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Pre-election budget, with a few ‘tweaks’, set for June 6

Meet the new budget, same as the old budget.

After a trip to the polls to sort it all out, Jim Flaherty now has a free hand to push his 2011 spending plan through Parliament.

The Finance Minister confirmed he will release a budget on June 6 that is virtually identical to the one he introduced on March 22. No opposition parties offered to support that budget at the time, and the minority Parliament crumbled on a no-confidence motion, leaving the ultimate budget vote in the hands of Canadians.

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Returned with a majority mandate, Mr. Flaherty said all that's required now are a few "tweaks and adjustments" to the document. "Basically this is the March 22 budget with a couple of additions from the platform," he told reporters Wednesday in the foyer of the House of Commons.

Per-vote subsidies will be phased out

One of the main platform promises that will be added to the 2011 budget is the elimination of the $2-per-vote subsidy that goes out to political parties. Prime Minister Stephen Harper said this $27.4-million annual expense will be gradually phased out over four years, a time line Mr. Flaherty confirmed.

Liberal MP Bob Rae, named Wednesday as interim leader of the third party in the Commons, said his party opposes the phase-out but will simply have to do a better job encouraging Canadians to donate to the Liberals.

"The notion that there's public support for the political process and for political parties is widely accepted in a great many democratic countries around the world," he said. "I find it interesting that everyone says Mr. Harper wants to destroy the Liberal Party of Canada. I can say I'm not interested in destroying the Conservative Party. I want to defeat them in the next election, but I'm not anti-democratic."

$2.2-billion for Quebec

The Quebec government has been saying for months that a deal is within reach with Ottawa that would see the province compensated for harmonizing its provincial sales tax with Ottawa. Mr. Flaherty, however, has questioned whether Quebec would accept full harmonization like governments in Ontario, British Columbia and the Atlantic provinces. The Conservative platform was a pledge to strike a deal by Sept. 15 on the issue. Mr. Flaherty said this money will be set aside in the budget.

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Quebec Finance Minister Raymond Bachand told reporters in Quebec City Wednesday that public servants for both governments are continuing to work out the details.

How's the economy?

Mr. Flaherty says he will soon meet with private-sector economists to see what adjustments will be needed to the budget in terms of projected growth in the Canadian economy. The March budget forecasted 2.4 per cent real GDP growth for 2011 and 2.8 per cent for 2012.

Since private-sector economists provided numbers, Japan was hit with a devastating tsunami and earthquakes, while the all-important U.S. economy came in softer than expected in recent reports.

"I'll listen to the private-sector economists again," said Mr. Flaherty. "I think we're quite close to where we were in March, quite frankly, and I think they're quite close to where they were in March, but I want to make sure and if some adjustment is warranted."

TD Bank chief economist Craig Alexander agreed with that view. "It's still going to be a moderate growth environment," he said.

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The deficit

The Conservative platform promised to erase the deficit – forecast at $29.6-billion for 2011-2012 – a year earlier than planned in the March 22 budget. On Wednesday, Mr. Flaherty confirmed that more aggressive cost-cutting plan – which will involve a spending review this year led by Treasury Board president Tony Clement – won't be booked until the 2012 budget.

In an interview with the CBC, Mr. Flaherty repeated his view that most of the savings can be found on the personnel side through attrition and by ending some programs. "I don't expect to see layoffs in the public service," he said.

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About the Author
Parliamentary reporter

A member of the Parliamentary Press Gallery since 1999, Bill Curry worked for The Hill Times and the National Post prior to joining The Globe in Feb. 2005. Originally from North Bay, Ont., Bill reports on a wide range of topics on Parliament Hill, with a focus on finance. More

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