Budget watchdog calls for more transparency after Liberals shift fiscal anchors

The government’s new metrics for demonstrating fiscal prudence include balancing the operating side of the budget in three years — after it split capital spending into its own category — and charting a declining path for the deficit-to-GDP ratio.

Jacques said those changes were introduced just six weeks before the budget was tabled and marked a significant departure from one of the previous anchors, which committed the government to shrinking the debt-to-GDP ratio.

John Fragos, press secretary for Finance Minister François-Phillipe Champagne, said the Liberals have been candid since the spring federal election about their plans to shift the budgeting approach to focus on capital investment, and the new framework was presented to parliamentarians with enough lead time.

“We’ve been decidedly transparent and forthcoming in disclosing our plan to spend less so we can invest more in the projects, programs and infrastructure that grow the economy all while exercising fiscal prudence,” Fragos said.

Jacques’ Nov. 14 analysis of the federal budget tabled 10 days earlier found the Liberals were expected to maintain long-term fiscal sustainability thanks to a flat-to-declining debt-to-GDP ratio over a 30-year horizon.

But Jacques argued the Liberals were using up their fiscal powder and the government would be less able to absorb new shocks in the future. He suggested the government would likely blow past its goal of a declining deficit-to-GDP ratio and would be a year late hitting its goal of balancing the operating budget.

While definitions of debt and GDP are clearly spelled out by independent sources, Jacques said the Liberals should create an oversight body to ensure the government is adhering to its own new benchmarks for capital spending — a practice followed in other jurisdictions that separate capital and operating budgets, such as the United Kingdom.

The budget officer compared Ottawa’s current setup to his 17-year-old son deciding what his homework assignment should be and then marking it himself.

Fragos said the government is not currently considering setting up the kind of oversight Jacques is suggesting.

To back up the government’s financial decisions, Fragos pointed to comments from former PBO Kevin Page and IMF managing director Kristalina Georgieva supporting Ottawa’s decision to tap its relatively stable fiscal position and run deeper deficits in the face of economic disruption.

The federal budget, which recently passed by a slim majority in the House of Commons, projects a jump in the deficit to $78.3 billion for this fiscal year and average deficits of more than $60 billion over the five-year planning horizon.

The Liberals say they’ve found roughly $60 billion in operational savings and efficiencies over that time frame to help fund new capital investments.

Jacques has previously criticized the government’s capital definition as “overly expansive” because it includes things like tax expenditures that encourage capital formation from other levels of government or the private sector but do not go toward creating assets directly.

He argued in his analysis that, under his office’s stricter definition of capital investment, the Liberals’ deepening deficits are instead being driven by new operating spending.

On Monday, Jacques told MPs that tax breaks can indeed indirectly encourage capital investment, but it’s harder to draw the connection between the spending and the asset.

“The further you stretch the relationship between … the spending and what is considered investment, the harder it is to actually identify or determine whether it’s actually a capital investment or not,” he said.

Jacques, a veteran of the budget office, was appointed to a six-month term as PBO in September. The government has issued a posting for a permanent PBO under the list of governor-in-council appointments on its website.

That appointment process was the subject of a motion following Jacques’ appearance at the standing committee on government spending and operations last Thursday.

During that meeting, Conservative MP Kelly Block moved a motion amended by the Bloc Québécois asking the Prime Minister’s Office to submit a shortlist of candidates for the permanent PBO position to the body’s subcommittee, which would then come back with a unanimous, cross-partisan recommendation for the post.

Though that motion passed, PMO spokeswoman Laura Scaffidi told The Canadian Press on Monday that the office does not feel bound by the direction.

She pointed to the rules for appointing officers of Parliament, which say that a new PBO must get approval in the House of Commons and Senate following consultation with all party leaders.

“We thank the committee for their recommendation and, as with all recommendations, we will take it into consideration. With respects to all appointments, we will follow the statutory requirements under the Act,” she said in a media statement.

This report by The Canadian Press was first published Nov. 24, 2025.

Craig Lord, The Canadian Press

by The Canadian Press

Budget watchdog calls for more transparency after Liberals shift fiscal anchors

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