At the end of the first regular weekly cabinet meeting chaired by new Prime Minister Paul Martin, Finance Minister Ralph Goodale said: "We have taken immediate steps to find savings in the current fiscal year. We will take every step possible to ensure that we are able to provide the two billion dollars health transfer to the provinces and territories without going into deficit."

Goodale said the cabinet had ordered, in addition to the freeze on major new capital projects, a free on promotions within the civil service and a freeze on the total number of civil servants on the government's payroll.

Also, said Goodale, all cabinet ministers had been ordered to make a "detailed scrutiny of every expenditure that remains to be made in the next three months."

In a press release, the cabinet said: "In contrast to previous reviews, all government spending will go under the microscope. There will be no exceptions."

Talking to reporters, Goodale pointed out that the anticipated budget surplus for the current fiscal year was now about 2.3 billion dollars, just enough to cover previous promises to provide two billion dollars in new money to health care.

But the margin, he said, was "razor thin ... leaving just 0.3 billion dollars and that is in the margin of error."

The freeze announcement Tuesday, he said, "is about good management, about better management."

When the time comes, he added, to take specific projects off the freeze, it would be done "on a case-by-case basis."

Almost immediately, Defence Minister David Pratt said that one of the major capital projects that will get an early go-ahead will be a multi-billion dollar contract to replace Canada's aging Sea King shipboard helicopters.

TERRA.WIRE