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Finance Minister Jim Flaherty speaks in Montreal on Dec. 3, 2010. (Graham Hughes/THE CANADIAN PRESS)
Finance Minister Jim Flaherty speaks in Montreal on Dec. 3, 2010. (Graham Hughes/THE CANADIAN PRESS)

Deadline to slay deficit not set <br/>in stone, Jim Flaherty concedes Add to ...

Timing is everything, particularly when it comes to the deficit.

It was only this fall that Finance Minister Jim Flaherty first put a timeline for returning Ottawa's books to balance. He promised last year's $55.6-billion deficit would turn into a $2.6-billion surplus by 2015-16.

Now he's asking Canadians whether that's the right approach. "Should we balance the budget sooner than the present plan, which is 2015-16?" Mr. Flaherty asked out loud Friday in Montreal. "Should the timeline be delayed until later on?"

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Mr. Flaherty was summarizing the key questions his department has been asking online - and that he is asking during closed door consultations across the country - as Ottawa seeks input on the 2011 budget.

The issue of timing is no small point. Just by asking the question, Mr. Flaherty is already facing suspicion from the opposition. It is prompting a range of theories, some of which are contradictory, as to how the 2011 budget may or may not trigger the next federal election.

Moving up the timeline for balancing the books would require a 2011 budget that is more aggressive and detailed in terms of spending cuts. If the Conservatives want an election, that could help trigger one by polarizing the debate in Ottawa. It would set the stage for the Conservatives to campaign as the most dedicated deficit fighters. The risk however - as the Tories learned in the last campaign with cuts to arts funding in Quebec - is that relatively small cuts can sometimes be politically damaging.

When the government's question on returning to balance first surfaced online last month, NDP finance critic Thomas Mulcair predicted that an early deadline would trigger an election over the budget.

"If they were to come in with a pure, dogmatic slash-and-burn budget saying 'Everybody's asking us to bring the 2016 date forward, here's the only blueprint to do it,' then they'll be forcing an election without being the ones who actually pull the trigger," Mr. Mulcair said.

The flip side of the argument is that keeping the deadline where it is - or even extending it - could also help the Conservatives in that they could avoid having to defend detailed spending cuts in a 2011 election campaign.

Deputy Liberal leader Ralph Goodale said Friday the Finance Minister's comments show his original timeline is not credible. "It was just yesterday he was saying he's on track to balance his budget in 2015 and then 24 hours later, all of a sudden, well, maybe it will be 2016 or 2017 or 2018," Mr. Goodale said. "Their arithmetic is not reliable and it never has been."

There is no shortage of debate as to when the books will be balanced. Predicting budget balances five years into the future is widely viewed as a science bordering on voodoo, according to those who have worked in the Finance department.

While outside experts - including Parliamentary Budget Officer Kevin Page - have suggested Mr. Flaherty is off target, most predictions are not that far off from the government's.

A recent report by TD Bank said the big unknown at this point is what Ottawa will do with provincial transfers when the current arrangement expires in 2013-14. Keeping the growth at existing levels would likely mean Ottawa misses its deadline, according to the bank. Scaling back the rate of growth could mean the budget is balanced a year or two early.

Mr. Flaherty is clearly not pleased with Mr. Page these days after his report this week concluded the $4-billion Infrastructure Stimulus Fund did not create many jobs.

Opposition MPs praised Mr. Page's efforts this week when he appeared before the Commons government operations committee, but the Finance Minister clearly does not share that view. The methodology of Mr. Page's report on jobs was challenged this week by the Federation of Canadian Municipalities, a point the government echoed. Mr. Flaherty noted Friday that the government's budget estimate that the total stimulus spending created or saved 220,000 jobs was independently reviewed by experts.

"I'm concerned with the quality of his work," Mr. Flaherty said.

Follow on Twitter: @curryb

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