By Kevin Page

October 6, 2025

Finance Minister François Philippe Champagne today announced changes to the timing and presentation of federal budgets, making fall budgets a permanent fiscal fixture and, as promised in the Liberal Party’s election platform, distinguishing between operational and capital spending allocation.

The tradition of fall economic statements will now move to spring.

The following points are important to note:

1. The separation of operating and capital-related spending is an important transparency improvement.

Try to find a line on ‘capital investment’ spending in a past budget or fiscal planning framework. You will not find it.

To assess the capital spending in the current budget framework you would need to look at the public accounts (capital amortization for federal assets) and search departmental plans (Infrastructure Canada, Industry, etc) for capital transfers to provinces, territories and municipalities, and look at the Department of Finance annual tax expenditure report to assess various tax credits related to investment). It is a mess.

In the new framework, Parliament, media and Canadians will get everything we had before … plus the new changes. It will be seen as a good practice with anticipated support from the OECD.

2. The separation of operating and capital related spending from a budgetary balance perspective is an important economic distinction.

From a macro-fiscal policy perspective, when the economy is operating near its potential, it is not a recommended policy to deficit-finance programs and services that will be consumed in the current year (old age assistance, EI, health transfers, child benefit, farm income assistance etc.). These types of programs should be funded from current revenues.

Capital investment is different. Deficit financing capital investment (federal laboratories, military equipment, trade corridor infrastructure, public transportation …) will accrue long term benefits for the young and future generations. Not all debt is the same. Young Canadians and future generations will mind less if they pay debt-interest charges on assets they can use and see versus the consumption of spending long gone.

Capital investment can and should be scaled to ensure the appropriate fiscal stance over short term and longer-term fiscal sustainability. We will need to see in the budget how capital investment will be planned (and constrained).

3. The separation of operating and capital spending in financial reporting will impact budgeting behaviour.

With the change in reporting and fiscal targeting, more government and public-servant attention will be given to capital investment in future budgets. As the Finance brief indicates, Canada has a weak-investment problem that is hurting productivity and growth.

4. The announcement of a fall budget is an important change to our financial cycle.

Over the past few decades, we have seen federal budgets tabled later and later — often after the start of the fiscal year. This has created alignment problems with the Main Estimates that provide Parliamentary approval for voted appropriations (departmental spending). Main Estimates were typically tabled before the budget and included (therefore) no budget measures. They were typically ignored by Parliament (other than the voting obligation) and media.

It is an OECD best-budget practice to table a budget a few months before the start of the fiscal year. With the fall budget announcement, Canada will reset and strengthen the financial cycle. We will have better alignment with the Estimates. Other levels of government will have a better planning environment because any upcoming changes to the tax base and federal transfers will be announced. Spending announcements on capital investment in the fall budget will have time to get Parliamentary approval before the start of the spring construction season.

A fall budget should be tabled after the public accounts are tabled for the previous fiscal year.

I am pleased that the government is using the long lead-up to the November 4 budget to provide planning and process announcements. In the weeks ahead, it would be helpful to Parliament and to Canadians to get a better understanding of the fiscal constraints being planned in Budget 2025 -— operating balance target timeline; planned capital deficit limits; other fiscal rules — on spending; on next year’s budgetary balance; on the use of contingency reserves.

Kevin Page is the President of the Institute of Fiscal Studies and Democracy at the University of Ottawa, senior fellow at Massey College, and a former Parliamentary Budget Officer. He is a Contributing Writer for Policy Magazine.