Marceau’s budget update fails to inspire confidence

It was hardly big news the Parti Québécois government would not be coming through on its promise to balance the provincial budget in the current fiscal year to end next March.

That had been evident for months now, even though Finance Minister Nicolas Marceau only came out and admitted it late this week. What made it front-page fodder was the size of the shortfall, now projected to be $2.5 billion — or $900 million more than the deficit recorded in 2012-13, a year that saw the former ruling Liberals defeated in a September general election by the PQ.

The Marois government now says not only will it run a $2.5-billion deficit in the current fiscal year, but it will also run a projected $1.75-billion deficit in the 2014-15 fiscal year to begin next April. But for the fiscal year after that, 2015-16, all will be fiscally hunky-dory, according to the government, with the deficit beaten down to zero.

But why believe that after the government failed so dismally to deliver on its previous promise? Especially given the weakness of the finance minister’s rationalizations for the fact under this government, Quebec’s economic and fiscal performance has gone from bad to worse.

Marceau bemoaned a sluggish North American economy as a big reason his projected 5.2 per cent increase in tax revenue came in at exactly half that amount. But the problem is not so much continental as provincial, given Quebec’s economic growth this year is lagging considerably behind that of the U.S. and the rest of Canada, which are on course for 1.7 per cent and 1.6 per cent growth respectively, compared with Quebec’s 0.9 per cent. For that, Marceau had no answers.

He blamed federal cutbacks on mortgage insurance for a slump in housing construction, but had no explanation why this is having a greater effect here than in the rest of the country.

He was further reduced to blaming low inflation for the revenue shortfall, adding Quebecers are spending less freely and saving more assiduously these days. This may be true, but only in Quebec do low inflation and people saving money rate as bad things. Ditto with people gambling less, and drinking less, which have resulted in a revenue downturn for Loto-Québec and the Société des alcools.

What he did not blame was his government’s spending, which he insisted is under tight control. Yet the books show consolidated spending up 3.3 per cent, as opposed to the projected 2.3 per cent.

The fact is, as Conseil du patronat president Yves-Thomas Dorval says, Quebec is living beyond its fiscal means.

To be sure, this is not entirely this PQ government’s fault. Previous governments, both Liberal and PQ, have contributed to this state of affairs. Although Quebec’s economic problems are structural and this requires some tough policy changes, this government’s prime concern is simply to assure its re-election. The abominable secularism charter is a tool to distract the population from Quebec’s fundamental problems, and polarize it along ethnic and linguistic lines for electoral reasons.

There are no quick or easy fixes that a government of any stripe could apply. But if this government falls next spring after it tables its 2014-15 budget, Quebecers might get an opportunity to engage in a more honest open-ended debate on the province’s future.