Budget renews eco retrofits, but no HST deal

The Conservative government's budget will include student loan forgiveness for rural doctors and nurses, $400 million to renew a home energy retrofit program and a new program to link veterans with job training opportunities, CBC News has learned.

According to a government source, the budget will provide for student loan forgiveness of up to $40,000 for doctors and up to $20,000 for nurses in remote or rural areas.

The source said the budget will also include $50 million for Waterloo's Perimeter Institute and $4 million for Thunder Bay's Regional Research Institute.

The source said the budget will have four main themes: job creation; families and communities; research, innovation and training; and "preserving Canada's fiscal advantage."

One of those training initiatives, the source said, is to help Canadian Forces veterans find apprenticeship opportunities in the construction industry.

But a deal tocompensate Quebec for implementing the harmonized sales tax (HST), which the Bloc Qubcois wants to see in Tuesday's budget, is not done yet and won't be part of the budget, according to Finance Minister Jim Flaherty.

Bloc Qubcois Leader Gilles Duceppe demanded to know in question period Monday whether the budget will include $2.2 billion in compensation for Quebec for harmonizing its provincial sales tax with the GST in the 1990s.Quebec andOttawa have been working on a deal for months, similar to the ones reached with Ontario and British Columbia.

Duceppe said Quebec's finance minister has sent a draft agreement to Flaherty andthe province is waiting for him to sign off on it.It has already taken far too long for the federal government to conclude the negotiations, Duceppe said.

NDP MP Thomas Mulcair suggested Monday in question period that the Conservatives are deliberately stalling on reaching a deal for political reasons.

He said the Conservatives might be withholding the money for Quebec in Tuesday's budget because it would mean the Bloc Qubcois would be more inclined to vote for it. While the Conservatives need the support of an opposition party to pass the budget,the Conservatives don't want to be seenas beingpropped up by a separatist party, Mulcair suggested.

He also suggested the Conservatives might be holding on to news about a deal until a campaign is underway, if one is triggered in the next few days. The government faces possible non-confidence motions in addition to budget votes in the coming days.

Flaherty told the House of Commons that negotiations are going well and that progress has been made but there is still more work to do. "We will continue our negotiations," he said.

Earlier in the day, Flaherty held the traditional pre-budget day photo op, posing for the cameras but letting no details slip on the government's fiscal plan for the year.

It's tradition for the finance minister to buy a new pair of shoes to wear on budget day, but Flaherty opted to have an old pair repaired at an Ottawa store.

On Tuesday at 4 p.m. Flaherty will deliver his sixth federal budget as finance minister in Prime Minister Stephen Harper's cabinet. It's not expected to be a blockbuster; Flaherty and Harper have warned it will contain little in the way of major new spending programs.

However, what could be a lacklustre budget might still spark the government's downfall, depending on how the parliamentary calendar shapes up this week.

If the opposition parties decide they want to bring down the government, they could do it on the first vote related to the budget, but a non-confidence motion related to a committee finding that the government should be found in contempt of Parliament might come first. If successful, that would bring down the government before its budget could be passed.

'Stay on course'

Flaherty said Monday the government will continue to follow its plan to get the country back to a balanced budget in the coming years.

"One of the goals of the budget is to make sure we stay on course, that we maintain the fiscal track that we set out in the fall economic update, that we move back to a balanced budget but at the same time, make some investments to promote economic growth, jobs," Flaherty said during the photo-op on Monday.

He wouldn't say whether he thought there would be enough in the budget to persuade one of the opposition parties to support it. The Conservatives need the votes from at least one of the three parties in order to stay in power and avoid an election.

It is possible the government could fall this week on a non-confidence motion, based on a report from a Commons committee that found the government in contempt of Parliament, before Flaherty's budget is even debated by the House.

Flaherty has dropped hints about the government doing more to support senior citizens, though he hasn't specified how it might do that. The CBC's Greg Weston reported last week that the budget would include a $700-million increase in old age security payments. The average Guaranteed Income Supplement is currently worth $455 per month and the average basic old age security cheque amounts to $493.

Will measureswin opposition support?

An increase in the GIS is among the items the NDP wants to see in the budget, but Leader Jack Layton has signalled that his party needs to see substantive measures in the budget in order to vote in favour of it. The NDP has outlined other measures it wants to see in the budget: the elimination of federal tax on home heating, the renewal of the EcoEnergy Retrofit program, reforms to the Canada Pension Plan and efforts to increase the number of family doctors.

The main thing the Liberals are looking for, but won't find, is a roll back of corporate tax reductions. The corporate tax rate was dropped to 16.5 per cent from 18 per cent on Jan.1, and another cut to 15 per cent is due next year.The Liberals say corporate tax cuts are unaffordable when the country has its biggest deficit in history. The Conservatives have made it clear they do not intend to reverse the corporate tax cuts.

"We've made it clear what measures we'd like to see in the budget. What we've received is radio silence," Liberal finance critic Scott Brison said Monday.

Duceppe saidthe BlocQubcoisis looking first for a deal on the HST and would only evaluate the rest of the budget after that.

One measure the Conservatives have said will be in the budget is a tax credit for enrolling children in arts programs. That was a campaign promise made in 2008 and it is similar to an existing tax credit for children's sports programs.

Once Flaherty is finished delivering his budget speech, there will be a flurry of activity on Parliament Hill. The opposition leaders aren't likely to immediately declare whether they will support the budget, but they could give their basic impressions of it. All of the parties have caucus meetings on Wednesday morning and following those, the opposition leaders or their finance critics are likely to have more to say.

Parliament Hill will also be packed with financial analysts and representatives from various organizations and interest groups who will react to the budget as soon as it is tabled.