QUE­BEC CITY

The de­feat of the bud­get­bal­anc­ing B.C. Lib­er­als may hold a sober­ing les­son for Que­bec’s Lib­er­als

Investment Executive - - CONTENTS - BY KEVIN DOUGHERT Y

B.C.’s Lib­er­als’ elec­tion de­feat may hold a les­son for Que­bec’s Lib­eral gov­ern­ment.

que­bec and bri­tish columbia are the only prov­inces in Canada run­ning bal­anced bud­gets. And, gen­er­ally, as the for­tunes of the econ­omy go, so go the for­tunes of the in­cum­bent gov­ern­ment.

But in B.C., the Lib­er­als’ bud­get-bal­anc­ing Christy Clark did not i mpress enough in other ways. In­stead, the vot­ers in Canada’s strong­est econ­omy re­cently turned to the New Demo­cratic Party (NDP).

In Que­bec, de­spite run­ning sur­plus bud­gets and pay­ing down the pro­vin­cial debt since re­turn­ing to power in April 2014, the reign­ing Lib­er­als un­der Philippe Couil­lard also might be driven from of­fice.

Que­bec faces its first fixed-date elec­tion on Oct. 1, 2018, and that cer­tainty means the pro­vin­cial elec­tion cam­paign is un­der­way al­ready. “We saved Que­bec from fi­nan­cial dis­as­ter,” Couil­lard boasted re­cently.

True, Que­bec has been run­ning sur­plus bud­gets un­der his Lib­eral ad­min­is­tra­tion and is pay­ing down its once mas­sive pro­vin­cial debt. In the first three months of the cur­rent fis­cal year, Que­bec al­ready has a $539-mil­lion sur­plus.

And in June, Fi­nance Min­is­ter Carlos Leitão found him­self in the slightly em­bar­rass­ing po­si­tion of an­nounc­ing the sur­plus for the pre­vi­ous year was not $2.3 bil­lion, as he had pro­jected. In fact, Que­bec’s sur­plus for 2016-17 was a whop­ping $4.5 bil­lion.

Un­em­ploy­ment in the prov­ince, at 6.1% in Au­gust, marks a 40-year low. Stan­dard & Poor’s Fi­nan­cial Ser­vices LLC has boosted Que­bec’s credit rat­ing from A+ to AA(which sur­passes On­tario’s rat­ing for the first time) on the strength of the Lib­er­als’ tight spend­ing con­trols.

But lim­it­ing pub­lic spend­ing in­creases to 1.7% an­nu­ally has re­sulted in much grum­bling that pub­lic ser­vices are un­der­funded.

For ex­am­ple, wait times in hos­pi­tal emer­gency rooms have not im­proved. Que­bec’s schools are over­crowded and crum­bling. The most heart-rend­ing crit­i­cism is a limit of one bath a week for res­i­dents of pub­licly funded, long-term care homes for se­niors and the dis­abled.

Al­though the bud­get num­bers may be pos­i­tive for the Que­bec Lib­er­als, the poll num­bers aren’t. A re­cent Léger Mar­ket­ing poll, con­sis­tent with polls con­ducted ear­lier this year, shows Couil­lard’s Lib­er­als still ahead; but, with a 32% ap­proval rat­ing, they are likely to form a mi­nor­ity gov­ern­ment.

The Parti Québé­cois (PQ) is trail­ing at 22%, ac­cord­ing to the Léger poll, with François Le­gault’s Coali­tion Avenir Québec gain­ing on Couil­lard’s Lib­er­als, at 28%.

Le­gault, a for­mer PQ min­is­ter and a found­ing part­ner in the char­ter air­line Air Transat, has drawn sup­port from Lib­er­als and more con­ser­va­tive PQ vot­ers. Québec Sol­idaire, at 12%, has be­come the ral­ly­ing point for dis­il­lu­sioned PQ back­ers who are more left-lean­ing.

The Lib­er­als are likely to counter dis­con­tent over their spend­ing con­trols with new in­vest­ment an­nounce­ments and tax cuts.

How­ever, they con­tinue to face lin­ger­ing dis­sat­is­fac­tion with past al­le­ga­tions of Lib­eral cor­rup­tion.

On the PQ front, Jean-François Lisée was elected leader last au­tumn on a prom­ise not to hold an­other ref­er­en­dum, leav­ing his mem­bers puz­zled about just what the PQ stands for.

Le­gault is count­ing on a ris­ing wave of dis­con­tent with the Lib­er­als and PQ. Much can hap­pen in the next 12 months in what prom­ises to be a lively cam­paign.

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