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Federal Finance Minister Jim Flaherty was in Prince Edward Island Friday to meet with provincial officials and consult on the federal government's upcoming budget.
TORONTO — The federal budget will not be a draconian document that mirrors plans put forward by debt-ridden European countries, Finance Minister Jim Flaherty promised Thursday.
That's because Canada's economic landscape is nowhere near that of countries like Greece, which was recently approved for a $130 billion euro bailout in the largest sovereign restructuring ever attempted.
"We are not one of the countries, many of them in Europe, that have run up deficits for a long period of time, accumulated substantial debt and must really act dramatically - some of them in a draconian way in order to get their house in order again," he said during a funding announcement in Toronto.
The government will be taking a "moderate" instead of austerity-driven approach with the budget, expected to be tabled some time next month.
Canadians also shouldn't count on any new tax increases.
"We don't raise taxes," said Flaherty. "We reduce taxes and we try to watch our spending and we'll do some more of that in the budget."
At this time, Canada needs to work on ensuring that it can cut back on spending while still drive economic growth.
The days of large governments are also over, hinted Flaherty.
Ottawa was expected to come in well under its full-year projection for a $31-billion shortfall. In January, TD calculated the 2011-12 deficit would come in at between $27 billion and $28 billion.
Recently, the government has forecasted that the budget will also include changes to Old Age Security, including potentially upping the eligibility from 65 years old to 67 years old.
Flaherty emphasized Thursday how important it was that the economy be set up for the future.
"We do have to look ahead, look down the road so that we can make sure that the important government programs we have are available down the road for younger Canadians," he said. "So we have intergenerational equity."
This success can only work if provincial governments also follow suit and rein in their spending too, he said.
"It's very important the provinces also do move in the direction of getting their fiscal houses in order because the long term effect of accumulated deficits, large public debts, are not good, said Flaherty.
The minister made the comments at the Canadian Cancer Society's headquarters in Toronto where he re-announced a $40-million caregiver tax credit, which came into effect Jan. 1.
The maximum $300 credit is aimed at easing the financial burden of those who care for ill family members.