Despite Prime Minister Stephen Harper's talk about slaying the deficit, the federal government has no plans to cut any spending before the spring of 2011 because of the weakness of the economic recovery.
Finance Minister Jim Flaherty confirmed that the Conservatives will wait until the current two-year, $46-billion economic stimulus plan ends on March 31, 2011, before looking for ways to begin trying to balance Ottawa's books.
"The first thing to do is make sure that the economy recovers, that's absolutely imperative," Flaherty said Tuesday after prebudget discussions with business economists.
Referring to the meeting of government leaders and CEOs in Davos, Switzerland, on the weekend, Flaherty said, "We're all agreed internationally that we need to continue with our economic stimulus, that there is a lack of evidence of sustained private-sector demand.
"So we will continue to provide public-sector demand in the Canadian economy in 2010 and into the first quarter of 2011," he told reporters Tuesday.
In an update for the March 4 federal budget, a dozen private-sector economists said the outlook for Canada's business conditions has improved a bit.
They now predict 2.6% economic growth this year, up slightly from the 2.3% they predicted in September. In 2009, the economy retracted by 2.5%.
But the economists see unemployment continuing at an unusually high 8.5% in 2010.
On Jan. 19, Harper and his aides trumpeted the need for budget restraint when the prime minister put fiscal conservative Stockwell Day in a position to hold the line on spending as president of the federal Treasury Board.
The government has also set up hundreds of meetings across the country to initiate public debate on how to end Ottawa's budget deficits, now set to hit a cumulative $160 billion by 2014.
But Flaherty said Tuesday that trimming federal spending will have to await consistent economic growth, lower jobless rates and more investment by private business.
"Once we see a sustained recovery, then we'll start moving back toward deficit reduction and then balanced budgets," the finance minister said.
After the meeting, the business economists agreed that it's too early to focus on restraint.
"There's still lots of risks in the global economy, so to take away the stimulus that is promised would probably be premature right now," CIBC World Markets economist Avery Shenfeld told reporters.
While talking up restraint, the Conservatives appear to have added big new cost factors to their budget-making. Harper has recently committed to billions of dollars in additional spending initiatives to help Haiti and improve conditions for women in children in developing nations. The government is also moving toward significant reductions in greenhouse gases, a plan that may lead to hefty federal spending.
Flaherty was unable to say how much those programs would cost taxpayers and how the promises would impact budget planning.
But Liberal leader Michael Ignatieff poked fun at the Conservatives' recent talk about fiscal belt-tightening.
"Poor Mr. Flaherty. I absolutely love it, when a guy who's dug us into a $56-billion hole is talking to me about financial responsibility and prudence," Ignatieff told reporters. "I mean, these guys have no credibility at all on this."
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