The Liberal government is ending a long-held tradition of presenting a spring budget and will instead adopt a relatively new practice borrowed from the U.K. that will see all future budgets delivered in the fall, Finance Canada said Monday.
As part of the change, the government’s fiscal update will be moved from the fall to the spring.
The move is a part of the Liberal government’s new framework that will separate day-to-day operational spending from capital investments in the Nov. 4 budget.
Despite the separation, Finance Canada will still deliver one overall deficit number when the budget is delivered.
“By moving to a fall budget cycle and introducing a new capital budgeting framework, we’re making better-timed and more transparent decisions. This is how we’ll deliver generational investments,” Finance Minister François-Philippe Champagne said in a statement.
CBC News Chief Political Correspondent Rosemary Barton speaks to Finance Minister François-Philippe Champagne about the Liberals’ upcoming November 4th budget.
Government officials, speaking on background in a technical briefing, said a fall budget will help organizations that rely on federal funding to deliver programs by giving them a better idea of what funds they have before the fiscal year starts in April.
The change in schedule, officials said, will also help businesses prepare well in advance of construction season to get projects off the ground quicker.
Officials said releasing the budget well in advance of the spring main estimates means MPs can better oversee planned spending.
The new framework fulfils a promise made by Prime Minister Mark Carney during the last federal election campaign.
Officials explained that Finance Canada will remain fully compliant with public sector accounting standards as it divides the budget in two.
Operational vs. capital spending
Finance Canada said in a background document released Monday that “capital investment is defined broadly as any government expense or tax expenditure that contributes to public or private sector capital formation, held directly on the government’s balance sheet or on that of a private sector entity, Indigenous community or another level of government.”
The document explains that the intention is to focus on two types of capital expenditures: The first are situations where an entity receives funding from the government and is then required to invest it to create infrastructure or other capital assets; the second is when government spending “enables capital investment in identifiable sectors or projects.”
Finance Minister François-Philippe Champagne, speaking to reporters on Parliament Hill on Monday, discusses how the Liberal government will end a long-held tradition of presenting a spring budget and will see all future budgets delivered in the fall.
Spending that increases the country’s housing stock or pays off the cost of an asset over time would qualify as capital spending, as would tax breaks that give companies the incentive to invest in an asset, research and development or scaling up productive capacity.
“The way that the deficit is calculated and the way that the debt is recorded will be the same as before,” Champagne said later Monday. “It won’t change any of the baseline.… It’s just another lens.
“At a time when we say to Canadians that this is a generational moment, that we need to do generational investments, I think it’s only fair to go to Canadians and say this is what we are going to do.”
Champagne said his government is still on track to balance the operational spending on the day-to-day running of government in three years.
Budget will never be balanced: Conservative MP
After announcing the new framework, Champagne appeared before the House of Commons finance committee where Conservative MP Pat Kelly dismissed the promise to balance Canada’s operating budget by 2028-29 as a non-answer to his question of when the country’s finances will be balanced.
“I understand that you are distracting Canadians with accounting rule changes but I’ll give you one more chance to answer my question: when will the budget be balanced?” Kelly said.
Champagne responded saying there will still be an overall deficit number and that basic accounting principles are not changing.
Kelly accused Champagne of not answering the question and said he is “left to conclude that the budget will never be balanced by this government.”
Champagne defended his government’s spending commitments, asking Kelly if Canada should abandon its commitment to NATO to raise defence spending to five per cent of GDP. Kelly said he was not suggesting that, only that he wanted an answer on when the budget would be balanced.
“The answer is very clear,” Champagne said. “We are going to meet our NATO commitments. We’re going to invest in the sovereignty of Canada. Canadians understand the world is changing and we need to make these generational investments.”
Champagne said that as Canada invests in infrastructure, defence, housing and other areas to transform the economy in the wake of the U.S. trade war, his government has made it easier for Canadians to see what are operating expenses and what are generational investments.
