louise Egan

OTTAWA (Reuters) - Canada's plan to reduce its record deficit will center on slowing the growth in government spending, with the exception of health care, pensions and education, a senior government official said on Monday.

The March 4 federal budget will lay out the Conservative government's plans to execute the second year of its economic stimulus efforts, the official said. The spending plan will focus on jobs and growth, he said.

But Ottawa will not bow to pressure to extend even the most popular temporary measures, such as a two-year freeze on employment insurance premiums or a home renovation tax credit.

The stimulus taps will be turned off at the end of the 2010-11 fiscal year, as originally planned, he said.

"As you know, we've always said that reducing the deficit and returning to fiscal balance will happen through slowing the rate of growth in federal spending, and that still applies," the official told reporters in a background briefing, speaking on condition of anonymity.

"Having said that, I don't anticipate that to occur for pensions, for health care or for education." he said.

He declined to comment on whether Ottawa would introduce new fiscal targets, either in the short term or over a longer horizon.

Finance Minister Jim Flaherty has repeatedly said he will balance the books in the medium term, without raising taxes or cutting the federal government's transfer payments to the provinces. The budget will simply be a plan for "staying the course," he has said.   Continued...