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One of the first items on Prime Minister Stephen Harper’s agenda when Parliament returns will be reintroduction of a $278 billion budget that includes a sprinkling of social and economic spending and a plan to slay the budget deficit in several years. And the government will continue with a $6 billion corporate income tax cut.

“The risks still lie outside the Canadian border, which as we’re well aware can have a spillover effect on Canada,” said Royal Bank chief economist Craig Wright.

“We’re seeing continued uncertainty and concerns still with respect to the Eurozone and where it’s headed,” he said. Uncertainty on economic growth is also being fanned by volatile energy markets and the questionable U.S. business rebound, Wright said.

Prospects for Canada are also complicated by expectations that spending by debt-burdened consumers could slow in 2011 and by the shut-off of the Conservatives’ two-year, $47 billion emergency stimulus program.

With government spending slowing, the Conservatives have staked a great deal on their view that the business community will pick up the slack and stimulate the economy with expansion-minded investments.

Besides phasing in corporate income tax cuts worth $14 billion by 2012, the Conservatives in recent years have provided a wide range of investment incentives for business, including easing taxes on small business and manufacturers. In all, tax cuts for business by the Conservatives total an estimated $60 billion by 2013.

both Flaherty and Bank of Canada Governor Mark Carney have pointedly talked about the urgent need for more spending on machinery and equipment by companies.

But many are not convinced, with some Canadians saying the government would be smarter to tie tax incentives directly to company investments to ensure that corporations don’t just pocket the extra profits.

Speaking of corporate tax cuts, Canadian Association of Social Workers spokesperson Fred Phelps said it would be one thing “if corporations turned around and invested those funds into the economy.” But he said that hasn’t been happening in recent years. “What really has driven us out of the recession,” he said, “is spending by households and government, not business.”

reducing the size of government, forcing unions to compete for government contracts and reducing red tape on business

introduce forced manual labour for prisoners.

make it illegal to raise taxes without a clear mandate

It also features a bundle of crime bills that would be passed in the first 100 days of Parliament

The five main priorities of the campaign platform are jobs creation, supporting families, eliminating the deficit, getting tough on crime, and investing in the North.

corporate tax cuts are not creating jobs or investments, and they are not helping Canadians recover from the global recession

"Jobs and growth will remain our government's top priority," Johnston said.

"In order to accelerate the return to a balanced budget and to eliminate the deficit one year earlier, over the next year we will undertake a strategic and operating review of government spending," he said.

"Our government's plan will put us on a strong footing to resume paying down the federal debt, further reduce taxes on families and continue investing in priorities."

House of Commons committee on poverty released a report proposing a guaranteed basic income for Canadians with disabilities, on the model already available to seniors. The Senate released a similar report this spring calling for a study of how it would work for all low-income Canadians.

Within a year, working with counsellors who helped them with their plans and purchases, nine of the 15 participants were moving to some form of housing. The results were not perfect: A couple of people moved back out of housing again, and at least one was imprisoned. But most spent far less than the money available to them, mostly on clothing, food and rent. On the other hand, one person who chose to remain on the street asked for music lessons, and that was all right too.

Economists continue to bounce the idea around. Two years ago, Canadian researchers started their own chapter of the Basic Income Earth Network (a group founded in Belgium in 1986) to co-ordinate an ongoing discussion. Some say it might actually accomplish what political rhetoric has been promising for years: the eradication of poverty.

In Britain, an experiment was recently conducted with a small group of people who had been living on the streets for more than five years. They were given a budget that they could spend however they wished. The idea was to see whether the “personalized budgets” Britain gives to seniors and people with disabilities to pay for care (which include some conditions) would work for the very poor as well.

In Quebec, a government task force went further, recommending a minimum guaranteed income starting at $12,000 for everyone in the province.

The idea of a guaranteed annual income has been tested before in Canada – in the mid-1970s, in Dauphin, Man., a farming town with then about 10,000 residents. In the only experiment of its kind in North America, every household in Dauphin was given access to a guaranteed annual budget, subject to their income level. For a family of five, payments equalled about $18,000 a year in today's dollars. Politicians primarily wanted to see if people would stop working. While the project was pre-empted by a change in government, a second look by researchers has found that there was only a slight decline in work – mostly among mothers, who chose to stay home with their children, and teenaged boys, who stayed in school longer.

“Very often, services are about getting people off the streets, come what may,” says Joe Batty, who managed the program. “This is about normalizing people.” The program was considered so successful, he says, that the city of London is now providing financial support to expand it.

Evelyn Forget, a researcher in medicine at the University of Manitoba, reports that Dauphin also experienced a 10-per-cent drop in hospital admissions and fewer doctor visits, especially for mental-health issues.

But a guaranteed-annual-income program would be expensive. In developing nations, a small amount of money can bring about big changes. In a country like Canada, the basic income needed to pull everyone out of poverty would have to be larger, balanced against higher taxes.

cost analysis of the Quebec proposal estimated it could run the province as much as $2-billion, including the cost in lost taxes if minimum-wage workers did the math and left those jobs.

Other experts argue that poverty reduction needs to be tailored to individual circumstances, especially in cases involving mental health and addiction.

Conservative Senator Hugh Segal, one of the more vocal proponents of no-strings-attached aid for the poor, points out that the guaranteed-income program for seniors has greatly reduced poverty, especially among women. “There's a bias that when given the chance people will be lazy,” he says. “That's not my sense of reality.” Mr. Segal argues that giving money with no conditions removes the stigma and shame around poverty, allowing people to focus instead on how to improve their lot.

Requiring the poor to prove continually that they are deserving of assistance or threatening to pull help away without notice only discourages the risk-taking and confidence required to get out of poverty.

“If you think of the core premise of charity, it is not to treat people as lesser,” Mr. Segal says. “[It] is to give people a leg-up so they can have some measure of independence and can make some of their own choices.”

To do that effectively, he argues, we need to let them decide the steps they take to get there. Or – as Ms. Gray in Victoria puts it, saying she would go back to school for more training if she could count on covering rent and daycare – give some autonomy back to “people who are trying to be somebody in this world.”

Perrin Beatty, chief executive of the Canadian Chamber of Commerce and a former Conservative cabinet minister, warned Canada's dismal productivity rate, which he said is about 25 percent below that of the United States, was the biggest problem facing exporters.

Lines of credit are the largest category of consumer debt in the country accounting for 41% of all outstanding debt though delinquency rates are very low. Line of credit debt was up 5.9% in the quarter over last to an average of $33,981. When compared to the final quarter of 2010 however, line of credit borrowing is down for the first time in several years.

This may be “an early sign that Canadians are shifting to a more conservative and restrictive form of financing to manage their debt loads,”

economists say the benefits to the rich from these tax breaks will far outweigh anything seen by other members of society.

single parents, who account for one in five families with young children and have the highest rate of poverty in this country.

“The families that will most benefit from Harper’s income-splitting promise will be those who need the least help,” says Armine Yalnizyan, an economist with the Canadian Centre for Policy Alternatives. “The higher the income, the bigger the tax break.”

Unemployment, now at 7.6 per cent, will remain considerably higher between now and 2015

Sluggish U.S. growth combined with the Canadian dollar remaining above parity will subdue near-term growth in the Canadian economy and restrain the decline in the unemployment rate.”

Canada’s rate (at this moment, 27 per cent).

As Canada trimmed, the world trimmed, too: 75 countries aggressively cut corporate tax rates in the past decade. China’s corporate tax rate is 20 per cent – discounted to 15 per cent for companies that invest in strategically important industries.

combined federal-provincial statutory tax rate of 25 per cent, won’t

The “Bowles-Simpson Plan,” proposed by President Barack Obama’s commission on fiscal reform, suggests a federal rate of 28 per cent. The Wyden-Gregg Plan, proposed by Democratic and Republican legislators, suggests 24 per cent. The China-OECD Plan, advanced by the non-partisan U.S. Tax Foundation, suggests 20 per cent

These rates are federal rates and don’t include corporate rates levied by the states: nominally, on average, 6.6 per cent; in fact, on average, 4.2 per cent. Thus a U.S. federal rate of 20 per cent (the China-OECD Plan) would produce a comprehensive “America rate” of 24.2 per cent

Canada’s goal assumed an “America rate” of 39.3 per cent: a competitive advantage for Canada of 14.3 percentage points.

when you add the federal rate and the average provincial rate (19 plus 12.5), you have a “Canada rate” of 31.5 per cent – the fourth-highest rate in the world: and twice as high as China’s most competitive rate.

The Conservative government took a lot of heat for incrementally lowering Canada’s corporate tax rate.

Ottawa set a record $55.6 billion deficit in 2009-10, when the recession hit hardest, but has improved that position by between $15 and $20 billion in one year.

"However, based on the results to date, the final 2010-11 deficit is expected to be lower than the $40.5 billion as projected in the March 22 budget."

History has shown those adjustments can amount to billions of dollars in additional expenditures.

During the election campaign, the Conservatives pledged they would balance the budget in four years -- one year earlier than planned -- by finding an additional $4 billion in savings from operations.

The department said $17 billion, or about half, of last year's deficit was due the stimulus package.

In April, the International Monetary Fund pegged Canada's combined federal-provincial fiscal deficit at 4.1 per cent of gross domestic product, lower than the U.S. (10.5 per cent) and the United Kingdom (8.1 per cent).