Budget watchdog says little chance the Liberals will meet spending goals
The Carney government’s spending promises are misleading Canadians, according to the Parliamentary Budget Officer.
The Carney government’s spending promises are misleading Canadians, according to the Parliamentary Budget Officer, who now says there is a “low probability” the Liberals will stay within their own fiscal rules.
Despite Ottawa establishing its key long-term benchmarks only several months ago, Jacques told a parliamentary committee that there’s only a 7.5 per cent chance the government will be able to actually reach them.
“Based on the analysis we’ve conducted, there is a low probability of respecting the fiscal anchors the government has set out for itself,” Jacques told the House of Commons’ Government Operations and Estimates Committee on Thursday.
One of the Liberals’ targets is to annually reduce Canada’s deficit-to-gross domestic product ratio over the next few years. Another is to balance the operating budget within three years, while the last is to decrease the deficit-to-gross domestic product over that same period.
However, the government walked back its debt-to-GDP target in its latest budget. John Fragos, a spokesperson for Finance Minister François-Philippe Champagne, said the “fiscal anchors” must “reflect the balance between fiscal prudence and the macroeconomic reality.”
The budget, which passed in the House of Commons last week, will increase spending on infrastructure for the artificial intelligence sector, as well as energy and critical mineral industries.
Jacques has been an outspoken critic of the Carney government’s precarious accounting techniques. He recently caught the Liberals trying to hide billions in operating costs by burying them in the capital budget.
The Liberals’ Budget 2025 introduces a new split between “operating” and “capital” spending, with a promise to balance the operating budget by 2028-29.
However, the interim PBO published a report last week calling the government’s definition of capital investments “overly expansive,” saying it includes spending not considered capital formation under well-established international frameworks.
“Capital investments would total $217.3 billion over 2024-25 to 2029-30—approximately 30 per cent ($94 billion) lower compared to Budget 2025. Moreover, based on PBO’s definition, the day-to-day operating balance after new measures would remain in a deficit position,” the report states.
It also suggests the Liberals would run an $18-billion operating deficit by 2028-29.