Finance Minister François-Philippe Champagne told the House of Commons on Oct. 20 that he will table the federal budget on Nov. 5, "which will outline the next steps in our plan to build a stronger, more resilient and more affordable Canada," Hansard records. The same day, the Parliamentary Budget Officer projected a deficit of $63.3 billion for 2026-27, peaking at $70.2 billion the following year. Over the next five years, the PBO expects cumulative deficits of $333.3 billion, while federal borrowing rises by $732.9 billion.
The government uses an accounting method called accrual accounting. This means that a capital purchase is recorded as an expense spread across its useful life. A loan to a Crown corporation is recorded as an asset. So the cash Ottawa borrows for both never shows up in the year's deficit, even though it adds to the debt this financial year and increases the total debt servicing cost today. The PBO's outlook says this "obscures the realities of cash debt and raises questions about whether the current fiscal framework provides a complete and transparent picture of Canada's fiscal sustainability."
The Carney government has leaned heavily on this opaque practice. The Globe reports that it has created several large Crown corporations funded through government debt, including Build Canada Homes, the Canada Strong Fund and the proposed Canadian Corporation for Defence Investment. One of the most likely explanations is that money routed through a Crown corporation lets the government announce large programs while the deficit, and the anchors tied to it, barely move.
Those anchors were introduced in Budget 2025: a declining deficit-to-GDP ratio and a balanced operating budget by 2028-29. The PBO now projects the first will be missed, with the ratio rising in 2027-28 and again, marginally, in 2029-30. The second is projected to be met, with a $6.2-billion operating surplus in 2028-29. Its verdict on both was unusually blunt for an officer of Parliament: "On balance, the two fiscal anchors have imposed limited fiscal discipline on government spending and borrowing."
The spending record bears that out. New measures announced since the spring update cost an estimated $52.6 billion over five years, the PBO says, while improved fiscal room supplied only $37.4 billion. The largest is $36 billion for the Productivity Mega Deduction, alongside $7.5 billion in tariff support. As a result, debt-to-GDP rises every year in the PBO's projection, from 40.8 per cent in 2026-27 to 42.6 per cent in 2030-31. Public debt charges, which the PBO calls the fastest-growing federal expense, reach $83.0 billion by 2030-31.
The timing of the announcement is also worth noting. PBO published its outlook the same day the government set its budget date. Moreover, the budget date of Nov. 5 falls two days after the U.S. midterm elections. One reason may be that a budget tabled after the American vote can take account of any shift in U.S. political landscape.
Asked by Conservative deputy leader Melissa Lantsman whether the Liberals would "finally admit that it is time to reverse course and rein in spending," the minister replied with comparisons. "We have the lowest net debt to GDP in the G7. We have one of the lowest deficits to GDP in the G7. We are the only country, with Germany, in the G7 to have a AAA credit rating," Champagne said, according to Hansard.
The government has also said that fall budgets help provinces and municipalities plan. That may be true. Fall timing leaves the counting of borrowing unchanged. A budget that adds a debt-to-GDP target, or reports cash borrowing beside the deficit, would go some way toward answering the PBO.
The test arrives on Nov. 5. If the budget projects debt-to-GDP falling within its horizon, or publishes the government's borrowing requirement alongside the deficit, the PBO's concern will have been met in part. If it only adds new Crown-corporation lending and repeats the G7 comparisons, we will know which number the government would rather we watch.
With the dates set, we now wait and see what the government will put in the budget. Can we expect new Crown corporations, further growing the debt pile while obfuscating the numbers? Will there be some surprise fiscal discipline? Will spending surpass PBO's expectations? Will the midterm elections be the watershed moment the Liberal government has been hoping for to break the trade talk stalemate? We will find out on Nov. 5.
