Prime Minister Mark Carney’s government is facing fresh criticism for what the Canadian Taxpayers Federation (CTF) calls a deliberate attempt to “distort the financial picture” by changing the definition of capital spending in the federal budget.

PBO sounding the alarm.

Government expanding the scope beyond current treatment of capital spending. It’s “overly expansive and exceeds international practice.”

Counting more spending as capital will allow the government to paint a rosier picture of its operating budget. pic.twitter.com/GfAxGCkhsY

— Franco Terrazzano (@franco_nomics) October 7, 2025

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According to a new Parliamentary Budget Officer (PBO) analysis, the Department of Finance has expanded the definition of “capital” expenditures beyond international norms — a move the watchdog says “exceeds international practice such as that adopted by the United Kingdom.” The change effectively allows Ottawa to reclassify certain spending as “investment” rather than day-to-day costs, making the books look healthier than they are.

“The PBO shows the government is inappropriately expanding the definition of ‘capital’ spending,” said Franco Terrazzano, CTF Federal Director. “The reality is taxpayers need to cut through Carney’s budget spin and look at one number: how fast the debt is going up.”

The federal government announced earlier this year that future budgets will separate operating and capital spending, releasing new criteria for what qualifies as capital. But the PBO warned that the new framework could allow the government to mask the true size of its deficit and debt growth.

Terrazzano accused the Carney government of “acting fast and loose” with accounting categories.

“Handing out corporate welfare shouldn’t be considered capital,” he said. “Regardless of the label, more debt means more interest payments — and taxpayers are the ones stuck with the bill.”

The PBO’s Economic and Fiscal Outlook projects this year’s deficit will jump to $68.5 billion, with debt-servicing costs hitting $55.3 billion — roughly $1,300 per Canadian.

“The government is trying to muddy the water with its accounting nonsense,” Terrazzano added. “Instead of cutting the numbers, the Carney government should be cutting the debt.”