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OTTAWA — The Business Council of Canada says Canada is in an “investment crisis” but warns prosperity can’t be achieved by taking on more debt.
In a letter to Prime Minister Mark Carney, the council’s president and CEO Goldy Hyder said if the federal government intends on financing investment by incurring more debt, then it better have a plan to bring it down.
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“We recognize the difficult starting point and the need for upfront investments, but that should be underwritten by meaningful year-over-year reductions in the absolute deficit,” Hyder wrote, saying at the very least the government should halve this year’s deficit within three years.
The council’s submission is one of nearly one thousand the government received in recent weeks, ahead of the Liberals’ budget tabling on Nov. 4.
A projection by the Interim Parliamentary Budget Officer last week warned the federal deficit could jump to $68.5 billion this year, up from an estimated $51.7 billion last year.
In his letter, Hyder urged Carney to keep spending in check.
“Spending control also means no new unfunded permanent programs. Any ongoing spending increase should be matched by permanent savings or an identified revenue source,” Hyder wrote, noting the government should hold spending growth below nominal GDP growth.
“Priorities need to be traded off, not layered on top of each other.”
Hyder also warned against the government’s plan to split operating and capital budgets — with the latter classified as anything which builds an asset, versus government salaries and social security payments, for example.
The Liberal party election platform called for such a change, pitching it as a way to “create a more transparent categorization of the expenditure that contributes to capital formation in Canada.” It also said it’s how other countries, like the United Kingdom, does it.
In his letter, Hyder disagreed.
“Experts caution it is unnecessary and risks being used to relabel current spending as ‘investment,'” he wrote.
“If the government proceeds, it must be governed by clear, public definitions and an independent oversight mechanism to maintain credibility.”
The council also conducted a survey over the last month and a half of its members, economists, policy experts and former senior officials. They almost unanimously agreed the government needs to have fiscal anchors in place to ensure political discipline and force trade-offs for new spending.
A fiscal anchor is a guiding principle governments can point to in their budgets to show they’re prudently managing public finances, particularly debt.
“Both BCC members and experts reject simplistic rules, strongly favouring a dashboard approach that provides a complete view of fiscal health, rather than judging a budget based on one fiscal anchor,” read a report on the survey.
“Members strongly preferred a combination of rules rather than a single one based on any individual metric.”
Most respondents cited the need for a debt-to-GDP ratio that’s either on a stable or declining path in the medium-term, while a vocal group stressed the need to keep debt-servicing costs in check. Others called for balanced budgets.
The previous Liberal government under former prime minister Justin Trudeau set an anchor of capping the annual deficit at one per cent of GDP and maintaining a declining debt-to-GDP ratio.
The PBO report last week forecasted Ottawa will blow past those anchors in the upcoming budget, with an expectation the federal debt-to-GDP ratio will no longer decline in the coming years.
Interim Parliamentary Budget Officer Jason Jacques told a parliamentary committee last week it was the first time in 30 years he has seen a projection where the key metric rises over time.
The Liberal election platform promised to balance the operating budget by 2028, and ensure the government debt-to-GDP ratio declines over the budget horizon.
This report by The Canadian Press was first published Oct. 1, 2025.
— With files from Craig Lord
Nick Murray, The Canadian Press
