The federal Conservatives are rolling out tightly targeted measures to boost Canada's modest recovery, aiming at stubbornly high youth unemployment and pumping new funds into infrastructure projects.
Finance Minister Jim Flaherty is set to unveil on Tuesday a final phase of belt-tightening in a budget that is a prologue to balancing the books just ahead of an expected 2015 federal election – a feat the Tories hope will generate sufficient surplus cash to offer tax cuts and other inducements to voters.
But Mr. Flaherty is pointing to modest new spending and other measures as a way to address a stubbornly high unemployment rate of 7 per cent, and flaccid economic growth.
Sources say the other measures will include new spending for apprenticeships and internships, as well as continued outlays for a 10-year infrastructure plan. Prime Minister Stephen Harper's stewardship of the country through one of the worst financial crises since the Great Depression – including the performance of the infrastructure-stimulus program – is sure to be a crucial issue in the election campaign.
Mr. Flaherty defended his approach, saying Ottawa is being prudent in infrastructure spending. "The infrastructure we build is built for economic purposes. It's not built to glorify somebody's ego," he told CTV's Question Period on Sunday.
Sources say the budget will also offer sufficient cash to bring Internet access to 280,000 more households and businesses in rural and remote regions of Canada. The cash over several years will be comparable to the $225-million in a previous Broadband Canada program, sources say.
As a sign of how thinly stocked the 2014 budget cupboard is, the single-largest new program expenditure is almost certain to be the $1.9-billion aboriginal education reform package Mr. Harper announced last Friday in Lethbridge, Alta.
The budget, to be tabled at 4 p.m. ET on Tuesday, will provide more funds for big infrastructure projects. The government has already mentioned four priorities that have significant economic implications for trade and jobs: the Detroit-Windsor crossing, Toronto subways, replacement of Montreal's Champlain Bridge and Vancouver's Evergreen Line. "There will be money for infrastructure, and very importantly, major infrastructure projects in Canada, major economic infrastructure projects," Mr. Flaherty told CTV.
In October's Throne Speech, the Conservatives talked of investing $70-billion over 10 years in federal, provincial, territorial and municipal infrastructure.
Sources say the budget will contain job skills training measures to help match young workers with areas of skills shortages. "There will be some emphasis placed on giving people a chance, a start in life in Canada," the Finance Minister said.
"We've looked at hundreds of issues, and some of the most important ones are relating to jobs, relating to young people, relating to apprenticeships, relating to internships, relating to getting people that first job even though they're well educated and so on," Mr. Flaherty said.
Sources say the 2014 budget will not revise the jobs grant program that was announced in the 2013 budget, and which Employment Minister Jason Kenney is still refining in negotiations with provinces.
Several of the government's tax-cut promises left over from the 2011 election campaign are dependent on balancing the budget. Those promises include a $1.8-billion income-splitting tax cut that would allow parents of children under 18 to share up to $50,000 of income for tax purposes. This would enable the higher-earning spouse to flow some income to a partner in a lower tax bracket.
Mr. Flaherty signalled on Sunday that he may be losing enthusiasm for income splitting. "I think in the next year it'll be healthy for Canada to have a fulsome discussion about that issue because there are some people who benefit and lots of people who don't in that world of income splitting," the Finance Minister told Global Television's The West Block.
The latest budget-balancing promise calls for a surplus of $3.7-billion in the 2015-16 fiscal year, and Mr. Flaherty will update that forecast on Tuesday.
Mr. Flaherty announced last Friday that Conservatives would use the budget to further tighten charity rules as a means of blocking money laundering by criminals and terrorists. He said Tuesday's budget will include new measures to stop criminals from exploiting Canadian charities.