Canadians may see jump in EI premiums as gov't works to balance books

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Canadians should expect cuts to some government programs, as well as hundreds of dollars in additional annual employment insurance premiums, over the next five years as the government strives to balance its books, economists say.

Finance Minister Jim Flaherty's promise is balance the books by the 2015-16 fiscal year doable, but only if the government shows significant spending restraint, said Alex Laurin, a senior policy analyst with the C.D. Howe Institute.

Toronto - Canadians should expect cuts to some government programs, as well as hundreds of dollars in additional annual employment insurance premiums, over the next five years as the government strives to balance its books, economists say.

Finance Minister Jim Flaherty's promise is balance the books by the 2015-16 fiscal year doable, but only if the government shows significant spending restraint, said Alex Laurin, a senior policy analyst with the C.D. Howe Institute.

It won't be easy for the government to maintain such a low rate of spending, and could result in some unpopular decisions, Laurin said Friday.

"This would affect everyone looking for something new, for a new program to be created," he said.

"Not creating any new expenses is always a restraint because there's always new demands on government, and as the population ages there will be new demands, and they'll have to say no for a while."

Flaherty said Thursday that Canadians can now expect five years of budget deficits - two more years than originally promised - and those deficits will be deeper than originally forecast.

He said Ottawa will balance its books by squeezing growth in public spending and relying on higher tax revenues from a growing economy, not increasing taxes or cutting transfer payments to the provinces.

The experts suggest a streamlining of the civil service is expected and a reduction in business subsidies and grants to a variety of groups are also in the cards.

However, TD Bank chief economist Don Drummond emphasized that Canada isn't entering "a draconian era of fiscal restraint."

He said the ratio of debt to GDP may creep as high as 35 per cent, but this is nothing compared to the 69 per cent level it hit in 1995.

Organizations: C.D. Howe Institute, TD Bank

Geographic location: Toronto, Ottawa, Canada

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