Source: The Canadian Press

Finance Minister Jim Flaherty opened the door Tuesday to a deal with the NDP in a bid to avoid an election, saying he is open to discussions on ways to help seniors — a comment that appeared to catch NDP Leader Jack Layton by surprise.

The New Democratic Party has made one of its key objectives to convince the Conservative government to allocate $700 million in the upcoming budget for sweetening the Guaranteed Income Supplement.

Flaherty said Tuesday he shares concern about the plight of seniors, particularly single women who spent their work years raising children and have no access to Canada Pension Plan benefits.

The finance minister told reporters after meeting with private sector economists at his Ottawa office Tuesday that he is open to discussions on the issue.

“We do have regrettably, some single older Canadians who are not entitled to the Canada Pension Plan because in their day they worked at home raising children and did not work outside the home, and have some income issues and that’s something all Canadians would like us to address,” Flaherty said.

Flaherty said he is also open to measures that help unemployed workers retrain for jobs of the future.

Layton appeared surprised by Flaherty’s comments, in part because he said there have been no discussions since before Christmas.

“It’s impossible to know what he means, but what we’ve been very clear in saying is that we want to see the seniors in this country lifted out of poverty,” Layton said.

“And we want some retirement security for those who are looking forward to their senior years or are already there. If the government’s willing to start to take a look at those things, well we welcome that.”

One of the issues will be whether Flaherty considers $700 million too rich at a time of spending restraint.

As he has in the past, the minister said there is no money for major new spending in the budget, which he said would be tabled sometime in March.

“Are there billions of extra money available for big new spending programs? No, there are not and there will not be next year,” he said.

There appears little chance of the government meeting the Bloc Quebecois’ demand for a $2.2 billion deal with Quebec over sales tax harmonization. Flaherty said the chance of a deal this spring is unlikely.

After the minister’s meeting with 10 economists, the Finance Department downgraded by one-tenth of a point the economic growth forecast for this year to 2.4%.

But on nominal growth, which accounts for inflation and is more directly tied to government revenues, the department believes output will grow faster by $1 billion this year and next, rising to $11 billion more in 2015, when the economy will top $2 trillion for the first time in history.

The most recent adjustments are extremely moderate given the size of the economy, and Flaherty noted that his latest meeting with private sector economists produced little new.

Unemployment will remain stubbornly high despite moderate growth, he said, with the rate averaging 7.7% this year. In December, the official jobless rate was 7.6%.

“There is more optimism now than there was six months or a year ago,” he added. “It’s fair to say there is less uncertainty now than there was before, but we’ll see.”

Earlier, Parliamentary Budget Officer Kevin Page told a House committee that he does not believe the government’s plan to balance the budget in five years is credible. He said the International Monetary Fund also calculates Ottawa will be in a budgetary hole in 2015, when Flaherty is projecting a surplus.

Page said Ottawa’s deficit will dramatically decline the next few years as the economy improves and stimulus is withdrawn. Longer term, however, the government faces a structural deficit due to the twin drags of an aging work force and weak productivity, he said.

“We are saying there is a structural deficit,” he told the committee, “so even when the economy (has fully recovered) we are still going to have a deficit.”

Flaherty rejected the analysis. He insisted the government is on track to balance the budget in the 2015-16 fiscal year.