'It's incredible that the same person who told us in November that Canada would have nothing but surpluses forever now acknowledges he's the $50-billion man,' says Liberal finance critic John McCallum. (CBC)

Finance Minister Jim Flaherty has "lost credibility" after announcing Canada's deficit will soar to a record level, Liberal finance critic John McCallum said Wednesday.

Flaherty announced Tuesday the federal deficit will reach more than $50 billion this fiscal year, more than $16 billion higher in 2009-2010 than he forecast in January's budget.

McCallum, a former chief economist at Royal Bank, said he warned Flaherty early last year against spending "drunkenly" during good economic times.

"Sadly, I'm afraid this serves to further undermine confidence in our finance minister at a time when Canada desperately needs competence and strength at the helm in this area," said McCallum.

"It's incredible that the same person who told us in November that Canada would have nothing but surpluses forever now acknowledges he's the $50-billion man."

In his November 2008 fiscal update, Flaherty projected balanced budgets and small surpluses through 2012-2013, but did warn economic uncertainty made it impossible to rule out future deficits.

"If he had come clean … then I think people would be more sympathetic," said McCallum. "I think he has lost credibility."

Stimulus spending stalled: Liberals

Wednesday also marks 120 days since the federal budget — a key date for the government's plan to stimulate the economy, said McCallum. According to the budget, "measures to support the economy must begin within the next 120 days to be most effective."

McCallum said the flow of money for stimulus projects has stalled.

"We have a flurry of announcements and money is only trickling out to shovel-ready projects to get people working," he said.

McCallum said a Liberal proposal to establish a national standard of eligibility to qualify for employment insurance at 360 hours will help pull the country out of recession.

"It's efficient stimulus to put money in the hands of unemployed people," he said. "We think this is a major addition the government must implement."

Liberal Leader Michael Ignatieff has said he's willing to try to bring down the minority Conservative government if it doesn't reform the EI system.

The government argues such a change would hike payroll taxes, adding the budget already provided an extra five weeks of benefits.

McCallum says the cost of creating a national eligibility standard is less than three per cent of the $50-billion deficit.

The Liberals can fall back on their record of deficit slaying, said McCallum, noting the former Liberal government eliminated a $40-billion deficit during the 1990s.

"Looks like we may have to do the same trick for a $50-billion Conservative deficit now," he said.