Flaherty says will avoid austerity budget

Mon Jan 16, 2012 5:56pm EST
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OTTAWA (Reuters) - The government will avoid bringing down an austerity budget this year, because of tough economic times globally, Finance Minister Jim Flaherty said on Monday.

Canadians have been taken aback by what has happened to Greece, Italy and Portugal, and the downgrading of France's credit-rating, Flaherty told CTV television.

"People are paying attention, and they see that we've done relatively well, but they know that we're part of a larger world," he said.

"So I think Canadians - what I'm hearing - is they want us to be prudent, be careful, get back to balanced budgets, but be balanced about it, because at the same time we have to foster the creation of jobs and economic growth. It can't be an austerity type of approach."

Flaherty is expected to bring down his annual budget in February or March, and most federal departments and agencies have been told to prepare for cuts of 5 to 10 percent.

But he noted that transfers to the provinces for health and social spending would continue to rise, and payments to individuals, such as pensioners and people with disabilities, would not be reduced.

(Reporting by Randall Palmer; editing by Rob Wilson)