Budget designed with election in mind
After years of painful cuts, Liberals finally turn on the tap and offer taxpayers a break
Apparently, this is what the light at the end of the tunnel looks like.
And we are seeing it a mere 18 months before the next general election.
In tabling the 2017-2018 provincial budget Tuesday — described as filled with good news, hope and confidence — Quebec Finance Minister Carlos Leitão projected the image of a government starting to give back.
Some analysts are already referring to it as a budget of good conscience.
In other words, the “making do with less” theme that marked the first three years of the Liberal mandate is over, and the province — including taxpayers — is getting a breather.
“We have come a long way since April 2014,” Leitão said, rising in the legislature to read his fourth budget as minister.
‘The budget that I am tabling is a budget for today and tomorrow. It’s a good news budget that allows us to invest in our future. We are doing what we said we would do.”
For the first time in office, Leitão gets to turn on the tap a bit.
That’s because unlike the federal government and many Canadian provinces that are swimming in debt, the budget reveals Quebec is sitting on a $2.488-billion surplus, the largest in Quebec’s history — and that’s after contributing $2.4 billion to the Generations Fund to fight debt.
Overall, government spending is going up 4.1 per cent to a total of $72.6 billion in 2017-2018.
The cash-starved health and education sectors are getting their first real boost in years.
Health spending will go up by 4.2 per cent in 2017-18, and education spending will also increase by 4.2 per cent. Compare that to the dark days of the 2014-2015 budget where education got a mere 0.6 per cent and health 1.4 per cent — not even enough to cover inflation and normal cost increases.
The icing on the cake for Leitão is that he gets to give Quebecers some tax relief — and more than the rumours and leaks had anticipated.
Including the retroactive refund of the unpopular health services tax, the total amount being returned to Quebecers’ pockets is $768 million. Over five years, the projected total tax reduction is $1.4 billion.
Given such whopping numbers, is it possible the government went too far in its previous cuts and is trying to patch things up?
Leitão dismissed that theory when asked by the Montreal Gazette.
“We are doing now what we couldn’t do in 2015-2016,” Leitão said at a news conference. “We are announcing significant additional investments in those many missions, but inside a balanced budget.
“People understand the need to remain in balance. It’s not rocket science.”
Truth be told, he got a few nice breaks.
Quebec’s economic growth
— 1.7 per cent in 2016 — means juicier tax revenues for the treasury. Quebec’s economy is now performing better than the Canadian and U.S. averages.
The budget says that from January to December, 2016, 90,800 jobs were created in Quebec — which represents 40 per cent of the total number of new jobs created in Canada. Quebec’s unemployment rate sits at 6.4 per cent. Welfare numbers are at historic low.
The Liberals now claim they have helped create 150,500 jobs since May, 2014.
And there could have been more money in the till. The provincial government devotes an entire chapter of the budget to blasting the federal government for failing to cough up the kind of health transfer Quebec says is required to sustain the system.
Quebec wanted a six per cent increase but — like the other provinces — got three per cent.
“The federal government’s contribution remains insufficient,” the budget huffs.
It’s easy to say Quebec taxpayers should have been given a bigger break, but the political optics said otherwise. In fact, managing such large surpluses is kind of embarrassing after so many years preaching frugality.
Polls consistently show Quebecers want to see schools, hospitals and the long-term care homes their parents live in become less strapped for cash.
Nevertheless, politically, the budget takes the Liberals where they want to be: able to say they responsibly managed the public purse and now are giving back. The worst is over, it argues, so stick with us.
To that end, Leitão points Quebec toward the next election.
The budget, for example, quietly moves up nearly $400 million in spending — from ferry boats to flu shots — to this fiscal year.
That gives the Liberals a wider leeway for the next budget, which lands just before Quebecers go to the polls.
As if to encourage people to stick with them in the long run, many of the numbers in the budget are set on a five-year spectrum.
Leitão’s defence is that the government wants the money to be “sustainable and predictable,” but the moves invariably raised eyebrows among political wags. Advertised as a budget of hope, a cynic would add: We hope to get re-elected.
The opposition says it spotted the ruse a mile off.
“What we have here is a preelection budget,” Parti Québécois finance critic Nicolas Marceau said. “After three years of demolition, the Liberals promise to patch things up.
“They’re trying to repair, but these are only partial repairs of the damage they did. The whole operation is very cynical.”
“The pocketbooks of Quebecers were the real losers in this budget,” said Coalition Avenir Québec finance critic François Bonnardel. “The government is basically giving people a mere $1 a week per person.”
Québec solidaire MNA Manon Massé ridiculed the tax reduction, saying it amounts to an extra meal a year if you don’t drink too much wine.
“We know this government is trying to mend fences before the election,” Quebec Federation of Labour president Daniel Boyer said. “But it will need to do a lot more to repair all the waste.”
But Yves-Thomas Dorval, president of the Conseil du Patronat, the province’s largest employer group, said the government is spending surpluses on the right things while maintaining a balanced budget for a third year in a row.
“I’m convinced that at the psychological level, this will give entrepreneurs more confidence to invest,” Dorval said in an interview.
“I think it maintains a favourable climate despite uncertainty across the border.”