OTTAWA—The 2014 federal budget—which may have an earlier, February release date this year—is expected to be a steady-as-she-goes, low-key package that looks forward to a big-bang pre-election budget in 2015.

Whittling away the Conservatives’ budget deficit is the government’s foremost goal, and the budget message will reflect the fact that Ottawa has very little money to devote to new programs or tax breaks for Canadians this year.

“I will not entertain the traditional ‘laundry list’ of new spending or subsidy programs typically sent from the opposition,” Finance Minister Jim Flaherty said in a letter to opposition Members of Parliament in which he asked for pre-budget suggestions — but only if they entailed little or no cost to the federal treasury.

Setting the tone for the upcoming budget, Flaherty said he hoped opposition parties would “refrain from demanding costly new spending initiatives that would increase the size of government, jeopardizing our return to balanced budgets in 2015 and beyond.”

Nearly eight years after winning power in the 2006 election, Prime Minister Stephen Harper is coping with persistently mediocre economic growth. A $50-billion two-year pump-priming exercise by the Conservatives helped Canada weather the 2008-09 world recession better than most industrial countries. But, hampered by ongoing business slumps in Europe and the United States, Canada’s rebound from the recession has been slower and weaker than expected.

In hopes of strengthening the Canadian economy, Flaherty has since 2007 been phasing in corporate income tax cuts that deprive federal coffers of an estimated $10 billion annually. But business investment in new machinery and equipment — a key ingredient in economic expansion — has been modest. And growth in Canada has been held back by a weak export performance. More than 1.3 million Canadians remain unemployed and for 2013 as a whole, the economy is expected to post a meagre 1.7-per cent growth rate.

The weaker the economy, the weaker the flow of tax revenues received by Ottawa, which has complicated the Conservatives’ effort to put an end to debt-financing.

More national news stories on Thestar.com

More economics stories on Thestar.com

Still, balancing the books has become a personal crusade for Flaherty. The 64-year-old MP from the riding of Whitby-Oshawa has been struggling with a skin condition that has affected his appearance and raised persistent questions about his ability to stay on in the demanding finance portfolio. But Flaherty has dismissed all queries about his health and his future, saying he intends to be in the same post when Ottawa erases the deficit in 2015.

Against the backdrop of a less-than-robust economy, the Conservatives’ focus on fiscal restraint is a matter of controversy.

Reducing Ottawa’s deficit over the medium-term is important but there’s no reason why it has to be done in the next two years, says TD Bank chief economist Craig Alexander: “What’s important is the commitment to behave in a fiscally responsible way, but the decision to balance in 2015 is very much a political decision, not an economic decision,” Alexander told the Star.

The NDP says reducing federal government outlays at a time when consumers are starting to be more cautious in their spending is a recipe for economic backsliding.

“They talk about the economy and yet they do nothing for job-creation,” NDP Leader Thomas Mulcair said in a year-end press conference.

He said the Conservatives should be doing more to tackle the decline of manufacturing industries, regional economic problems and the jobless rate.

Mulcair also criticized the Conservatives for “giving billions of dollars in tax breaks to corporations” when the tax reductions “didn’t even discourage them from shipping Canadian jobs to other countries.” The NDP advocates tying tax breaks for companies to job-creation.

The Conservatives say balancing the budget is crucial to ensuring economic expansion and lower corporate taxes encourage valuable business investment.

“Balanced budgets signal stability and pave the road to prosperity,” Flaherty said recently.

Loading... Loading... Loading... Loading... Loading... Loading...

And, with 2015 being an election year, meeting the Conservatives’ deficit-elimination target has taken on enormous political significance for the party. That’s because in the 2011 election campaign, Harper promised several goodies for individual taxpayers once Ottawa’s books are balanced.

These include doubling the children’s fitness tax credit, a $2.5-billion measure to allow income-splitting on young families’ tax returns, a doubling to $10,000-a-year of Tax-Free Savings Account limits and an adult fitness tax credit.

The plan to eliminate the $17.9-billion annual budget deficit in time for the next election is expected to be the centerpiece of this year’s budget message. Beyond that, the package of economic and fiscal measures is expected to contain few surprises, with the focus being on cutting spending and public service jobs.

Perhaps because Flaherty’s announcement could be what is called a “one-day wonder” that attracts minimum attention in Parliament and across the country, tentative planning calls for it to be delivered a lot earlier this year than in 2013 and 2012. It is also possible that an earlier budget announcement could be seen by Harper as a way to shift attention away from the Senate scandal that is likely to be front and centre when Members of Parliament return from their winter break on Jan. 28.

Read more about: