Flaherty says not time for "risky" spending

Tue Jan 10, 2012 2:01pm EST
 
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By Nicole Mordant

VANCOUVER (Reuters) - Canada's upcoming federal budget should not contain "risky" new spending programs that could increase the deficit, Finance Minister Jim Flaherty said on Tuesday.

"Although we stand prepared to be flexible and pragmatic should circumstances warrant it, we will stick to our low-tax plan to create jobs and economic growth," he said at a media briefing in Vancouver.

"That being said, as we prepare for budget 2012 it is clear to me that this is not the time for dangerous and risky new spending schemes that will increase deficits and raise taxes."

Flaherty said the Conservative government was still reviewing how deeply to cut operational spending. Government departments and agencies have been told to come up with two scenarios, one that cuts costs by 5 percent and another by 10 percent.

Officials said late last year the 10 percent scenario was the most likely, but Flaherty said on Tuesday no decision had been made.

"We'll review in preparation for the budget, but no decisions have been taken on which percents for which departments," he said.

"We're not going to reduce transfers to the provinces and we're not going to reduce transfers from the federal government to individuals, to pensioners and persons with disabilities, so we're looking at one part of federal spending."

(Writing by Jeffrey Hodgson; Editing by Leslie Adler)