The government could function without a budget, but will need a spending bill

Conservative Leader Pierre Poilievre says a government plan should include a budget, and says Carney’s government looks like the last 10 years.

Finance Minister Francois-Philippe Champagne said Wednesday that when Parliament resumes, the government will put forward a middle-class tax cut, deliver a throne speech and release a fiscal plan in the fall economic update.

Absent from that plan, was the traditional federal budget to start the fiscal year.

Conservative Leader Pierre Poilievre said Thursday the lack of a federal budget sends “a bad signal” to investors and credit rating agencies.

While the budget document itself is a fiscal plan outlining the government’s spending plans, it is always followed by a budget implementation bill that authorizes the government to spend money to keep government departments running.

This includes central agencies like the Defence Department and Canada Border Services Agency, plus Crown corporations such as Canada Post and Via Rail.

Here’s a closer look at how that can happen without formal budget documents.

Where do government departments get their operating funding without a budget?

Since the House of Commons has been prorogued since January, MPs have not been around to authorize any government spending.

The government’s fiscal year began on April 1, but government departments didn’t suffer an American-style shutdown due to a lack of funding. This is because cabinet approved a special warrant to authorize about $40 billion to keep a host of government departments running. This first warrant expired May 15.

A second warrant worth $33 billion was approved by cabinet on May 2 to fund government operations until June 29.

The House of Commons reconvenes on May 26 and cabinet will no longer be able to authorize this kind of spending unilaterally.

Kevin Page, who was Canada’s first Parliamentary Budget Officer, said MPs will have to vote on further spending.

“Basically the government has no authority to spend right now as of July 1st. So they’re going to need some supply bill that gets them through another significant part of 2025-2026,” Page said.

Supply bills are what MPs vote on to approve or deny government funding.

Page estimated the government would likely need $500 billion in spending authority to get through the remainder of the fiscal year.

How can MPs vote on this without a fiscal plan?

Page said that he expects the government will share some kind of fiscal outlook before the House rises next month.

“If the government says, ‘well, we’re not going to give you that, just give us those appropriations,’ that’s not really fair to Parliament. Parliament deserves better,” Page said.

He added it doesn’t have to be a full budget, but could be as simple as a projection on what the government believes the debt and deficit will be at the end of the fiscal year.

“The (Parliamentary Budget Officer) deficit that they projected, which was the baseline deficit for the party platforms, was about $42 billion for 2025-26,” Page said. “That was based on an assumption that growth would be over 1.5 per cent. We’re probably looking at growth at least half that amount, maybe even less. And so, the deficit’s going to get bigger.”

Prime Minister Mark Carney campaigned on a pledge to balance the operating budget within three years, while tracking capital spending separately. This is a break from traditional federal government accounting, which combines the two.

The Liberals’ costed platform outlined $35 billion in new spending.

Page said he worked with Carney briefly at the Finance Department and said the prime minister took protocol around the financial cycle seriously.

“(Carney) didn’t invent forward guidance when he was at the Bank of Canada, but he was a big on ‘you’ve got to tell people what they should expect’ in this environment, even in a crisis,” Page said.

Is the uncertainty around American tariffs contributing to the lack of budget?

Page said that U.S. tariffs changing “almost daily” does make for a challenging environment to make a plan, but it can be done.

He said this has been demonstrated by the Bank of Canada, which has been issuing regular monetary policy reports on the effect of tariffs since January. Each of these reports contain a few different scenarios on how tariffs could affect the economy.

Private sector economists have been issuing their own tariff-related economic projections too.

Page said he sees no reason the government shouldn’t be able to provide its own outlook before the House rises for the summer.

“This is not like we’re betting on are the Oilers going to win the Stanley Cup? It’s just sort of like, ‘OK, what should we plan for?’ And I think you probably do need different scenarios, but Parliament needs to be apprised of that,” Page said.

So why isn’t the government tabling a spring budget?

When Champagne spoke to reporters about the government’s plan Wednesday, he did not provide a concrete reason why the government is holding off on tabling a spring budget.

Page suspects the relative newness of Champagne leading the finance portfolio is a contributing factor to the delay in tabling a budget.

Champagne only became the finance minister on March 14, and the election campaign began just over a week later.

“Not a lot of time has elapsed for the finance minister to really wrap his head around his game plan for the next month and then the fall,” Page said.

“I could imagine finance officials, of which I was one many years ago, saying ‘we’re not in a position to get a budget out before the summer break.”’

This isn’t the first time a budget has been delayed following an election.

The 2001-02 budget was not tabled until December 2001, deep into the third quarter of that fiscal year.

The Liberal government at the time released a “budget update” that covered much of the 2001-02 fiscal year.

That budget faced further delays after the Sept. 11, 2001 terrorist attack on the World Trade Center, and adopted a new national security focus.

The last time a spring budget was not tabled was in 2020, due to the COVID-19 pandemic.

Written by David Baxter