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 criticized Finance Canada’s broad definition of capital spending, stating it goes beyond international norms.
According to an analysis published on the PBO’s website, the new budget timing will offer legislators more immediate and transparent financial information for budget scrutiny, a change the PBO has advocated for. This adjustment aims to better align the budget with the main estimates, providing parliamentarians with a comprehensive federal spending plan in advance of the fiscal year’s commencement.
Former PBO Kevin Page, writing in Policy Magazine, also endorsed the move, emphasizing that releasing the budget in advance will aid businesses and other governmental levels in planning ahead.
Finance Minister François-Philippe Champagne revealed the budget date change, outlining Prime Minister Mark Carney’s strategy to distinguish between operational spending and capital investments in future federal budgets. Despite the consolidated deficit figure, the separation will clarify government expenditures for operational purposes versus those allocated for asset acquisition or investment.
While the PBO commended the government’s commitment to adhere to public sector accounting standards, it raised concerns about Finance Canada’s expansive interpretation of capital expenses. The document defines capital investment broadly to encompass various government expenses that contribute to public or private sector capital formation, either directly on the government’s balance sheet or that of other entities.
The PBO’s analysis questions the broad scope of the capital spending definition, stating that it potentially overstates the federal government’s actual contribution to non-residential capital formation. Although the separation of capital and operational spending is seen as enhancing transparency in federal finances, the PBO and Page have reservations about the specificity of the government’s classification of capital expenses.
