Prime Minister Mark Carney's government is not on track to meet its pledge to balance day-to-day operating spending with revenues by 2028-29 under the Parliamentary Budget Officer's assessment, prompting the Canadian Taxpayers Federation to call for spending cuts.The government's fiscal anchor calls for operating spending to be covered by revenues by 2028-29, after which borrowing would be reserved for capital expenditures. The PBO has previously identified that target as one of Ottawa's two fiscal anchors.“Based on the PBO-adjusted day-to-day operating balance, the government would not achieve its fiscal anchor of balancing operating spending with revenues by 2028-29,” the PBO said in its latest assessment.The finding comes after Carney said Sept. 15 that his government was ahead of schedule.“I can announce today that we are on track to balance the operating budget next year, one year ahead of schedule, while maintaining the lowest overall deficit in the G7,” Carney told the Canada Investment Summit.The Canadian Taxpayers Federation said the PBO findings raise questions about that pledge.“Carney is continuing on a course of unaffordable borrowing and the PBO report raises serious questions about the prime minister’s own promise to stop borrowing money to cover operational spending,” said CTF federal director Franco Terrazzano.“The reality is the government is borrowing tens of billions of dollars every year and taxpayers pay interest on every borrowed dollar.”The PBO has also questioned how Ottawa distinguishes capital spending from operating spending under its Capital Budgeting Framework. The government's framework separates expenditures into operating and capital components when measuring progress toward its fiscal anchor.According to the CTF, the PBO noted Ottawa's definition includes measures such as corporate income tax expenditures, tax credits and operating or production subsidies that would not be treated as capital formation under frameworks used in several other jurisdictions..The federal government's Spring Economic Update projects a $65.3-billion deficit in 2026-27, followed by deficits of $63.1 billion in 2027-28 and $57.7 billion in 2028-29. The government projects the deficit will decline to $53.2 billion by 2030-31.Federal public debt charges are forecast to reach $58.7 billion in 2026-27 and rise to $80.9 billion by 2030-31. Ottawa says debt charges will equal 1.7% of GDP this year, increasing to 2.1% by the end of the forecast period.The government maintains its finances remain sustainable, pointing to Canada's net debt-to-GDP position and credit ratings. The Spring Economic Update says Canada has the lowest net debt-to-GDP ratio in the G7 and is one of two G7 countries with AAA-equivalent ratings from Moody's, S&P and DBRS.Terrazzano said Ottawa should respond by reducing expenditures.“Carney needs to put down the credit card because taxpayers can’t afford to pay more than $1 billion every week to cover interest on the debt,” he said.“Instead of playing games with accounting labels, Carney needs to cut spending and debt.”
