Expect an election-year budget from the Conservative government this afternoon that even takes some ideas from the Liberals, says CTV's Ottawa bureau chief.

"They're looking at urban Canada and particularly vote-rich Ontario," Robert Fife told Canada AM on Tuesday about the Tories' strategy.

"What you're going to see are some measures to help the auto sector ... There's going to be money for job creation in terms of infrastructure, targeted largely to Toronto, Montreal and Vancouver."

The Tories found themselves shut out of Canada's three largest cities in the Jan. 23, 2006 federal election, leading in part to a minority government.

Fife said the Tories have stolen some of those ideas from the Liberals, "including a plan to make permanent a gas tax transfer to the municipalities."

The auto industry will get a $200-million fund to help manufacturers write off the cost of new machinery and equipment. The infrastructure fund is expected to be called Build Canada, and will be worth $500 million.

Some other areas of spending could also include:

• A working tax credit to keep low-income Canadians in the workforce;
• More money for science and technology;
• Training more scientists;
• Setting up a carbon capture project in Alberta's oilsands; and
• Money for cleaning up lakes.

Although the Conservative campaign team wants an election, neither Prime Minister Stephen Harper nor Liberal Leader Stephane Dion want to go to the polls, he said.

Harper has taken some Liberal ideas to make it even less likely that the Grits will vote down the budget, Fife said.

Conservative strategist Ezra Levant says the prime minister will show in this budget that he's a "prudent, responsible manager."

You're not going to see a lot of spending, but ... I think you'll see some smart moves on how Canadians can invest their own money, maybe some changes to capital gains taxes or RRSPs," Levant told CTV's Canada AM. "And I think that will have a greater stimulus effect far better than the government throwing cash around."

Recently, the Conservatives have tried to paint Dion as a spendthrift who would plunge the country back into deficit. Last fall, during the government's economic update, the Tories announced tax cuts totalling about $60 billion over five years, including a one percentage-point cut in the Goods and Services Tax.

Levant said he suspects Harper is more eager to go to the polls than Dion. "He (Dion) is probably smart," he said, adding it could benefit the Liberals if the economy is softer six to 12 months from now.

Prudence

The government is expected to announce a surplus of $13 billion for the 2007-08 fiscal year, up from a previous estimate of $11.5 billion.

Jane Taber, a Globe and Mail political writer and co-host of CTV's Question Period, told Canada AM that the higher surplus will give Finance Minister Jim Flaherty a bit more room to manoeuvre.

"All we've heard for the last couple weeks from the Tories who have come on (Question Period) is that 'this is going to be a prudent budget for uncertain times,'" she said.

The Liberals, based on the leaks they've heard, have decided they will not defeat the budget, Taber said.

To prevent the budget's passage, all three opposition parties would have to vote it down -- an act of non-confidence that would almost certainly trigger an election.

Flaherty will deliver his budget at 4 p.m. ET today in the House of Commons.

"People ought not to expect any big spending items because we have to stay within our means and be prudent and fiscally responsible, which we will be tomorrow," he told reporters on Monday.

But he did admit there would be some good-news surprises in the document.

Canada's economy is expected to slow somewhat this year. On Monday, the International Monetary Fund predicts economic growth of 1.8 per cent in Canada in 2008. Last fall, the IMF predicted 2.8 per cent growth for Canada this year.

Statistics Canada reported Tuesday that the number of people receiving Employment Insurance went up in December for the first time in five months.

BNN's Michael Kane told Canada AM that the budget will come out after the stock markets close, so investor reaction to the budget will become known on Wednesday.