DR. JACK MINTZ
President’s Fellow at the School of Public Policy,
University of Calgary

Canada’s new fiscal framework, unveiled by Finance Minister Carney, re‑classifies federal spending into operating and capital categories. The broadened definition of capital now covers not only traditional infrastructure but also research‑and‑development, provincial transfers, clean‑energy projects, housing initiatives and even certain “tax expenditures” that stimulate private investment. Because capital outlays are treated as investments, the government can borrow more while keeping net‑debt figures relatively unchanged – the additional borrowing is offset by a corresponding rise in “capital” assets.

However, analysts warn that this expansive view of capital risks obscuring the true fiscal position.  Without a stronger anchor – such as a clear gross‑debt‑to‑GDP ceiling – net debt metrics alone may give a misleading picture of fiscal health. Critics therefore recommend introducing a firm gross‑debt target (e.g., 30 % of GDP) to preserve credibility while the new framework enables higher investment spending.

In short, Carney’s redefinition aims to unlock greater borrowing capacity for priority projects, but its success hinges on accompanying rules that prevent fiscal opacity.

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