Finance Minister Jim Flaherty says Canada won't return to a surplus until at least 2015-16, instead of 2014 as his government previously promised.
He said economic conditions are worsening, adding almost $16 billion to the deficit over two years, and he's scaling back austerity measures that were intended to pay down the deficit as soon as possible.
Delivering the fall economic update, Flaherty seemed to indicate another round of stimulus was not off the table.
"Let me be clear: we will not be bound by ideology when it comes to making decisions to keep our economy strong and protect Canadians, their financial security and their jobs," he said in the speech to the Calgary Chamber of Commerce.
"We have responded to critical situations with flexibility and pragmatism, and we will continue to do so as situations dictate."
In his fall economic update, Flaherty also confirmed that the employment insurance rate hike in his June budget won't be as high as previously planned.
Instead, E.I. premiums will only go up 5 cents per $100.
The government will also extend, by 16 weeks, the work-sharing program that gives employees the option of working less hours -- to help keep their employer afloat -- and receive EI benefits for the lessened hours.
The government says the cost will be about $600 million to its revenues.
Flaherty said it was important for the government to protect workers, but essential to keep the country's finances under control.
The Conservatives made a return to balanced budget in the 2014-2015 fiscal year an election platform.
"That remains our aim, when we identify the efficiencies we are seeking or have stronger growth, but we have to be flexible or pragmatic," Flaherty told reporters.
Despite the lowered predictions, Flaherty repeatedly praised Canada's economic performance, noting 600,000 jobs have been created since the recession ended in July 2009.
"Canada is the only G7 country, in fact, to have more than recovered both all of the output and all of the jobs lost during the global recession," he said.
NDP interim leader Nycole Turmel said the Conservatives aren't doing enough to invest in job creation.
"The only way to fight this recession is to create jobs," she told CTV's Power Play Tuesday.
Liberal interim leader Bob Rae slammed Flaherty as out of touch with economic reality.
"Given the uncertainties around the world and the challenges we are facing in this country I just found this speech to unbelievably self-satisfied and unbelievably complacent," he said on Power Play.
Rae will be making a speech on the economy Wednesday.
