The Liberal government is ending a long-held tradition of presenting a spring budget and will instead adopt a relatively new tradition borrowed from the U.K. that will see all future budgets delivered in the fall, Finance Canada said Monday.
As a part of the change, the tradition of tabling a fall economic and fiscal update will be moved to the spring.
The move is a part of the Liberal government’s new capital budgeting framework that will also separate out day-to-day operational spending from capital investments in the forthcoming Nov. 4 budget.
Despite the separation, Finance Canada will still deliver one overall deficit number when the budget is delivered.
“By moving to a fall budget cycle and introducing a new capital budgeting framework, we’re making better-timed and more transparent decisions. This is how we’ll deliver generational investments,” Finance Minister François-Philippe Champagne said in a statement.
CBC News Chief Political Correspondent Rosemary Barton speaks to Finance Minister François-Philippe Champagne about the Liberals’ upcoming November 4th budget.
Government officials, speaking on background in a technical briefing on Monday, said a fall budget will help organizations that rely on federal funding to deliver programs by giving them a better idea of what funds they have before the fiscal year starts.
The change in schedule, officials said, will also help businesses prepare financially well in advance of construction season to get projects off the ground quicker.
Officials said the new schedule will increase transparency, as releasing the budget well in advance of the spring main estimates means MPs can better oversee planned spending.
The new capital budgeting framework that will see day-to-day operational spending accounted for separately from capital investments fulfils a promise made by Prime Minister Mark Carney during the last federal election campaign.
The officials explained that the way Finance Canada will account for the division of operational spending from capital investments will remain fully compliant with public sector accounting standards.
Operational vs. capital spending
Finance Canada said in a background document released Monday that “capital investment is defined broadly as any government expense or tax expenditure that contributes to public or private sector capital formation, held directly on the government’s balance sheet or on that of a private sector entity, Indigenous community or another level of government.”
The document explains that the intention is to focus on two types of expenditures: The first are situations where an entity receives funding from the government and is then required to invest it to create infrastructure or other capital assets; the second is when government spending “enables capital investment in identifiable sectors or projects.”
“The way that the deficit is calculated and the way that the debt is recorded will be the same as before,” Champagne said later Monday. “It won’t change any of the baseline.… It’s just another lens.”
“At a time when we say to Canadians that this is a generational moment, that we need to do generational investments, I think it’s only fair to go to Canadians and say this is what we are going to do,” he added.
Champaign said his government is still on track to balance the operational spending on the day-to-day running of government in three years.
Examples of this type of government spending include tax breaks that give companies the incentive to invest in an asset, research and development, or scaling up productive capacity.
Spending that increases the country’s housing stock or annual government spending that pays off the cost of an asset over time would also qualify as capital spending.
Despite the significant change to the public accounts that breaking out day-to-day spending and capital investment spending entails, government officials say it will remain clear what the annual budgetary deficit is when the budget is delivered.
