Tough budget coming March 29

Minister of Finance Jim Flaherty. REUTERS/Mike Cassese

Minister of Finance Jim Flaherty. REUTERS/Mike Cassese

Mark Dunn, Senior National Reporter

, Last Updated: 1:30 PM ET

OTTAWA - If you haven't tightened your belts, folks, don't worry, because Finance Minister Jim Flaherty will do it for you March 29.

That's when one of the most anticipated budgets in recent memory lands in the Commons -- a document that will outline cost-cutting measures that have many on tenterhooks.

The government has been signalling for months that it plans to find annual savings of at least $4 billion a year through cuts to federal departments and agencies and elsewhere.

Public-sector unions fear a strategic program review launched last year by Treasury Board president Tony Clement will lead to reams of pink slips and severely impact services.

Key cabinet ministers have tried to downplay those concerns, including Foreign Affairs Minister John Baird, who says the "overwhelming" number of cuts will be through attrition.

Flaherty said Wednesday the public sector grew significantly under his watch, but now it's time "that we ask the public service to participate in the belt-tightening that the rest of the country has been doing."

Federal departments were asked to come up with scenarios to chop as much as 10% from their annual spending as part of a chainsaw exercise to erase the government's $32 billion deficit.

Flaherty has warned that Canada is not immune to the economic turmoil in Europe and the debt problems in the United States, and that tough measures are needed to avoid a recession.

He says his "jobs and growth budget" will show the government is on track to eliminate the deficit a year later than scheduled, and that spending reductions will be "relatively small" considering the budget is $265 billion.

"If you want to look at big austerity programs, you go to the United Kingdom today, you go to Canada in 1995, 1996. This is not in that order of magnitude."

Prime Minister Stephen Harper said earlier this month in a speech at the World Economic Forum in Switzerland that Old Age Security was unsustainable because of Canada's aging population - an assertion critics say is bogus.

Flaherty did not mention OAS when he announced the budget date, but the government is expected to raise the eligibility age for collecting pension to 67.