Report

The Government’s Operating Budget Fiscal Anchor

Sep 24, 2026

This note assesses the Government’s Operating Budget Fiscal Anchor.

Highlights

Budget 2025 announced two fiscal anchors – (1) balance operating spending with revenues by 2028-29 and (2) maintain a declining deficit-to-GDP ratio to govern fiscal management decisions within a stated strategy to “spend less to invest more”.
While Budget 2025 described the general components of the operating budget anchor, the lack of specific definitions to the initiative level constrained the ability to assess whether the anchor would function as a binding discipline on overall federal spending in practice or serve more as a directional guide as to high-level values for the government.
The Parliamentary Budget Office (PBO) requested and analyzed the detailed, granular components of the operating budget anchor and found that: The detailed classification of tax and spending items as operating versus capital within the Framework provides transparency as to how the government views the longer-term economic returns of specific initiatives, which informs the likelihood that they may be subject to future fiscal restraint to meet the anchor target. Attributions of certain tax or spending initiatives as operating versus capital appear contradictory and would benefit from a more formal methodology motivation.
PBO has released supplementary files with this study of granular attributions of spending items or tax expenditures as operating to inform which items the government may target to balance operating spending and revenues by 2028-29.