The Parliamentary Budget Office (PBO) has expressed approval of the Liberal government’s decision to shift budget day from spring to fall. However, the PBO has raised concerns about Finance Canada’s broad definition of capital spending announced recently. According to an analysis published on the PBO’s website, the change in the budget date will provide legislators with more timely and transparent information for scrutinizing expenditures, a move that the PBO has advocated for.
By moving the budget date, parliamentarians will have a better alignment between the budget and the main estimates, ensuring a more comprehensive federal spending plan before seeking approval for the new fiscal year’s funding. The main estimates, released in the spring, outline the planned spending for the upcoming fiscal year, subject to examination and approval by Members of Parliament to authorize government spending.
Former PBO Kevin Page, in an article for Policy Magazine, also praised the shift, highlighting that releasing the budget well in advance of the fiscal year’s start will assist businesses and other governmental levels in strategic planning.
Finance Minister François-Philippe Champagne announced the budget date change and outlined Prime Minister Mark Carney’s plan to separate day-to-day operational spending from capital investments in all future federal budgets. Despite maintaining a single deficit number in the budget, Champagne emphasized the clarity in distinguishing between operational and investment spending for better transparency.
While the PBO commended the government’s commitment to adhere to public sector accounting standards, it expressed reservations regarding Finance Canada’s expansive definition of capital expenses. Finance Canada’s definition of capital investment encompasses government expenses or tax expenditures that contribute to public or private sector capital formation, either held directly on the government’s balance sheet or on that of other entities.
The PBO highlighted concerns that the broad scope of capital spending, including corporate income tax expenditures and subsidies for production, may overstate the actual impact of federal spending on non-residential capital formation in the economy. Page also noted that segregating capital spending from day-to-day expenses would enhance transparency in federal finances but did not delve into the specific definition of a capital expense.