Finance Minister Jim Flaherty will unveil the federal budget Tuesday, and it's expected to include plans to help Canada's struggling automotive sector and boost infrastructure, sources have told Â鶹´«Ã½.
Auto companies will be able to tap into a new fund of more than $200 million, so they can build more fuel-efficient cars to stave off sluggish sales and job losses.
"What that does is allow manufacturers to write off new machinery and equipment that they're purchasing," Craig Alexander, deputy chief economist for TD Bank, told Â鶹´«Ã½.
The budget is also expected to include plans for a job-creating fund called Build Canada. It would devote $500 million towards roads, bridges and other infrastructure in the country's major urban areas.
Armine Yalnizyan, of the Canadian Centre for Policy Alternatives, said crumbling infrastructure is becoming a major issue in Canada's cities, along with poor public transit.
"We're operating in this bizarre period of almost Depression-era politics with mayors going to the federal government with cap in hand, saying, 'We can't deal with the pressures that are facing growing cities,'" she told Â鶹´«Ã½net.
Flaherty warned Monday that the budget won't have any major spending initiatives, but the government is expected to disclose a surplus with an extra $1 billion.
The surplus for the fiscal year ending March 31 will be $13 billion, a government official told The Canadian Press on Monday. It was previously thought to be about $11.5 billion.
At least two-thirds of the surplus will go towards debt reduction.
"We are doing spending, but we're doing spending in a controlled way, given the economic circumstances this year and next year," he said.
"People ought not to expect any big spending items because we have to stay within our means and be prudent and fiscally responsible, which we will be tomorrow."
The International Monetary Fund predicts economic growth of 1.8 per cent in Canada in 2008. Last fall, the IMF predicted 2.8 per cent growth for Canada this year.
Flaherty starts delivering his budget at 4 p.m. ET on Tuesday. He promises the budget will be balanced and that the government has looked for ways to cut spending.
In question period on Monday, Bloc Quebecois Leader Gilles Duceppe said he wanted to see the budget do something to help struggling manufacturing and forestry companies.
Prime Minister Stephen Harper said his government's corporate tax cuts have helped Quebec companies.
NDP Leader Jack Layton accused the Tories of helping big banks and oil companies at the expense of forestry, manufacturing and the middle class. He said one-third of a million well-paying jobs have been lost.
Harper said while there have been job losses in some sectors, job creation has far outstripped the losses.
The unemployment rate in January was 5.8 per cent -- a 33-year low.
"The problem the opposition has is it is not all doom and gloom out there," he said.
"This government is making sure that we don't just blow the spending in this country, that we keep this economy going," Harper said, adding tax and debt reduction will continue to be priorities.
With a report by CTV's Robert Fife in Ottawa
