Prime Minister Stephen Harper says he doesn't anticipate his government will make "drastic cuts" or tax increases in the coming budget.

Prime Minister Stephen Harper says transfers to provinces and territories in areas such as health care and education are 'protected.' (Graham Hughes/Canadian Press)

The prime minister, speaking at a forestry funding announcement on Thursday in Windsor, Que., insisted the government is not looking at cuts in transfers to provinces and territories for health care and education.

"We said those things are protected," he told reporters.

"It doesn't mean we won't have to make choices," Harper said. "There will be things that are reduced. But are we looking at drastic cuts? That's not the approach this government is taking."

Harper noted the vast majority of economic stimulus projects are winding down and the government must turn to reducing its roughly $56-billion deficit. But the prime minister did not rule out what he called targeted investments in creating new jobs.

He also would not reveal when Finance Minister Jim Flaherty would table the budget, saying only that Flaherty would announce a date when Parliament resumes on Jan. 31.

The prime minister's comments on the budget came after he announced a $25-million final instalment of a major investment with Montreal-based pulp and paper maker Domtar at its Windsor mill.

Harper's appearance was to be followed by other announcements across the country later Thursday in areas whose forestry operations were hit hard by the global recession and rising energy prices.