The Golden Rule & Fiscal Responsibility by Marc Robinson published by Marc Robinson Blog (1/2026).
“The golden rule of public finance is a time-honored fiscal policy principle that says that governments should only use debt for capital expenditure and not to fund current operations. I’ve always been a supporter of the rule. This makes me concerned to see that – with governments under intense budgetary pressure – there are increasing efforts to distort the golden rule to justify fiscal irresponsibility.
Canada provides a recent example of this. The 2025 Canadian federal budget announced a new “capital budgeting framework” which unacceptably stretches the definition of government capital spending (“investment”) for which borrowing may be used. Subsidies of private investment are under this framework deemed to be government investment expenditure, as is depreciation on existing government assets. The Canadian Parliamentary Budget Office and independent analysts have spoken out against this “overly expansive” definition of capital spending that “exceeds international practice.”…“