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First majority budget will reveal Harper unleashed

Stephen Harper's plan to transform Canada is about to take shape.

After years of having his hands tied by minority Parliaments, Thursday's budget marks the first one written by the Harper Conservatives with the freedom of a majority.

There is no fear of a snap election. The government can take risks. Be controversial. Think long-term.

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As the Prime Minister's landmark speech two months ago in Davos made clear, he plans to do all three. This budget won't just cover the next four years. Mr. Harper says he wants to make an impact that lasts for generations.

Mr. Harper's Canada will feature smaller government, low taxes and a natural-resources sector that grows faster under much less federal regulation. There will be fewer public servants and a dramatically different approach to immigration. But it is his determination to push ahead with pension reform that could set the political roof on fire.

In framing his plan as generational in scope, the government risks pitting generations against each other once the details emerge.

Ottawa says it's looking to gradually raise the eligibility age for Old Age Security Pension, likely from 65 to 67. The Tories claim this will help younger Canadians by ensuring the program is sustainable. The question is how the younger generation – the cut-off age for the phase-in is not yet known – will react to the news that they can no longer count on receiving more than $6,000 a year from Ottawa when they hit 65.

Former Tory cabinet minister Perrin Beatty, now president of the Canadian Chamber of Commerce, said years of minority Parliaments have prevented governments from making needed, but controversial, long-term changes.

Now, at the front end of a majority mandate, is the time to make those changes, he said.

"They need to be bold. They need to take risks here. They need to focus very much on what are the measures they can take now that will enhance our competitiveness and prosperity," he said. "This will really set the tone for the rest of the mandate."

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The Prime Minister's Davos speech was the blueprint. In the weeks that followed, several ministers flushed out some of the details. Natural Resources Minister Joe Oliver said Ottawa wants to pull out of environmental regulation in cases where it overlaps with provincial laws. The aim is to get projects approved faster, in spite of warnings from environmentalists that protection of water and wildlife will be compromised. Science minister Gary Goodyear is promising an overhaul of the various tax credits and grants available to private-sector researchers.

But some of the most dramatic changes will come in the area of immigration, where minister Jason Kenney has outlined major policy reforms. Skills shortages in natural-resources projects will increasingly be met through immigration. Businesses will receive new powers to cherry pick immigrants from waiting lists.

It will be a major change for those who see Canada as a place where immigrants traditionally start at the bottom and work their way up.

"This notion that we should be bringing poor and uneducated people to the country as part of our economic immigration program, I mean, it may, in some respect, be a romantic myth, but I just don't think it's relevant to today's economy, today's world," Mr. Kenney recently told CBC Radio.

The government is hoping all of this policy will overshadow another key part of the 2012 budget: cuts.

Finance Minister Jim Flaherty promises they will be "moderate," and told reporters savings will not be the most important part of the budget. Details of where the knife falls are expected to be in short supply, but public servants are bracing for major internal upheaval.

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Through their unions, they are issuing unprecedented warnings about the risks public-sector cuts will impose on the health and safety of Canadians and the level of service they will receive.

"This crisis is being created by this government," said Larry Rousseau, national capital region vice-president for the Public Service Alliance of Canada. "We wouldn't have a deficit if you hadn't cut the revenues coming in to the government."

Dustin McNichol, a 25-year-old recent hire as a political science instructor at the University of Alberta, said he's concerned incentives to get Canadians working longer will make it harder for recent grads to find work. Still, he said retirement is not one of his priorities.

"I won't recognize the social system in 30 to 40 years," he said. "It will probably look nothing like it is right now."

With so many multi-billion-dollar natural-resource projects coming on line in the coming years, Jayson Myers, president and CEO of Canadian Manufacturers and Exporters, said there are huge opportunities for Canada. Whether this growth – and the related skills shortages – are dealt with properly by Ottawa will have a lot to do with the 2012 budget.

"It will kind of set the benchmark for what the legacy of this government is," he said.

With reports from Tamara Baluja and Steven Chase

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