Finance Minister Jim Flaherty said the federal government will do what it can in this challenging economic time to keep the budget balanced, but it won't do so at any price.
"We're not going to engineer a surplus on the backs of Canadian families and Canadian businesses for the sake of being able to say we have a surplus," Flaherty told CTV Newsnet's Mike Duffy Live on Wednesday.
Flaherty, who has been under pressure to formulate a plan to stimulate the economy, maintained that Canada is in better shape than most countries in the world. He repeated that Canada is on track for a "small surplus, a modest surplus" this year. But he also indicated that short-term deficits are likely in future years.
He said the government is doing what it can to cut costs and said a review of program spending will extend to Crown corporations to make sure they provide value for money.
He also said public-sector workers shouldn't be expecting large wage hikes in the next round of bargaining for contracts.
"We are confident that every stakeholder involved in the process of setting public-sector compensation will show commitment and accountability to act in the public interest and strike the proper balance," he said earlier Wednesday at a news conference in Toronto.
Flaherty also said federal transfers to the provinces will continue, but at a slower rate of growth than in the past.
"Volatile oil prices make a difference in what happens with that equalization formula," he told Mike Duffy Live.
"The provinces that are receiving equalization will all get more money, the pie will grow next year. But as we look at it going forward, it's not sustainable. The growth pattern is such that the program itself would be in jeopardy unless we address the rate of growth ..."
Flaherty said the federal government is giving provinces $54 billion this year for health and other social spending -- an increase of 56 per cent since 2003-04.
The finance minister said he will meet with his provincial counterparts to discuss the global economic meltdown on Monday.
Flaherty's comments came on the same day a rate cut by the U.S. Federal Reserve boosted the Canadian dollar to one of its biggest one-day jumps ever -- 3.67 cents US -- to 81.63 cents US. But the dollar has still suffered through its worst month in four decades.
The stock market plunge and tight credit markets have contributed to consumer confidence plummeting to its lowest level in more than 25 years.
