New Budget Watchdog Says Fiscal Update Lacks Detail on Targets and Results

Parliamentary Budget Officer (PBO) Annette Ryan says the spring economic update that the government released this week lacks details on spending targets and specific objectives.

Testifying before the House of Commons government operations committee on April 30, Ryan said the document provides some metrics on the government’s progress, but “few mentions of risks and specific objectives.”

“The update instead introduced a range of new and rather undefined priorities, strategies, and general objectives that similarly would benefit from greater accountability, details on governance, and other aspects of planning,” Ryan said.

Ryan said the Canada Strong Fund announced this week is “a leading example from that list.” The federal government is contributing $25 billion to the new sovereign wealth fund, which will back major projects deemed of national interest. Finance Minister François-Philippe Champagne has suggested the money for the fund will be borrowed.

“I think that the announcement in the spring economic statement raised more questions than it answered,” Ryan said of the fund. “It would be helpful if the government could be more clear on what gap they’re trying to solve with this new agency that will have overhead and transparency questions.”

The April 28 spring economic update projected a 2025-26 fiscal year deficit of $66.9 billion, compared to the $78.3 billion forecast last year in Budget 2025.

The document announced new spending totalling $37.5 billion over six years, and the Liberals said nearly half of that would be to help with affordability for Canadians, such as the temporary suspension of federal taxes on fuel.

Ryan said while the update mentioned the government’s cost-cutting measures, it was “fairly limited in terms of the detail it provided.” She said it offered no estimates of savings in year one of its plan by department, “or by estimated reductions in full time equivalents or federal employment.”

Ryan said the government has not defined its second fiscal anchor of balancing revenues with operating spending.

“While the government has met its first fiscal anchor of achieving a declining deficit-to-GDP track in the spring update, it has yet to define its second fiscal anchor beyond a general commitment to balance operating spending with revenues,” she said.

Ryan said her office will publish a document early next week around the spring update, and she will hear from MPs in the next few days about the work she is doing and “the aspects that could be improved to ensure better accountability from the government.”

During her committee appearance, Ryan was also asked by Conservative MP Philip Lawrence about the potential for oil prices to remain elevated due to the war in Iran. Lawrence noted that the Bank of Canada said the previous day that this could lead to higher interest rates and slower economic growth.

“I think there is at least a reasonable probability of higher interest rates and potentially slower growth. If either or both of those events were to happen… would you have any concern about the sustainability of Canada’s finances?” Lawrence asked.

“Short answer, Mr. Lawrence, is yes,” Ryan said, adding that the PBO will put together models around what the federal government’s debt trajectory would look like under different scenarios, which they will soon share with MPs.