The Liberal government will move to a fall budgeting cycle, a departure from the traditional practice of tabling the

federal budget

in the spring.

“Budgets in the fall is pretty much the norm, as opposed to the exception in the

G7

, because it really aligns better with the budget cycle that we see in a number of G7 countries,” said Finance Minister

François-Philippe Champagne

, during a press conference with reporters on Parliament Hill.

The change will also mean a fiscal update will be provided in the spring. The minister said this will provide more clarity for Parliamentarians, more predictability for businesses and provincial governments and will be better aligned with construction seasons.

The upcoming federal budget will also include one overall

deficit

number, despite the separation of operational and capital spending in its new capital budgeting framework, according to senior government officials.

“We are going to calculate the deficit, as it was presented in previous budgets, the same thing with the debt,” said Champagne. “But what we’re trying to do is to provide more transparency and more clarity for Canadians.”

On Monday, Finance Canada released further details on how operational and capital spending will be defined in the Nov. 4 federal budget.

Capital investment is defined as any government expense or tax expenditure that contributes to public or private capital formation.

The criteria for capital investment includes conditionality, which means the funding recipient is required to invest in capital formation to receive the benefit. The second criteria is clear linkage, which is whether the spending encourages or enables capital investment in “identifiable sectors or projects.”

Categories for capital spending would include capital transfers, which are transfers to other levels of government intended to be used for infrastructure or other productive assets, capital-focused corporate income tax incentives, amortization of federal debt, direct funding or tax incentives for private sector research and development, measures that grow the housing stock and contractual agreements with proponents that lead to large scale capital investments.

Operational spending as day-to-day is defined as transfers persons, health and social transfers and costs associated with running government operations, like salaries and benefits.

The Nov. 4 budget is expected to show substantial deficits. In its latest fiscal outlook, the office of the Parliamentary Budget Officer forecasted a $68.5-billion deficit for the 2025-2026 fiscal year, with the federal-debt-to-GDP ratio expected to remain above 43 per cent for the remainder of the decade.

Champagne said the government remains committed to balancing the operational side of the budget by 2028-2029. Prime Minister

Mark Carney

has tasked federal departments with finding 15 per cent of savings in the next three years.

Champagne was pressed on how the government plans to balance the operating budget, when there is only one stream of revenue.

“It will be balanced in the sense that by that time the revenues will cover the operating expenses,” he said.

  • If Ottawa needs to raise revenue, ‘overwhelming consensus’ is to use GST, businesses say
  • Moody: Expect the federal budget to deliver more political messaging, less real change

• Email: jgowling@postmedia.com