Girard delivers on his promises
Finance minister makes good use of surplus money, but well runs dry next year
There’s more money all right, and they are spending it before the well runs dry.
The Coalition Avenir Québec government’s first budget — tabled Thursday in the National Assembly — opens up the spending tap on multiple fronts at the same time as knocking another chunk off Quebec’s $200 billion debt.
And politically, it has allowed Quebec Finance Minister Eric Girard to say the government is delivering the goods on some of the $2.6 billion in election promises the party made in the election.
“This is larger than the CAQ government,” Girard said at a news conference shortly before he presented the document. “This is about the stewardship of Quebec.
“Quebec is doing well. We want to take it one step further. The budget we are presenting today is your budget.”
The contrast from the Liberal years was striking. While the Liberals under Philippe Couillard set the tone for their mandate with a first austerity budget in 2014, Girard had the chance to pedal the other way with a classic good news budget.
Leitão spent his time applying band-aids to government services short of money, but Girard walked in Thursday with $2.5 billion in surpluses (for 2018-2019) in his back pocket. That was on top of pouring $3.1 billion into Quebec’s debt-fighting Generations Fund.
The surplus figure ends a long debate about just how much money the CAQ inherited from the previous regime.
It also means if ever the expression “a chicken in every pot” was appropriate for a budget operation, this was it, with Girard sprinkling the money throughout government ministries and agencies.
True, there were no significant personal income tax reductions, except one for older Quebecers who choose to delay their retirement, but there were no increases in taxes on tobacco and alcohol or for automobile registration fees and fishing and hunting licences.
Overall, the CAQ now says it will be able to reduce Quebecers’ fiscal burden by $5.2 billion over the next five years as measures, such as the new flat education tax (it got $200 million in the budget), start to kick in.
The extra money also means the government is able to increase government spending significantly. It goes up by 5.8 per cent in 2019-2020, the highest level in many years.
Everyone gets a piece of the pie with more money for a range of items including full-time kindergarten for four-year-olds, home care for seniors, library books and school outings and eyeglass
subsidies for children under 17.
Initially cool to the idea, the CAQ actually increases — from $3 million to about $5.5 million a year — the budget for the Secretariat for Relations with English-speaking Quebecers, a creature of the former Liberal government.
The immigration ministry gets a $146-million boost — $730 million over five years — to help pay for its new personalized pathway system for new arrivals seeking jobs. That plan is included in the controversial Bill 9, currently before a committee of the legislature.
The government is banking on the system to deflect criticism that it is not doing enough to ease Quebec’s labour shortages. There are 90,000 jobs open in Quebec.
Girard takes advantage of the fiscal situation to knock a chunk off Quebec’s debt. Following up on an $8-billion contribution in 2018-2019, Girard will shave off another $2 billion off April 1.
Girard, the former treasurer of the National Bank of Canada, told reporters the section of the budget dealing with the debt is a personal favourite. It says Quebec remains the most indebted province in Canada after Newfoundland and Labrador, but that will change. The objective now is to reduce the gross debt to 45 per cent of gross domestic product by 2021, which is five years sooner than expected.
The net debt will drop to 40 per cent as of March 2019 and 35 per cent by 2024.
There is an argument to be made that a government — if it knows what’s good for it — should deliver on its election promises in its first year in office, and Girard’s budget makes a start on many.
But hovering in the air was the feeling that this is too good to be true, that such spending cannot last.
Girard makes good use of the surplus money, but the well runs dry next year. Starting in 2019-2020, the government projects “balanced budgets,” not surpluses, all the way to 20232024, prompting the Liberals to speculate it will either have to cut services or increase taxes.
The document reveals while the CAQ today is able to boast it is increasing health spending by 5.4 per cent in 2019-2020, the plan is for growth to drop back to 4.1 per cent in 2020-2021.
It’s the same in education. While it will increase by 5.1 per cent this year, it drops to 3.7 per cent in 2020-2021.
“Enjoy it while it lasts,” Leitão, now the Liberal finance critic, told journalists. “Because things will not be like this in the future.”
Girard conceded such increases won’t last forever. He said they represent a catch-up after the lean years, and such elevated funding won’t be necessary in the future.
He added the CAQ’s electoral commitment is only to increase spending in health by 4.1 per cent a year and 3.5 per cent a year for education, so he figures he’s bulletproof.
There are other warning signs. The budget projects — as have many others including the Bank of Canada — that the economy is about to slow down, which will affect revenues.
Quebec’s economy grew by 2.3 per cent in 2018, but growth will drop to 1.8 per cent in 2019 and 1.5 per cent in 2020, the budget projects.
Girard nevertheless invented a new political mantra for a government, which describes itself as nationalist. He said a wealthier economy, balanced books, fewer taxes and lower debt levels are the right recipe for Quebec’s future.
“This is the road to financial autonomy within Canada,” Girard said closing his budget speech in the legislature as CAQ MNAs applauded. “This is the road to renewed pride.”