Ottawa’s budget watchdog doesn’t know if government has fiscal anchors

Interim Parliamentary Budget Officer Jason Jacques said he is not aware of any fiscal anchors set by the current federal government. Photo by Handout/Parliamentary Budget Officer

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Interim Parliamentary Budget Officer (PBO) Jason Jacques said he is not aware of any fiscal anchors set by the current federal government, according to testimony before a parliamentary committee on Tuesday.

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“I would say, officially within the office, I don’t know if the government currently has fiscal anchors,” said Jacques, in front of the government operations committee. “Which of course, causes the people I work with a considerable degree of concern at this point.”

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Jacques, who was appointed earlier this month as PBO on an interim basis, said the previous fiscal anchors set out by the government under former prime minister Justin Trudeau included capping the annual deficit at one per cent of Canada’s gross domestic product and a declining debt-to-GDP ratio.

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“It’s unclear where those stand, they haven’t been reiterated by the current government to the best of my knowledge,” he said.

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Prime Minister Mark Carney has promised a different approach to the upcoming federal budget, with operational and capital expenditures separated into two different budget categories. Carney has promised to balance the operating budget in the next three years by directing federal departments to find 15 per cent of savings during that period.

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Jacque’s predecessor, Yves Giroux, released a report this past summer, indicating there was no clear definition of the operating budget, which makes it difficult to determine whether the government is tracking to meet its own goals.

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“We haven’t seen a clear definition of what would fall into capital and would fall into operating,” said Jacques. “At this point it’s impossible for us and for you as Parliamentarians, to assess the likelihood or probability of the government hitting any fiscal target.”

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Carney has characterized the upcoming budget as consisting of “austerity and investment,” but on Monday, Government House Leader Steven MacKinnon said the deficit will be “substantial.”

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Economists’ forecasts of the deficit vary, with the Bank of Montreal estimating the budget shortfall could be as high as $80 billion, compared to the $48 billion last estimated for fiscal year 2024-2025.

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In recent months, the federal government has increased spending on defence and aid for trade-impacted sectors. Carney also cancelled counter-tariffs on U.S. goods that were estimated to bring in $20 billion in revenue.

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Jacques said his office will be releasing its latest economic and fiscal baseline projections next week, and that Canadians should expect a higher deficit.

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“The deficit will absolutely be higher, and the countervailing tariffs are certainly one part of that, the other part of that is additional spending,” he said.

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Jacques said he is waiting for the answers to his questions in the upcoming budget. Officials from the department of finance reached out to the watchdog’s office last week.

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“We had a very productive discussion, although a short discussion with them, with respect to some of their ideas around the operating and capital budget definitions,” he said.

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