Grading Tomorrow’s Federal Budget

To: Budget observers
From: Don Drummond and William B.P. Robson
Date: November 4, 2026

Re: Grading Tomorrow’s Federal Budget

The federal government is about to deliver a highly consequential budget. The government has talked a great deal about enhancing growth and about sound fiscal direction – and about big new spending programs. Here are the questions that will guide our assessment of tomorrow’s budget.

1. Does the budget promote growth?

Does the budget acknowledge the serious economic and fiscal challenges Canada faces, including weak productivity growth, Trump tariffs, global uncertainty, population ageing and climate change?

Is the budget based on optimistic economic assumptions that include rapid growth in the economy and in government revenues? Or does it feature more realistic projections that reflect the many risks and uncertainties? Optimism is a cover for not taking the bold action required.

2. Is the budget transparent?

Is the budget formally presented as a 2027 budget, or will the government claim that it is presenting a budget for 2026? We are more than half-way through the 2026/27 fiscal year. There is nothing wrong with presenting the 2027 budget well in advance, but the government needs to admit that it did not present a 2026 budget.

Does the budget bury key assumptions and fiscal variables hundreds of pages deep, or does it break with the past and put the key numbers where everyone can easily find and identify them?

Does the budget clearly distinguish between what is new and what is a regurgitation of announcements past, or does it muddle the two? In particular, does it tell us what proportion of the billions in recent spending announcements is incremental and how much was already set aside?

Does the budget finally reveal how much is being set aside for defence spending? We need to see spending under both cash (the metric for NATO commitments) and accrual accounting (how it is reflected in fiscal accounts).Do the budget projections show yet another step-up in the path for future spending? We have had more than five years of those. This budget needs to be more credible than its predecessors.

Is the government going to borrow far more than the deficit implies as it pushes more money out in loans, investments and advances? Lately the government has been levering its balance sheet, adding to interest costs and fiscal vulnerability in ways that do not show in spending and the bottom line.

3. Does the budget set a path to restore fiscal stability?

Does the budget demonstrate concern for the large deficits and heavy debt burden and show more serious efforts at restraint than the mild internal program review or does it argue the deficits and debt are not a problem?

Does the budget show a path back to a balanced budget? Experience has shown that weaker fiscal targets cannot stand up against temptation.

Does the budget project a fall in the ratio of federal debt to GDP in the near term, or is this key indicator of fiscal prudence going the wrong way?

Are there any sensible fiscal anchors or guardrails left, or does it continue with its fiction of an “operating balance” as a meaningful indicator of fiscal prudence?

4. Does the budget take the bold action called by the challenging times?

Does it introduce a thorough reform of taxation (at a minimum, following up on the 2025 election platform promise of a review of corporate taxation although it would be better to reform all taxes and tax expenditures) or does it instead offer populist gimmicks?

Does the budget commit to value-for-money reviews of all spending, or does it essentially take as a given the more than $500 billion of annual program spending?

A budget that scores well by these criteria holds out hope for a turnaround in Canada’s vicious cycle of disappointing growth and unsustainable fiscal policy. That is what we hope to see tomorrow.

Don Drummond is the Stauffer-Dunning Fellow and an adjunct professor at the School of Policy Studies at Queen’s University, and fellow-in-residence at the C.D. Howe Institute where William B.P. Robson is President Emeritus.

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The views expressed here are those of the authors. The C.D. Howe Institute does not take corporate positions on policy matters.