The federal government appears to be offering a few olive branches to the NDP in Tuesday's budget, with money to revive the home energy retrofit program as well as a boost to payments for senior citizens.

The government is putting $400 million toward the retrofit program, one of the key demands NDP Leader Jack Layton made to ensure his support for the budget.

According to Finance Department officials:

• the retrofit program will offer grants of up to $5,000 to make homes more energy efficient
• the budget contains a boost to the Guaranteed Income Supplement of up to $600 per year for a single senior citizen, and $840 for a couple
• the government will forgive $40,000 in student loans for doctors and $20,000 for nurses who choose to work in rural communities

Government sources said the budget also includes tax credits for volunteer firefighters, a $1,000 credit for small businesses to hire employees and a $500 tax credit for children's arts programs, CTV's Ottawa Bureau Chief Robert Fife reported Monday night. There will also be money for worker retraining, including apprenticeships in the construction industry for veterans.

"So for a government that is getting ready to eliminate a deficit and rein in spending, there seems to be a bit of money left over to buy some political goodwill," Don Martin, host of CTV's Power Play, told CTV News Channel Monday evening. "And we'll just have to see if it's enough to make Jack Layton happy."

On Monday, before the leaks began trickling out, Layton would only commit to reading the budget before issuing any pronouncements.

"We have a budget to study and I think that's what Canadians want us to do and that's exactly what we are going to do," he told reporters.

While the government, until Monday night, had kept a tight lid on the budget's contents, Finance Minister Jim Flaherty has said there will be some new spending items, in particular when it comes to job creation and economic stimulation.

However the main focus of the budget, Flaherty said on Monday in Ottawa, is to keep the country's economic recovery on track.

The Harper government's objective has been to return to a balanced financial ledger by 2015, after going into a record deficit as a result of the 2008 recession.

Rather than purchasing a new pair of shoes for the budget, as Flaherty has done in more prosperous times, the finance minister and Whitby-Oshawa MP had his shoes re-soled on Monday.

There's a good chance the Conservatives' fiscal plan will never be enacted, with the opposition parties likely to bring down the government and force a spring election.

The Liberals have called for the reversal of planned corporate tax cuts in the budget, an issue where Prime Minister Stephen Harper has said there's no room for compromise.

The Bloc Quebecois has demanded billions in funding for Quebec.

While Harper had shown little indication he is willing to bend on any of the parties' demands, Flaherty said recently that the opposition parties "will find that there are some measures in (the budget) that they would like."

When Flaherty delivers the budget on Tuesday it will be his sixth in a minority government situation.

Fiscal management 'not very interesting'

While Flaherty has promised nuggets for the opposition in Tuesday's budget, former TD Bank chief economist Don Drummond predicts the document will also include some detail on how the government plans to balance the budget after using its Economic Action Plan to spend its way out of the recession.

When they took power in 2005, the Tories continued the tradition of previous Liberal governments of increasing spending by roughly 6 per cent a year. When the recession hit in 2008, they ramped up spending into the double digits, which is "easy to do, kind of fun actually," Drummond told Power Play. "The hard part is pulling it back in."

"The hardest thing for any government is to maintain a period of restraint for as long as five years, which is essentially what they're doing. Imagine you get elected ... and you're told essentially all you're going to do is manage the ship fiscally for five years. Not very interesting."

Drummond thinks the Conservatives will bump program spending by a modest 2 per cent where they can, while health transfers, and payments such as Old Age Security and the Guaranteed Income Supplement for seniors, will rise by about 4 or 5 per cent. What this all means is that the government will have to cut spending by about 2 per cent per year to reach its deficit-reduction targets, Drummond said.

While the Liberals have hammered the government over a rolling corporate tax cut that was approved years ago, with Grit support, Drummond said the Tories are unlikely to roll it back.

"It's one thing to renege on one that's promised in the future, it's pretty hard to go back," he said. "Corporations relocated to Canada, they changed investment plans on the basis of the credibility of that promise. So it's hard to change it at this point."