Now that Jack Layton and the NDP have decided they won't cut any more deals that will keep the Liberals in power, Monday's economic update has taken on increased importance.

Until recently, the Liberals' strategy had been to hold off on announcing its big economic plans until February's budget. The final Gomery report is due Feb. 1 and Prime Minister Paul Martin has promised to call an election within 30 days of its release.

Just a week ago, Finance Minister Ralph Goodale told reporters that "the time for significant measures is the time of the budget."

But now, with an election potentially looming in December of January, what would have been a run-of-the-mill, annual update on Canada's economic outlook and the likely size of this year's surplus, has become the Liberals' last chance to lay out the measures they would campaign on.

The Liberals have done this before. In 2002 when he was still finance minister, Martin turned the fall update into a mini-budget that promised $100 billion in tax cuts.

That's why the Finance Department is giving this economic update the full-fledged "budget" treatment -- journalists and opposition MPs will get a chance to review the update in a lockup, hours before it is publicly released.

The decision has got the Opposition up in arms. Tory finance critic Monte Solberg says the update will be nothing more than blatant electioneering and is calling on his fellow opposition MPs to try to block the update from being presented before the Commons finance committee.

Tax cut and productivity agenda

It's widely expected that Finance Minister Ralph Goodale's statement on Monday will pledge business and middle-class income tax cuts, noted CTV's Ottawa bureau chief Robert Fife on Canada AM Friday

"The finance minister wants to deliver a pre-Christmas present to all Canadians, big tax cuts coming in the form of lower and middle-income tax cuts, but the opposition say he's electioneering, he's politicking," Fife said.

Indeed, even if the Liberals are able to release a budget-style agenda, it's unlikely they would be able to pass any legislation before the election call.

If Monday's 'mini-budget' goes ahead, Goodale will likely tout a productivity agenda.

As has become typical in recent years, the Liberals have a big surplus to play with. The current estimate is that it will come in somewhere in the range of $10 billion to $12 billion.

Canada's lagging productivity has become a concern for the finance minister. Business groups and think-tanks have been warning for some time that Canada's sluggish productivity improvement is threatening the nation's prosperity.

In a nutshell, productivity measures how much a nation produces based on how much it needs – in labour, capital, equipment – to produce it. Simply put, if one company needs two factories and 1,000 workers to produce 100 widgets and another company can do it with one factory and 500 workers, than the first company is going to have trouble competing.

Productivity is a key to any nation's wealth, and with an aging population and social spending crunch coming, improving productivity is a key to Canadians maintaining their living standards.

Over the last decade, Canada has consistently lagged behind the U.S. in productivity improvement.

A recent report by the Conference Board of Canada found that Canada's productivity is stagnating, with a widening income gap between Canadians and Americans to the tune of more than $8,000 US per person. American productivity grew by 3.6 per cent in 2004 -- triple the Canadian rate.

As part of any productivity-boosting agenda, Goodale will likely promise a combination of tax cuts and increased infrastructure spending.

The Liberals might re-introduce corporate tax cuts, which is also a key plank of the Conservatives' platform.

Corporate tax cuts were included in the Liberals' last budget, but that plan was cut when they made a deal with the NDP to remain in power. Under the deal with Layton's NDP, social spending and foreign aid was instead boosted by $4.6 billion over two years.

Any new measures will also likely contain measures to improve education and skills training, infrastructure and technological research and development, all key drivers of productivity.

Big surplus again

The fact that the Liberals continue to run large budgetary surpluses will also likely be a bone of contention with the opposition parties.

Going back to the years when Martin served as Jean Chretien's finance minister, the Liberals have piled up a string of surpluses unsurpassed by any other industrialized nation.

During last fall's economic update Goodale announced that the $1.9-billion projected surplus for fiscal 2003-04 was actually $9.1 billion.

Critics charge that the Liberals deliberately underestimate the size of the surplus.  That allows them to plead poverty when the provinces come calling for cash, but then allows them to later pump extra dollars into high-profile announcements come election time.

The government responds by saying it has acted prudently in order to keep the country's books from falling back into deficit.

Because of that extra cash, the government, for example, announced last month that it would spend more than $500 million to help cushion Canadians from surging prices for home heating.

Other recent big spending measures have included:

• A deal to increase transfers to Ontario by $5.7 billion over five years
• A $4.6-billion boost in social spending that was part of Liberals deal with the NDP to prop up the minority government
• Between $3 billion and $4 billion to lift the standard of living of Canada's natives is expected to be announced later this month