The federal government will unveil its much-awaited austerity budget on March 29, although Finance Minister Jim Flaherty said those expecting a detailed schedule of spending cuts may be disappointed.
Flaherty said Wednesday the budget will not lay out in specifics where the government plans to find between $4 billion and $8 billion in annual savings over the next three years.
“There’s not going to be intricate detail,” he told reporters in Ottawa.
“But there’ll be enough information that it’ll be comprehensible, that it will describe what we’re doing in terms of the deficit reduction action plan, and much more than that, this is a jobs and growth budget.”
The end of March date is later than usual for a federal budget, but Flaherty had long signalled he wanted a clearer picture of how the European debt crisis might impact Canada’s economy before tabling the blueprint for the upcoming fiscal year.
As well, the Harper government has been battling a constant barrage of criticism over its plans to cut programs and tackle Old Age Security in an effort to limit the cost of elderly benefits as the baby boomer generation moves to retirement.
Public sector unions have scheduled a “day of action” for Thursday to protest what they warn could be the elimination of 100,000 jobs across the country.
“Some of the numbers I’ve read from some of the public service unions are outrageous,” Flaherty responded.
However, he added that the public sector had been “protected” during the recession, so it was “realistic … that we ask the public service to participate in the belt-tightening.”
On Tuesday, Foreign Affairs Minister John Baird told an Ottawa newspaper that estimates of as many as 25,000 public service jobs vanishing in the capital region due to austerity were a “gross, gross, gross exaggeration.”
Reports in Ottawa suggests the budget will call for spending cuts of about $5 billion fully phased in within three years.
Flaherty would not say what he has in mind, but called the cuts modest in relation to a $265 billion budget.
“We’re talking about relatively small spending reductions. If you want to look at big austerity programs, you go to the United Kingdom today, you go to Canada in 1995, 1996. This is not in that order of magnitude.”
The 2012-13 budget comes amid a recent flurry of mildly encouraging economic news, suggesting that the gloom that permeated November’s fall update with the doubling of a risk premium for downside surprises in Europe has abated somewhat.
Flaherty has invited the country’s leading economists to Ottawa in the first week of March to give him the most recent outlook for the economy.
Recent interviews with several suggest their outlook won’t be much different from November’s 2.1% growth projection for 2012, but that they will turn down the temperature on risk.
They will likely also tell Flaherty that government revenues may be bigger than expected given the continued strength of commodity prices, including oil, which is again well over US$100 a barrel. High commodity prices improve Canada’s terms of trade and give a net boost to corporate profits.
Flaherty got some good news last week when the Finance Department reported the monthly deficit fell to $353 million in December, from $1.35 billion a year earlier.
The December data put Ottawa about $10 billion ahead of pace for the first nine months of the fiscal year compared to the previous year.
Some analysts calculate this year’s fiscal deficit could come in as low as $26 billion — or $5 billion below the fall update’s estimate — putting Ottawa in position to get back to balance one year earlier than projected, in 2014-15.
Flaherty said he believes the government books are still essentially in the same position as they was in November, although he added “it’s possible we’ll do a bit better.”