Tories’ financial plan expected to be bare-bones, basic
The future of Prime Minister Stephen Harper’s government hangs in the balance tomorrow as the Conservatives deliver what is expected to be a cautious, bare-bones budget tailored for risky economic times.
Despite calls for an immediate bailout package to avoid a recession in Ontario, Finance Minister Jim Flaherty is not expected to unveil any major direct support programs to help manufacturers weather the near-crisis caused by the supercharged loonie.
And Canadians are not likely to see any significant new across-the-board income tax reductions.
After slashing taxes and sharply increasing spending since 2006, the Conservatives have scant financial resources left to fund new programs for manufacturing despite the fact that hundreds of thousands of sought-after jobs are disappearing in this industrial sector.
Instead of fresh economic stimulus, Flaherty is likely to stress that the Harper government has already sought to invigorate business conditions in Canada by cutting corporate and personal income taxes and trimming the GST by two percentage points.
With the U.S.’s economic troubles posing more of a threat to Canada than had been anticipated, Flaherty will say the Conservatives are holding back on additional tax cuts or major new spending to ensure Ottawa does not slip back into a budget deficit.
Politically, the Conservatives want the 2008 budget to set the stage for a possible election campaign theme of prudent economic management.
"You don’t throw money around when times are tough," Flaherty told reporters recently.
In keeping with that approach, the Conservatives are expected to stick with their plan to earmark most of the expected $10-billion-plus budget surplus for 2007-08 (the fiscal year ending March 31) toward paying down the country’s $470-billion national debt.
Liberal Leader Stéphane Dion has urged the government to devote any surplus over $3 billion to an economic stimulus program of refurbishing urban infrastructure. But Flaherty is not budging on the $10-billion debt pay-down, sources say.