OTTAWA - The federal government is rolling in enough cash to be able to toss the penny in the garbage. It'll save a few more bucks on pink slips, because the threatened axe to the civil service is a mere swipe with a butter knife.

And it has decided not to build any prisons, saving millions more.

Updated figures show the government will erase its red ink by 2015-16 -- a year later than promised in the election -- after this year's projected $31-billion deficit landed at $24.9 billion.

And rather than putting the brakes on spending, the feds will spend more moving forward, when the total price tag - including transfers - will reach $261.7 billion in 2015-16, up from $241.9 billion in the fiscal year that ends Saturday.

Canada's debt-to-GDP is forecast to drop to 28.5% by 2016-17 - similar to pre-recession levels after the 2008-'09 financial meltdown.

In a budget that did not present the Doomsday scenario promoted by opposition MPs and public-sector unions, Finance Minister Jim Flaherty's liberal blueprint was adorned with shiny objects only a bureaucrat could have polished.

Thursday's budget was one of consolidating and streamlining and eliminating duplication to save money - from the way grants are doled out to sharing administrative functions to selling vehicles and foreign properties to better use of technology to replace people.

The bureaucracy dodged a chainsaw assault from a government that shied away from an $8-billion withdrawal - opting instead for $5.2 billion in annual savings by 2016-17 from the $75.3 billion spent on programs. That's about 6.9% of spending.

The government says it can achieve some of those savings by laying off 12,000 workers over three years in a civil service that swelled by about 33,000 since the Conservatives took office in 2006. Another 7,200 positions will vapourize over the same period, mostly through attrition. Roughly 400,000 people work for the feds.

In total, the government workforce will be reduced by 4.8% compared to the 7.4%, or 600, executive positions that will also be scratched.

"The vast majority of savings will come from eliminating waste in the internal operations of government, making it leaner and more efficient," Flaherty said.

The Canadian Taxpayers Federation panned the budget as a lost opportunity for its failure to rein in spending and reverse runaway growth - conservative mantras.

"Spending cuts announced today are a drop in the bucket," the CTF's Gregory Thomas said.

Flaherty said a number of innovative measures will save money, including using video and teleconferencing to replace expensive travel, posting more documents online to save printing costs, and stopping production of the penny altogether.

Every government department and agency will see a decrease in spending by 2014-15 -- from a low of 1.1% at Veterans Affairs to a high of 16.8% at Finance.

And jittery premiers can turn their sights on their own fiscal houses now that Flaherty promises not to cut to transfers to the provinces. In fact, they will rise.

And to charities that rake in foreign funds for political attacks on projects such as the Northern Gateway pipeline, tax laws will be amended to give the Canada Revenue Agency new powers to audit and to levy tougher sanctions against a growing list of abusers.

The government hopes to raise about $80 million by selling some of its official residences abroad, saying modest quarters will require fewer diplomatic staff.