The federal government should not turn off the taps on stimulus spending when it releases its budget later this week, the Canadian Centre for Policy Alternatives said Monday.

Prime Minister Stephen Harper, seen with B.C. Premier Gordon Campbell on Sunday, says work on Thursday's budget has focused on 'figuring out what are all the things we have to say no to.' , in Vancouver, British Columbia, Sunday, Feb. 28, 2010. (Jim Young/Associated Press)

In its annual alternative budget, the independent research group said the country needs continued economic support.

While the Canadian economy has returned to growth, "the human recession continues," said Bruce Campbell, executive director of the CCPA, which characterizes its policy stance as progressive.

"The best way to balance the budget is to focus on job creation," Campbell told reporters in Ottawa.

Canada's gross domestic product expanded by a better than expected five per cent annualized pace over the final three months of 2009, Statistics Canada said earlier Monday.

The country's unemployment rate for January stood at 8.3 per cent, down 0.1 percentage point from December.

"Canada needs a jobs plan because Canada is in a jobs crisis," said the centre's senior economist, Armine Yalnizyan, who said many full-time jobs have been lost in the recession, replaced by part-time and contract work.

In its six-point plan, the centre suggested $10 billion in reforms to employment insurance, along with more money for green technologies.

The group's plan foresees a $65-billion deficit for 2010-11, greater than the $56-billion shortfall the government expects to run for the 2009-10 fiscal year that concludes at the end of March.

The CCPA's alternative budget calls for cuts in defence spending, the introduction of a federal carbon tax by mid-2011, and changes to student financial support.

Finance Minister Jim Flaherty is due to bring down his next budget on Thursday. Flaherty is not expected to announce any new spending programs, but the government is likely to continue with the second year of its stimulus plan. The government has about $19 billion in stimulus money left to spend.

Prime Minister Stephen Harper said he and Flaherty "have spent more time together on this coming budget than on any budget — which will be our smallest budget — because we’re now in the business of figuring out what are all the things we have to say no to, instead of all the things we have to say yes to."

Speaking in Vancouver, Harper added: "That’s proven to be a much tougher exercise but one that does have to be done.… We’ll have lots of priorities in the longer term but we’re going to have to pursue them in a way that prioritizes very carefully and works within a constrained fiscal environment."

Liberal Leader Michael Ignatieff, meanwhile, said he's looking for a budget that aids in job creation.