One of my favourite lines from the 1993 movie Philadelphia is, “Explain this to me like I’m a six-year-old.” I’ve used that line often during my 30-plus years in the tax profession to encourage people to explain concepts to me that are otherwise complex. Why? Because understanding demands clarity. If the words are foggy, the ideas probably are, too.

Today’s leaders — especially politicians — will often deflect straightforward questions with word salads or diatribes that have nothing to do with the original question. People disengage quickly when relevance drops, often within seconds, according to studies on

attention and listening . In conversation, most listeners expect a direct answer almost immediately. If the speaker drifts into word salad or political evasiveness, attention begins collapsing well before the one-minute mark. Politicians often take advantage of that.

With our current government, you’ll likely hear one of the following vacuous phrases in response to questions regardless of relevance: “We’re spending less to invest more”; “We’ll balance the operating budget within three years”; “We’re building the strongest economy in the G7”; and “We’re making generational investments.”

In some cases, you’ll hear all four and more. A new one after the release of the latest federal budget was that it will “catalyze a trillion dollars of investment.”

The above phrases sound good and are useful if the objective is not directly answering questions. It works because many Canadians are financially illiterate or don’t have the time to dissect important financial information.

But they are particularly offensive when you combine them with the new deceptive framework used by the government when it presented its new budget.

Prime Minister Mark Carney promised a new budgeting framework during the Liberal Party leadership campaign when he said he would separate the

federal budget into an “operating budget” and a “capital budget,” with the operating budget being balanced within three years.

Tricks such as this are a blatant attempt to baffle people by transferring many day-to-day expenditures from an overall budget to a capital budget and crow that you are “investing.” The key to making it work is to ensure that the definition of capital is so broad that you can transfer amounts easily into the capital budget.

Sophisticated interested parties, such as bondholders or rating agencies, are not fooled by such deceptive tricks. This trick is reserved for the low-information voter.

The Department of Finance on Oct. 6 released its proposed definition of capital under the guise of suggesting it was “modernizing” its budgeting approach. To be frank, there is nothing modern about deception. It was, as expected, breathtakingly broad and not consistent with general principles both in accounting circles and in government budgeting exercises around the world.

The Parliamentary Budget Officer (PBO) on Oct. 7 expressed its concern about the broadness of the proposed definition, saying, “We find that the scope is overly expansive and exceeds international practice.”

The Nov. 4 federal budget prominently deployed this deceptive framework when laying out the massive, proposed spending . Of course, much of the spending was labelled as “capital” or “investment,” consistent with the vacuous phrase “spend less to invest more.”

Frankly, to read the budget with this framework was nauseating. It’s difficult to read something that is so blatantly misleading.

The budget also announced that balancing the operating budget within three years was one of its “

fiscal anchors. ” With such a malleable definition of capital, that fiscal anchor is a joke. Why wait three years? Just move enough day-to-day expenditures to the capital budget to have the operating budget balanced and voila. Fiscal anchor achieved.

The PBO on Nov. 14 released its first comments about the federal budget in a

  • “PBO maintains its view that the government’s definition of capital investments is overly expansive. Based on PBO’s definition, capital investments would total $217.3 billion over 2024-25 to 2029-30 — approximately 30 per cent ($94 billion) lower compared to budget 2025.”
  • “Given the subjectivity involved in defining federal capital investments and their role in guiding fiscal policy decisions and in assessing fiscal performance, the PBO recommends that the government establish an independent expert body to determine which federal spending categories and measures qualify as capital investment under an expanded definition beyond the Public Accounts of Canada.”
  • “Finance Canada projects the deficit-to-gross-domestic-product (GDP) ratio to increase to 2.5 per cent in 2025-26, before declining over the medium term to 1.5 per cent in 2029-30. Based on the PBO stress testing, there is a 7.5 per cent chance that the deficit-to-GDP ratio will decline in every year over 2026-27 to 2029-30. This suggests it is unlikely that the government’s declining deficit-to-GDP fiscal anchor will be respected.”
  • “Based on the long-term baseline projection in Budget 2025, there is limited fiscal room for the government to reduce revenues or increase program spending while ensuring the federal debt-to-GDP ratio in 2055-56 is at or below its initial (2024-25) level.”

report . Here are some of its refreshing findings. If the PBO has serious concerns about the government’s fiscal approaches, that speaks volumes.

So, explaining this to a six-year-old, the government needs to be honest with Canadians about its fiscal projections, anchors and reporting. Canadians need to demand it.

They should also be demanding policies that plant acorns that grow into the mighty oak tree, which can live for hundreds of years on a strong foundation. We need fiscal and taxation policies that are like that instead of being short-term focused and solely political. Voters need to demand acorn policies. Yes, I know, I’m dreaming, but we need it.

If we want policies that grow into oaks instead of collapsing under scrutiny, Canadians need to start asking acorn questions — questions that cannot be dodged by a word salad — and refuse anything less than clear answers and honest accounting.

  • Tax-and-spend governments do a disservice to those who sacrificed everything
  • The good, the bad and the ugly of Canada’s budget 2025

Kim Moody, FCPA, FCA, TEP, is the founder of Moodys Tax/Moodys Private Client, a former chair of the Canadian Tax Foundation, former chair of the Society of Estate Practitioners (Canada) and has held many other leadership positions in the Canadian tax community. He can be reached at kgcm@kimgcmoody.com and his LinkedIn profile is https://www.linkedin.com/in/kimgcmoody.

_____________________________________________________________

If you like this story, sign up for the FP Investor Newsletter.

_____________________________________________________________