By Julian Beltrame, The Canadian Press

OTTAWA - The federal government is making deep cuts that include selling the company store in order to stay out of a deficit next year, but admits that still may not be enough.

Finance Minister Jim Flaherty’s mid-year economic report card on the country shows that Canada is falling into a “technical recession” of two consecutive negative quarters of growth that would have plunged the government into the first deficit in 13 years.

But the finance minister said he will save money by selling $2.3 billion in government assets - including property - and another $2 billion in cuts, particularly reining in perks for ministers and top mandarins.

As expected, the minister is also proposing that political parties give up their estimated $27 million in taxpayer subsidies based on how many votes they received on Oct. 14, and threw in another controversial item - a temporary removal of the right to strike in the public service.

“These are not easy times,” he told the House of Commons.

“But we must not forget that tour country has been through plenty of hard times before and we’ll get through these ones the same way.”

According to the economic projects tabled Thursday, it will be virtually impossible for the government to avoid a budgetary deficit next year, something Stephen Harper and Flaherty said they would not allow to occur during the recent election campaign.

The government is projecting a 0.3 per cent growth rate next year - a rosy outlook considering many economists are now forecasting a deepening recession.

Even so, that would result in a paper-thin $100-million surplus in each of the next two years after the new cuts, or a $5.9-billion deficit if Ottawa had done nothing.

But Flaherty conceded that the times are so uncertain “no one could unconditionally guarantee the fiscal projections contained in today’s statement.”

As well, the government has signalled strongly that it will introduce a multibillion-dollar fiscal stimulus package that likely includes major infrastructure spending and help for the auto sector in the next federal budget, now expected for late January.

“Any additional actions to support the economy will have an impact on the bottom-line numbers in our next budget,” he said, all but conceding that a deficit of several billion dollars is in the offing.

Most of the measures unveiled Thursday were well known after several days of co-ordinated leaks of populist measures that partially blunted opposition criticism that nothing in the economic statement would help get the stalling economy restarted.

They include:

-A clamp-down on discretionary spending for ministers and deputy ministers on such things travel, hospitality, conferences, exchanges and professional services, including polling and consultants.

-Limiting public service pay increases to 2.3 per cent this year and 1.5 per cent annually the next three years.

-Tying future equalization payments to growth of the economy.

-The sale of $2.3 billion in Crown assets

In a minor boost to the economy, the government said it will inject another $700 million through its agencies to provide additional credit for Canada’s struggling corporations, and will spend $6 billion in already approved infrastructure payments next year.

Flaherty also moved on the pension issue, but not as much as many had wanted.

The government said it would double to 10 years the time federally-regulated pension plans have to make up shortfalls. This will take pressure off corporations to make crippling pension contributions at a time of falling revenues.

As well, individuals who turn 71 are being given a one-time chance to reduce the amount they must withdraw from their registered retirement income funds, known as RRIFs, by 25 per cent.
Courtesy of:  http://ca.news.yahoo.com