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budget 2011

Opposition leaders have signalled they will not support the Conservative budget, making a spring election all but inevitable.

The budget, tabled Tuesday by Finance Minister Jim Flaherty, had been carefully crafted to try to meet the NDP halfway in a bid to avoid a trip to the polls, but it was also designed - sprinkled with targeted tax credits for families, for example - to serve as a campaign platform if the government is defeated in a no-confidence vote, which could come as early as this week.

Rejection of the budget came faster than many observers expected, but the Tories have made it clear there are no plans to make amendments.

Prime Minister Stephen Harper "just doesn't get it," NDP Leader Jack Layton said after the release of the document. "The NDP will not be supporting the budget as presented."

Mr. Layton said Mr. Harper "had an opportunity to address the needs of hard-working, middle-class Canadians and families and he missed that opportunity."

The NDP Leader added that the budget falls far short of the four conditions he had set for NDP support: elimination of the federal sales tax on home-heating fuel; measures to greatly increase the number of doctors; a big boost in pensions for poor seniors; and restoration of the home eco-energy retrofit program.

Mr. Layton said the government could yet survive by agreeing to amend the budget to respond to NDP concerns, but added that scenario is "difficult to imagine."

Mr. Flaherty immediately said the Conservatives have no plans to change the budget.

Liberal Leader Michael Ignatieff and Bloc Québécois Leader Gilles Duceppe also rejected the budget.

Mr. Ignatieff said: "We don't believe the budget is credible and we're forced to reject this budget."

He took the Tories to task for producing a budget that spends "a thousand times more" on jets than on helping kids get a university education.

"There's nothing on affordable housing, or childcare. This is a government that doesn't seem to be listening to what Canadian families are telling us."

Mr. Duceppe agreed, saying his party "certainly can't accept" what's being offered in the budget.

Budget action to confront Ottawa's long-term challenges, such as planning for higher costs and slower revenue growth due to an aging population, took a back seat in the proposals presented earlier by Mr. Flaherty, as did a thorough accounting of where future cuts might be proposed.

The budget maintained Mr. Flaherty's forecast from last fall for Ottawa's books to be balanced sometime in 2015 - including a 25-per-cent drop in the deficit this coming year by ending stimulus spending. It also increased the surplus the federal government is projected to record in 2015-16 while holding out hope the budget could be balanced earlier than expected, depending on the results of an across-the-board review of government spending.

A Conservative official had said in a briefing to reporters during the lockup for the media that there is nothing in the budget that the opposition couldn't support.

"There is no poison pill in this budget," the government official said. "We don't believe an election is what the economy needs, or what Canadians want."

The Conservatives' budget appeal to the NDP - which amounted to nearly $1-billion over two years - included help for low-income seniors via an extra $300-million a year in enhancements to the Guaranteed Income Supplement.

While that amount was less than half of what Mr. Layton had asked for in that area, there was also a $9-million tax incentive to encourage more doctors and nurses to work in rural Canada and $400-million for a one-year extension of the ecoEnergy program to encourage home renovations that reduce electricity and heating costs.

The budget included other potential overtures to the NDP, including added Employment Insurance benefits and an end to oil-sands subsidies. However, it did not act on the party's full list of demands.

For instance, the NDP called for about $700-million in new GIS benefits for seniors, more than twice what the budget offers. The budget was also silent on the NDP's call for an HST reduction for home heating fuel. And the budget did not include the NDP's request for a doubling of Canada Pension Plan benefits. Rather, it noted that work is ongoing with the provinces on "options for a modest enhancement" of the CPP.

Under Mr. Flaherty's plan, the federal budget would return to balance by the 2015-16 fiscal year, with the $40.5-billion deficit in the current fiscal year, which ends March 31, shrinking to $29.6-billion in the coming year and to $19.5-billion in 2012-13, eventually sitting right on the bubble between red and black ink at about $300 million in 2014-15.

The government would then post a surplus of $4.2-billion in 2015-16, more than the $2.6-billion windfall anticipated in Mr. Flaherty's October fiscal update and the first surplus since the 2008 global recession forced the government to spend billions on stimulus programs to prop up the economy.

Overall, the budget was projected to achieve $6.2-billion in savings over five years, through previously announced spending reviews and by closing tax loopholes. In addition, the budget proposed a further cost-cutting exercise that - if successful - would save $4-billion annually and potentially balance the books a year ahead of schedule. However, the budget did not provide a detailed breakdown of how that would happen.

All told, the government projects that the combination of savings, closing of tax loopholes and the expiry of crisis-era stimulus measures would mean program spending as a share of gross domestic product shrinks to about 13 per cent in 2015-16 from 16 per cent in fiscal 2009-10.

Ottawa's total debt would drop closer to pre-recession levels by 2015-16, declining to 29.7 per cent of GDP from 34 per cent two years ago.

The budget accepted private-sector analysts' forecasts for the economy, including faster growth this year as the crucial U.S. recovery accelerates, while maintaining the October projection of 2.7-per cent average growth from 2011 to 2015.

That's a slow rebound from recession, by historical standards, which helps explain why the budget forecasts showed unemployment at 7 per cent or higher through 2013. Nevertheless, the improved outlook included higher projections for government revenues, which were revised up in each of the five years.

Included among the "boutique" tax measures in Mr. Flaherty's budget was a credit for people caring for family members including spouses, common-law partners and children. Introducing that measure effectively robs the Liberals of a key campaign plank. Other tax breaks include a credit of up to $500 per child for parents who enroll their children in artistic programs, and a $3,000 credit for volunteer firefighters who put in at least 200 hours of service.

The budget included $420-million to fund a one-year renewal of two pilot projects aimed at helping unemployed Canadians, including one that allows people claiming Employment Insurance to earn extra income on top of their benefits, and another that inflates benefits for claimants in regions with high jobless rates.

It also helps cities and municipalities by making permanent the federal government's $2-billion annual contribution to the Gas Tax Fund.