Carney's Early-Balance Claim Conflicts With the Budget Officer's Forecast
Prime Minister Mark Carney's claim that Ottawa will balance its operating budget a year early does not line up with the Parliamentary Budget Officer's forecast.
Carney told the Canada Investment Summit in Toronto that the government would beat its own timetable by a year. The 2025 budget promised to balance the operating budget — day-to-day spending on programs, wages and services — by 2028-29. Parliamentary Budget Officer Annette Ryan concludes balance will not arrive until 2029-30. That is one year late, not one year early. The Globe and Mail
The operating-balance promise was a central Liberal pledge in the 2025 federal election. In the 2025 budget it became one of two fiscal anchors, the formal limits a government sets for itself. The other anchor is a declining deficit-to-GDP ratio, which measures the shortfall against the size of the economy. The budget dropped an earlier anchor tied to a declining debt-to-GDP ratio.
Carney leads a minority government. His first budget doubled Canada's deficit, according to reports at the time. Ottawa put the proposed deficit at C$78 billion for the next fiscal year. Reuters
On a budgetary basis, the deficit has grown. In its Economic and Fiscal Outlook – June 2026, the Parliamentary Budget Officer projected the budgetary deficit would rise from $36.3 billion (1.2 per cent of GDP) in 2024-25 to $72.0 billion (2.2 per cent of GDP). Parliamentary Budget Officer The government's spring economic statement put this year's federal deficit at $65.3-billion. The federal government has not set a timeline to eliminate the federal deficit as traditionally defined.
Ryan's office is required to give Parliament non-partisan, independent analysis of the federal budget. Its latest report says Ottawa's plan rests on unclear and sometimes contradictory definitions. It calls the choice of what counts as operating or capital "subjective." Film tax credits are counted as capital while journalism tax credits are not. The Agricultural Clean Technology program is counted as a capital transfer while the Agricultural Climate Solutions program is counted as day-to-day operating, though both support farm-level investments.
The difference counts. Operating balance leaves out capital. Capital covers infrastructure, transfers for fixed assets and other items tagged as investment. Think of groceries versus a new roof. Both cost money, but only one sits in the daily budget. A dollar moved from operating to capital improves the operating balance with no change to the budgetary balance. The budget officer says that reclassification is at the centre of the disagreement.
The broader context here is how much weight such anchors carry in a minority Parliament. Ottawa has split day-to-day operations from investment, which leaves room for larger budgetary deficits while still claiming control over operations. The Parliamentary Budget Officer accepts the government's accounting for forecasting but disputes the timetable and the coherence of the split. The test is not only whether 2028-29 or 2029-30 turns out to be right. It is whether an operating rule built on movable categories can shape future choices on transfers, tax credits and capital spending. Without a plan for the budgetary deficit itself, the operating target is the government's main fiscal signal. If Parliament cannot easily check what counts as operating, that signal is weaker.
