Finance minister François-Philippe Champagne, left, and Prime Minister Mark Carney present the federal government’s spring economic update in the House of Commons in Ottawa on April 28, 2026.Sean Kilpatrick/The Canadian Press
There is a thought experiment in physics, called Schrodinger’s Cat, where a (strictly theoretical) feline is placed inside a box. According to the precepts of quantum mechanics, until the box is opened, it’s not possible to tell whether the (again very theoretical) cat is alive or dead. So it is both: a dead cat and a live cat.
The Liberal government seems intent on replicating Schrodinger’s Cat on a fiscal scale, with its spring economic update. In a single document, there are two very different fiscal realities.
In one, there are relatively modest outlays on defence, and a winding down of various Trudeau-era social spending commitments. In that reality, the deficit declines ever so gradually through to the end of the decade.
In the other, the Liberals do fulfill their pledge to boost defence spending to 5 per cent of gross domestic product by 2035. They do not scrap the limited pharmacare program and supplemental health care funding. In that reality, the deficit would be unlikely to decline, breaching the fiscal rule of a falling deficit-to-GDP ratio that the government currently boasts of meeting.
So what will Canadians find when they finally get a chance to look inside the black box of future federal budgets?
A clue can be found in a recent report from the newly installed Parliamentary Budget Officer, Annette Ryan, on the update. In it, the PBO raises questions about how much of the defence bill is showing up in the budget numbers.
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The PBO measures the cost of the full 5-per-cent pledge, which is made up of 3.5 per cent of GDP of core military spending and an additional 1.5 per cent of GDP on security-related infrastructure.
Last year, the Carney government boosted defence spending to 2 per cent of GDP, from 1.43 per cent the year before. Beyond the commitment to the 2035 goal, the Liberals haven’t said much on how they will reach the much higher target.
“It is unclear” whether that full cost of meeting the 5-per-cent goal, $63-billion by fiscal 2036, is reflected in the government’s fiscal plan, the PBO states, adding that represents a “material risk” to deficit and debt projections.
The Carney government has been studiously vague on the question, and continued that pattern when asked if additional defence expenditures would be needed to hit the goal. A response from the Finance Department noted that spending plans by the federal, provincial and municipal governments would be enough to hit the 1.5-per-cent goal. But the response did not answer the question about the core 3.5-per-cent goal.
The government does have some wriggle room. It’s possible, for instance, that the Liberals could choose to ramp up defence spending after fiscal 2031, beyond the projection forecast of the spring update. But that would imply a massive and hurried military spending program.
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There is similar fuzziness on the pharmacare program. In the spring economic update, the government boasts that it is “protecting the essential social programs that give Canadians a fair chance to get ahead,” including pharmacare.
Yet, the five-year, $1.5-billion commitment to fund pharmacare (in reality, birth control and insulin) expires in fiscal 2029, with no indication in the budget of an extension. The Finance Department did not shed any further light on the question either, when asked.
Oh yes – one of the other programs that the Liberals are dedicated to protecting is child care. The Trudeau government launched an Ottawa-led program with great fanfare in the 2021 budget. The system is breaking under its own weight, yet the Carney government’s funding is declining, from $8.6-billion this year to $8.1-billion in fiscal 2031. In addition, top-up health care funding for mental health and home care is winding down.
Does this mean that the Carney government is backing away from those programs? Prominent Liberals outside the government have said that the numbers shouldn’t be taken at face value, and that it would be silly to ink in spending commitments ahead of negotiations with the provinces.
Perhaps they are right. Perhaps the spending projections in the budget are strictly fictional, and not to be relied on. Or perhaps the government is in the process of chipping away at the spending excesses of the Trudeau era.
With a fiscal plan written as an homage to Schrodinger’s Cat, there’s really no way to know.