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Budget sets the stage for next election

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OTTAWA -- The seeds of Jim Flaherty's ninth federal budget were planted in a tidy backyard in a Victoria suburb almost two years ago.

It was there, during the 2011 election campaign that Stephen Harper promised a popular tax move, something he dubbed the "family tax cut," allowing families to pool incomes and save an average of $1,300 per year.

It would kick in only when the budget is balanced and as Flaherty repeatedly told us Thursday, those books will be balanced in 2015. Easily, he says, and a good thing for him, too, because the Conservative election campaign depends on it.

And that is the nub of Thursday's effort -- it is all about the next election and another four years of Conservative rule.

It is a budget larded with program renewals and extensions, the spending of the nickel-and-dime variety, the savings the governmental equivalent of finding loose change under the cushion on the couch.

It is all aimed at one goal, with Flaherty using less prosaic language to find his "hell or high water" moment immortalized by a previous Liberal government.

"I need to make one thing very clear,'' he told the House of Commons.

"And it is simply this -- our government is committed to balancing the budget in 2015. Period.''

It was a point driven home to him by Harper, who took less than 72 hours to correct a Flaherty tongue trip last November when the finance minister predicted balanced books by 2016.

Besides the income-splitting initiative, a balanced budget will allow the government to campaign on a pledge to increase the limit on their popular tax-free saving accounts to $10,000 and sprinkle in some adult fitness tax credits and double an existing child sports tax credit.

By some estimates, that will cost the treasury $3 billion per year.

Hence the need for the clear fiscal slate before the election planes are leased for an election expected no later than October 2015.

If 2013 is the Stephen Harper mid-term year of cabinet shuffles, new, younger, likely female faces on the front benches and a throne speech in the fall, the budget document was the first obvious pivot toward the next campaign.

By Flaherty's estimation, his budget contains the smallest growth in government spending in two decades.

The government projects an $800 million surplus by 2015, a figure almost indistinguishable on the graphs in the budget document, but that's good enough.

He could have shown a larger surplus, Flaherty said, but a surplus of a nickel would suffice to allow the promises to be included in the election campaign.

The government is spending billions of dollars over 10 years on Canada's crumbling infrastructure, a welcome investment, but one that is back-end loaded and comes with a higher government price tag because it includes the continuation of existing programs.

Flaherty called it the largest infrastructure plan in the country's history.

In a bid to match Canadians with unfilled jobs -- and slow an explosion in the number of temporary foreign workers entering this country -- the government has created the Canada Job Grant, but not until next year.

Even then, an existing program must first be renegotiated with the provinces and territories after its 2014 expiry and much of its administration will be handed to the private sector, which will be obliged to kick in if it wants to find themselves qualified carpenters, welders or electricians.

The Conservatives will also extend a tax relief program for the country's beleaguered manufacturing sector, much of it targeted at southern Ontario.

They will also crack down on tax loopholes and tax evaders, which they say will save them $315 million in the first year.

They have promised to eliminate more "redundant" government operations and will go after lucrative sick leave provisions in the public service, although they couch it in gentle budget speak, promising to "support their timely return to work.''

All of this, of course, is unfolding in the bureaucracy bubble, while Flaherty is dealing with the fallout of Alberta's "bitumen bubble.''

The biggest challenge facing the federal government right now does not come from instability south of the border or the latest Eurozone crisis brought on by the fiasco in Cyprus, but with the $4-billion federal revenue shortfall from Ottawa's inability to get its resources to export market.

The great pipeline push will accelerate -- the Harper government will not let anything get in the way of a 2015 plan that includes not only an array of pre-announced goodies, but some extra cash to sweeten the electoral pot.

Tim Harper is a national affairs columnist for the Toronto Star.

Republished from the Winnipeg Free Press print edition March 22, 2013 A10

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