Carney and Poilievre both want to stop wasteful spending. But what would they cut?
The real debate is about what they would spend money on — and what they wouldn’t
It is an exciting debate for accountants.
Mark Carney, the presumptive favourite in the Liberal leadership race, says a government led by him would introduce a new budget "framework" that would "separate" the federal government's operating and capital budgets — drawing a distinction between spending that covers ongoing expenses for programs and services and spending that goes toward building and buying things like infrastructure, housing and military equipment. According to Carney, his government would aim to balance the operating budget within three years, while running a "small deficit" on capital spending.
Carney has likened this approach to the way homeowners pay their monthly bills while also investing to improve the value of their house. But expert opinion on Carney's proposed framework is at least somewhat divided — Kevin Page, the former parliamentary budget officer, told the Globe and Mail that it could allow for easier scrutiny of government spending, while Trevor Tombe, an economist at the University of Calgary, has come to the opposite conclusion.
Conservative Leader Pierre Poilievre is decidedly in the latter camp. He says Carney intends to "hide" a deficit and "cook the books."
Poilievre's latest rhyme is undercut somewhat by Carney's assurance that his government would also "reinforce the capacity and oversight function of the parliamentary budget officer" to scrutinize this new treatment of capital spending. But regardless, the next election isn't really going to be a fight over accounting practices ("accrual" is a hard word to chant at partisan rallies).
The real budget debate, if there is to be one, is about what Carney and Poilievre would spend money on — and what they wouldn't.
What would get cut?
While the rate of inflation has fallen over the last two years, Poilievre is still driven by the (debatable) premise that federal spending is driving inflation and should therefore be severely curtailed. In Poilievre's view, the federal budget is "broken." (Before she resigned as finance minister, Chrystia Freeland was often at pains to insist that Canada had the strongest balance sheet in the G7.)
Carney has not embraced Poilievre's broader premise. But Carney, a former senior official in the Finance Department, says the federal government has still been "spending" too much and "investing" too little. And both Poilievre and Carney believe that there is "waste" within government to be cut.
"A Mark Carney-led government's fiscal policy will focus first on reining in wasteful and ineffective government spending," the Carney campaign says.
"We will cut bureaucracy, consultants, corporate welfare, foreign aid and other wasted money," Poilievre said last week.
If there happens to be a secret file marked "waste" hiding somewhere in the Privy Council Office, the next prime minister will have a fairly easy time figuring out what to cast aside. Failing that, the task of further reining in federal spending might be easier said than done.
Carney says he would cap the size of the public service and aim to make the operations of government more efficient by "leveraging AI and machine learning." But Poilievre is correct when he says Carney has not identified any specific federal programs he would target.
Poilievre has identified a handful. He says he would cut the housing infrastructure fund and the housing accelerator fund (though it's unclear how much money will actually be left in the latter by the time a new government is in place). He would defund the CBC, shutter the Canadian Infrastructure Bank and "dramatically" reduce foreign aid.
A Conservative government would also reduce the size of the public service and its use of outside contractors (though those two goals might come into conflict with each other).
But it's not obvious that those cuts are enough to balance the federal budget — especially when Poilievre is also promising to reduce taxes. Poilievre has said Carney, whatever his accounting methods, will simply continue to run annual deficits. But Poilievre hasn't specified when he would balance the budget.
What would be spared?
Though Carney hasn't come forward with a list of programs he would eliminate, he has broadly suggested there are federal programs he's not interested in cutting.
"[We] absolutely have to keep in place the progress that the government has made on crucial things such as child care, on dental care and pharmacare, because that helps those who are most vulnerable," Carney said during Tuesday night's Liberal leadership debate.
According to a policy backgrounder released by the Carney campaign, "While we will review operating spending, transfers to individuals (e.g., pension and elderly benefits, employment insurance, child benefits, GST/HST credits and disability savings grants) and transfers to provinces and territories (e.g., equalization, Canadian Health Transfer, Canada Social Transfer and Territorial Formula Financing) will be maintained."
Poilievre has said Conservatives "don't want to cut transfers to people and provinces," but he has also cast doubt on dental care (which has now assisted more than a million applicants) and pharmacare programs (Manitoba just became the first province to sign on). He has also previously criticized the new federal school food program, which six provinces are now accessing.
These are not abstract questions — not just because transfers to individuals and provinces account for more than 40 per cent of all federal spending, but because the programs directly impact Canadians.
The debate over Carney's proposed budget framework is ultimately about clarity. Carney seems to think it will provide greater clarity about the federal government's spending. Poilievre vehemently disagrees.
But the real need for clarity is not about how federal spending will be accounted for, but what it will and won't be spent on.
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