OTTAWA—Finance Minister Jim Flaherty’s upcoming budget, expected in a few weeks, will be the opening round of the next federal election showdown.

The central theme of the economic and fiscal package will be deficit-fighting, with the Conservatives announcing they are on the verge of balancing the books after years of spending more than Ottawa collects in revenues.

In his economic update in November, Flaherty forecast a $3.7-billion budget surplus in the 2015-16 fiscal year. But the Parliamentary Budget Office estimates the surplus could hit $4.6 billion by then.

“We could have a larger surplus than we anticipate, but we will have a surplus,” Flaherty told CTV recently.

Eliminating the deficit is expected to be a central pillar in Prime Minister Stephen Harper’s next election campaign, which will probably take place in 2015. It’s all the more important politically because balancing the books will open the way for the Conservatives to fulfill tax-cutting promises left over from the 2011 campaign.

At the time, Harper pledged to increase the child fitness tax credit, allow Canadians to put more money into tax-free savings accounts and let families with young children split their income for tax purposes, a generous break that would cost Ottawa $2.5-billion a year in forgone revenues. But all those promises were contingent on eliminating the annual federal budget shortfall.

This has proved harder than expected because the lingering economic malaise from the 2008-09 global recession, particularly in the United States, has held back Canada’s economy, in turn reducing the flow of taxes into Ottawa’s coffers. But that could be changing. Forecasts for expansion in the U.S. are looking rosy for the first time in half a decade.

“I do think right now we face a somewhat cautious, but somewhat more optimistic, environment than we have for the past few years,” Harper said during a question-and-answer session at Tel Aviv University in Israel.

“Lots can yet go wrong, but I am optimistic that we are now beginning to see some sustained momentum to broad, global growth,” he said.

“It’s been a, not robust, but a relatively strong recovery” in Canada, Harper said. “We still have too many people who are out of work, and we still have longer-term challenges,” he added. Among the examples he gave for trying to deal with these challenges were revamped immigration policies, support for higher education, expanded trade and enhanced skills training for Canadians.

The 2014 budget is also expected to focus on consumer issues. The government says it wants to take aim at cable-TV packages that don’t allow consumers to pick and choose, payday loan companies, lack of competition among wireless providers and price differentials on the same goods between this country and the U.S.

While there is widespread support for these aims, there is also impatience with lack of action so far. “Where are they? We haven’t seen much,” Consumers’ Association of Canada president Bruce Cran said of the promised measures.

In last year’s budget, Flaherty sought to probe the price differentials between Canadian and U.S. consumer goods by mandating $76 million in tariff relief on imported baby clothing and sporting goods. Whether the savings are being passed on to Canadian buyers of these items is under study, but the research is not scheduled to be completed until August. In the meantime, the question of why Canadian prices didn’t fall further when the loonie attained par with the U.S. dollar may have become moot now that Canada’s currency has nosedived to about 90 cents (U.S.).

How average Canadians are doing five years after the recession will be a major focus for federal political parties in this budget and in the run-up to the next election. Liberal Leader Justin Trudeau has been talking consistently about the problems of middle-class families facing rising costs and stagnant wages. And NDP Leader Thomas Mulcair has been on a cross-country tour to discuss pocketbook issues and how to make life more affordable for average people. He says the Harper government raises consumer issues but hasn’t followed through with action.

“So we’re going to talk to Canadians about how we can end the rip-offs at ATM machines, at the gas pump, and how we can ensure more Canadians have access to a low-interest credit card,” Mulcair says.

The upcoming budget will also stress the Conservatives’ efforts to expand overseas commerce by trying to land big-ticket free-trade deals, the role of resource development in the government’s economic blueprint and ongoing spending restraint. As part of Flaherty’s effort to rein in Ottawa’s $265 billion in annual spending, the government is cutting outlays by $5 billion a year, reducing federal government employment and selling off billions of dollars in assets, including embassies, a coal terminal in British Columbia, land and some of the government’s holding in General Motors.

As 2014 goes on and the pre-election jousting grows, much will hinge on whether the forecast U.S. economic pick-up materializes and provides a boost for Canada’s economy. If not, and the latest monthly employment report — Canada’s unexpectedly grim performance in December saw 45,900 jobs disappear — proves to be a pattern, then the Harper government’s concentration on budget-cutting, rather than economic stimulation, could be widely questioned.

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“It depends on what happens” in coming months, said BMO chief economist Doug Porter. He said the December employment performance might turn out to be a one-time aberration. “But if it’s the opening act of some real weakness in employment, then I would have to wonder if a sole focus on balancing the books is really the appropriate stance for government policy at this point,” Porter told the Star.

It appears doubtful the Canada Job Grant will feature prominently in the 2014 budget. The $300-million training plan, which is the federal government’s main attempt to address what some see as a national skills shortage, was the centerpiece of the 2013 budget. But it is still entangled in disputes with the provinces, some of which say the plan would deprive them of money they use to provide job training for the most vulnerable in society.

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