Monday's federal budget will address the fiscal imbalance and post-secondary education costs, make the environment a priority and reduce taxes, all while being "friendly to families in Canada," said Finance Minister Jim Flaherty on Sunday.
Appearing on CTV's Question Period one day ahead of the budget, which is seen as make-or-break for the minority government, Flaherty said it's "designed to help Canadian families, to build a stronger, better Canada."
He said it is balanced and includes substantial measures in the areas of infrastructure and debt reduction.
Later in the day at a sporting goods store in Whitby, Ont., Flaherty said he expects cities to be pleased by a gas tax announcement.
There is little doubt that the budget will zero in on solving the historic fiscal imbalance with the provinces, with many experts predicting that Ontario and Quebec -- vote-rich provinces expected to be key battlegrounds in the next election -- will be getting millions more from the federal equalization program.
Flaherty wouldn't confirm nor deny that speculation, saying only "there's lots of constructive spending in terms of resolving the fiscal balance, and that applies to the whole country."
The government has also made the environment a top priority in the months leading up to this budget. Shortly after Stephane Dion was elected Liberal leader, Prime Minister Stephen Harper shuffled his cabinet. He took the environmental portfolio away from Rona Ambrose and handed it to John Baird, and launched the party towards a new green agenda with a special focus on climate change.
Dion announced his own plan to address global warming on Friday. It involves setting emissions targets for all industry, and sets fines of up to $30 per ton of carbon emissions over the target. The money would go into a fund to support efforts to combat climate change.
Companies that reach their target would be able to sell the extra credits they earned.
Flaherty told CTV's Craig Oliver the scheme amounts to nothing more than a tax increase that would "push the economy toward decline."
"It would hurt our GDP. It would hurt our standard of living and our quality of life. (There are) measures in the budget, which I'll announce tomorrow in the budget speech, that deal with some of the environmental issues, the EcoTrust and some other important issues, but we're not going to sacrifice jobs in Canada and our standard of living. We're going to make sure we have a balance between environmental concerns and of course the economy."
Budget support
Dion suggested that his Liberals could vote for the budget -- provided it helps Canada's business competitiveness, post-secondary education, the poor and the environment.
Dion told CTV's Question Period that his troops will vote against it, however, if it looks like last year's budget, which he said failed in each of those areas.
The NDP meanwhile -- whose support may be necessary to pass the budget and keep the government from collapsing -- has demanded an end to millions of dollars in federal subsidies for the oil industry.
Again, Flaherty saved the details for his Monday speech, but hinted that it will fall short of meeting the demand.
"We're going to strike a balance and I think it's a reasonable balance for Canadians, taking into account energy and the environment and the economy. And the rest will have to wait for tomorrow."
The Conservatives have announced a "tax-back guarantee," which sets out that any savings on interest the government pays, resulting from a reduction in debt, will be handed back to Canadians in the form of tax cuts.
Flaherty suggested that could amount to about $1 billion in tax cuts this year and in years to come.
"As the prime minister has announced, we're going to legislate that tax-back guarantee to give governments discipline going forward year after year, so Canadians can see the benefits of reducing our national mortgage every year."
Flaherty wouldn't release details about possible breaks on capital gains taxes, but said "I'm conscious of course of the need to be expansive in our views of families.
"When I speak about families I mean low-income families, middle-class families and seniors, grandparents in Canada, and there will be measures in the budget tomorrow addressing that."
The government has already announced a plan to allow seniors to split their pension incomes to lower their taxation level.
On fiscal imbalance, Flaherty said he expects oil-producing provinces -- Alberta, Saskatchewan, Newfoundland and Labrador -- to recognize that the measures set out Monday will provide stability and fairness and put all the provinces in a better position.
However, he wouldn't say whether the government will keep its promise to remove non-renewable natural resources from the funding formula used to calculate equalization payments.
But he acknowledged not every province will be satisfied with his fiscal plan.
"I think there will be some dissent, I'm sure. Some saying it should have been this or that after the budget, because they can't agree among themselves. So the federal government in terms of equalization itself, which is about $12, $13 billion, has to make that decision."
Later in the day, at the Blades shop in Whitby, Ont., the finance minister bought a new pair of Reebok CCM skates for his son John -- a twist on the tradition of buying a brand new pair of shoes preceding the budget. Flaherty said he got a deal on the Quebec-made skates, which retail for $699. He paid $456 for them on his credit card. Asked whether he plans on buying shoes for himself, Flaherty said the budget shoes he donned last year will be good enough.
