Prime Minister Mark Carney’s signature pledge to balance the “operating budget” by 2029 is too vague to evaluate and may do little to stop federal debt from rising, the Parliamentary Budget Office warned in a new report.Blacklock's Reporter says analysts said the government has not explained what qualifies as “operating” versus “non-operating” spending, leaving no way to judge whether recent policy decisions are aligned with its stated goal. “The government has not defined how the new operating budget targets will be measured,” wrote the Budget Office. “There is no commonly accepted definition of what is defined as ‘operating’ or ‘non-operating’ spending.”.The report said the government could meet its operating budget target while still increasing the federal debt-to-GDP ratio by borrowing heavily for capital projects such as military equipment. “This means the government could achieve its fiscal objective and yet be fiscally unsustainable,” analysts wrote.Carney has promised to reduce annual growth in operating spending from 9% to 2%, and in a March 23 media appearance said reining in spending increases would create fiscal room. “We’re going to get that level of spending increase down,” said Carney. “That in and of itself will create room.”.The May 29 Throne Speech laid out broad goals to cut costs by reducing waste, capping public sector growth, eliminating duplication, and modernizing operations through technology.In a February 25 leadership debate, Carney pointed to the 1995 Liberal budget as a model, citing its emphasis on outcomes over spending inputs. “The scale of the increase in spending and the scale of the increase in the public service hasn’t been matched by greater productivity in certain areas,” he said. “The focus does have to go to that.”.The 1995 budget reduced military spending by 15%, foreign aid by 21%, and dairy subsidies by 30%. It also cut 45,000 federal jobs, privatized CN Rail for $2.16 billion, and ended Prairie grain freight subsidies dating back to 1897.The Budget Office said if Carney wants his plan to anchor fiscal policy, Parliament will need more details. “Parliamentarians may wish to seek additional clarity regarding how the government plans to measure its fiscal anchor and how it will ensure federal finances remain sustainable,” analysts concluded.
