Ottawa, ON – Last week, the finance minister presented the Spring Economic Update, which continued the Liberals’ credit card budgeting that doubled the deficit that the previous Prime Minister left behind. Today, the Parliamentary Budget Officer (PBO) released a slate of reports that raise red flags about Carney’s budget.
The PBO continued their warnings about the Liberals’ abandonment of traditional definitions of capital spending, noting that there continues to be a lack of definitions for how spending fits into each category. This lack of clear definitions prevents the PBO from ensuring “that this fiscal anchor remains in balance.”
The lack of definitions has also prevented the PBO from determining if so-called capital spending is actually creating assets and evaluating if taxpayers ever receive a return on investment.
They aren’t the only ones sounding the alarm, with the IMF calling for the Liberals to adopt international accounting standards to “improve transparency, ensure comparability over time, and maintain a clear link between borrowing and the debt path.” The IMF has also “called for an independent mechanism to validate classifications and compliance.”
After the Liberals’ repeated abandonment of their fiscal anchors, the PBO further highlighted that their repeated increases in spending above previous estimates “can erode the credibility of fiscal plans and weaken confidence in the fiscal framework and raise concerns about long-term fiscal sustainability.”
They pointed to the “concerning upward track” of interest payments, which are expected to rise to 13.2 per cent of revenues – $80 billion – by the end of the decade. That’s an increase to $1,901 per person that will be spent annually just paying back bankers and bondholders. It’s no surprise that the IMF said the Liberals should restore the debt-to-GDP fiscal anchor to “strengthen discipline, transparency, and credibility” in Canada’s budgeting.
Meanwhile, there is a massive black hole in the government’s fiscal projections: defence spending. The latest Spring Economic Statement has no year-by-year account of defence spending, and the PBO estimates that meeting the Liberals’ commitment “would require core defence cash spending to reach $159 billion in 2035.”
This is not chump change as the PBO calculates that meeting our defence commitment would increase the annual deficit by $63 billion in 2035/36 – nearly doubling the deficit – and increase the debt-to-GDP ratio by 6.3 per cent. The PBO notes this represents “a material upside risk to the deficit and debt projections.”
It’s not the only area where the Liberals haven’t been forthright with Canadians. The PBO notes that the Major Projects Office has failed to publish “progress reports or approval‑timeline scorecards assessing performance against its two‑year mandate.” And there are still no details on savings from the Comprehensive Expenditure Review or an update on the reduction of bureaucrats.
The Liberals also had “no specific targets or metrics for the pace of homebuilding” in the Spring Economic Update, with the PBO pointing out that “since Budget 2025, housing starts in Canada have continued to lose momentum.” Despite allocating $13 billion on Build Canada Homes, they’re expected to add just 5,200 units a year, which the PBO says “would be insufficient to achieve the previously targeted pace of homebuilding.”
11 years of Liberal credit card budgets have delivered nothing but higher spending that has driven up the cost of living. Carney promised to be different, but his budgets show that he’s just another Liberal. Only Conservatives will put Canada back on track and restore affordable government so Canadians can have affordable lives.