Article content continued

As expected, the government is cutting in half the planned increase in employment insurance premiums for 2012, to five cents for employees from a proposed 10 cents, meaning next year’s rate cannot exceed $1.83 per $100 of insurable earnings.

For employers, the government is chopping the increase to seven cents from a planned 14 cents.

The changes are expected to save employees and employers $600-million in 2012, but will eat away at federal revenues next year.

The government will also temporarily extend an enhancement to the work-sharing program, an initiative that helps employers and workers avoid temporary layoffs when normal business activity sinks.

“We will not be bound by ideology when it comes to making decisions to keep our economy strong and protect Canadians, their financial security and their jobs,” Mr. Flaherty said in a speech to the Calgary Chamber of Commerce, as he delivered the economic update.

“We have responded to critical situations with flexibility and pragmatism, and we will continue to do so as situations dictate.”

Mr. Flaherty also announced the government and Bank of Canada have agreed to renew the country’s inflation target at two per cent for another five years.

On the spending side, the Harper government is in the midst of an ongoing strategic operating review that is searching for $1 billion in annual cuts for next year, $2-billion for 2013-14, and $4-billion by 2014-15. Nearly 70 government departments and agencies are required to submit scenarios for a five- and 10-per-cent cut to their budgets.