OTTAWA, Sept 3 (Reuters) - Canada's Prime Minister Mark Carney said on Wednesday that the upcoming federal budget would focus on both austerity and investments, adding that current government spending was unsustainable.
Canada has been dealing with economic uncertainty since the start of the year, so the primary focus of the budget will be to cut operational spending and trigger investments into major projects, Carney told reporters in Toronto.
"It's a budget of austerity and investment at the same time and that's possible if you have discipline," he said.
Canada's main budget, which is usually unveiled in the parliament in April, was delayed due to federal elections and will be presented in October.
During his election campaign, Carney had promised to balance the operating budget over the next three years.
But with increasing defense spending, lower revenues from tariffs, the scrapping of a digital services tax and several other tax relief measures, economists say the government looks unlikely to reach that goal.
Carney said federal spending had been growing at more than 7% a year on average over the last decade.
"That's twice the rate of growth of the economy on average. It's not a sustainable situation," he said. "So we need to rein in spending. We need to find efficiencies."
Finance Minister Francois-Philippe Champagne said in July that he had asked all ministries to find ways to cut 7.5% from program spending for the 2026-27 fiscal year, followed by 10% in the next year and 15% in the year after that.
Reporting by Promit Mukherjee, editing by David Ljunggren and Nia Williams