OTTAWA — Canada’s fiscal watchdog suggested to a parliamentary committee on Tuesday that Ottawa should need House of Commons approval to change or eliminate long-held fiscal targets, as the Carney government did just weeks ago.
Jason Jacques, the interim Parliamentary Budget Officer (PBO), told the Senate finance committee that Ottawa had used its debt-to-gross domestic product (GDP) ratio as one of its key “fiscal anchors” for the last three decades and that this government had described it as a key gauge for fiscal sustainability as recently as this fall.
But in early November, the debt-to-GDP anchor was thrown overboard.
In responding to a question from New Brunswick Senator Krista Ross, Jacques suggested that the federal government should need parliamentary approval for such a move, similar to what is required to raise the debt ceiling.
“It’s a change in fiscal policy which wasn’t discussed meaningfully on Parliament Hill,” Jacques told committee members. “It happened without any discussion.”
The interim PBO’s comments mark his latest criticism of the Carney government’s fiscal policy. The PBO, an independent officer who scrutinizes government raising and spending of tax dollars, told a parliamentary committee last month that there’s only a 7.5 per cent chance that the government will hit its target of reducing Canada’s deficit-to-GDP ratio over each of the next few years.
That, along with balancing the operating budget within three years, is one of the government’s two remaining fiscal anchors. The third, the debt-GDP ratio was dropped in last month’s federal budget.
John Fragos, a spokesman for Finance Minister François-Philippe Champagne, said the government is operating in line with international norms in that the government chooses its fiscal anchors, and then Parliament votes on budgets that reflect those anchors. In this year’s case, Fragos said, MPs voted to pass the budget bill.
Jacques, who has already established himself as a clear voice on federal finances in his three months on the job, earlier
described the government’s spending as
“stupefying,” “shocking” and “unsustainable.”
He also criticized the federal government in a report earlier this fall for using an “overly expansive” definition of investments that will help the government hit its first fiscal target.
The Carney government’s first budget, released last month, projected an average deficit of $64.3-billion between this fiscal year and 2029-30, more than double what was projected about a year ago in the 2024 Fall Economic Statement. The budget also forecast a deficit this year of $78.3-billion, the third-highest in Canadian history and the largest ever in a non-pandemic year.
In a report Tuesday, the PBO also said that the government’s
Build Canada Homes program is expected to lead to only 26,000 new Canadian homes over the next five years, which is a tiny fraction of what the government says is needed.
The federal Liberals’ vowed to increase house construction to 500,000 a year over the next 10 years during the federal election campaign earlier this year. That would mean more than double the number of housing starts compared to what is now expected for each of the next few years, and a level of residential construction not seen since the boom years following World War II.
Canada has been facing a housing crunch, caused by a number of factors. On the supply side, the key barriers include access to land in the right places, lack of skilled trades, and, of course, rising costs.
Scott Aitchison, the Conservatives’ housing critic, said the Carney government still has no plan to build the homes that were promised and criticized Build Canada Homes as unnecessary. “In fact, it’s making things worse.”
According to The Canada Mortgage and Housing Corporation (CMHC), a crown corporation that acts as the country’s national housing agency, the supply shortage will be with us for a while. CMHC recently forecast that the total number of housing starts this year will be about 237,800, down from 245,367 in 2024. Despite all of the attention on this issue, the agency also forecasts a drop to about 227,734 next year and 220,016 in 2027.
National Post
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