Quebec looks to revive economy
Hydro surplus creates jobs for cheap power
MONTREAL • In a bid to rescue an economy in danger of slipping into recession, the Parti Québécois government has launched a multibillion dollar job-creation effort anchored by a program that will offer Quebec’s surplus hydroelectric power at below-market rates to corporate investors.
With her minority government one year old, Premier Pauline Marois has presided over a province that has generated barely 0.1% employment growth during that time. Meanwhile, the wider economy is at a near standstill, according to Desjardins Group, pulled down by a sputtering manufacturing sector and weak international trade.
“The recovery is slow to materialize,” Ms. Marois told an audience in the foyer of pension giant Caisse de dépôt et placement du Québec’s headquarters Monday. “It’s important to act with every means at our disposal.”
Ms. Marois is now betting she can stoke job growth and private sector investment by using Quebec’s vast hydroelectric resources as a lure. While the PQ has used the tool before — for example, to snare a $1.2-billion investment by Swedish communications technology firm Ericsson AB this year — the party is now enshrining it formally in policy and commanding a specific block of electricity totalling 50 terawatt hours for that purpose.
Investment Quebec is being mandated to seek out big power users willing to make job commitments in exchange for the cheaper electricity. Priority will be given to new investors, especially natural resources transformation companies, electric transport and green energy equipment makers and data warehousing firms.
Hydro-Québec estimates it will have surplus power every year until 2027. The crownowned utility saw its revenue from electricity sales fall by $109-million in 2012 amid a decline in purchases from industrial users such as aluminum smelters.
As part of its effort to kickstart growth, the Marois government also is speeding up previously-planned public infrastructure investments and introducing a maximum $10,000 tax credit for home renovations (which should help struggling rona Inc. and other hardware companies).
In addition, it is lowering the threshold for obtaining a 10-year tax holiday on investment projects to $200-million from $300-million and sweetening tax credits for manufacturers. In all, the measures will cost the government $1.3-billion in new spending commitments and $712-million under the existing 2013-2014 budget plan for a projected 40,000 new jobs by the end of 2017.
business groups had a mixed reaction to the effort.
The conseil du Patronat, Quebec’s largest business lobby, applauded the use of surplus power but said: “It would be more worthwhile to concentrate our efforts on creating a competitive business climate that could successfully draw big investment projects instead of having to roll out new state subsidies.”
Montreal’s board of Trade echoed that view, saying the PQ plan could represent a welcome burst of oxygen for the economy in the short term. “However, the real test is to create a business environment that encourages companies to invest here on their own without having to resort to government incentives.”
Ms. Marois has articulated a vision for Quebec centred on its hydro power wealth that will see the province become a global centre for transportation electrification. To that end, the government has earmarked $60-million to develop a Quebec-made electric vehicle to be used for car-sharing.
One of the best known efforts at homegrown electric car manufacturing to date was Toronto-based Zenn Motor company Inc., which decided in 2009 to stop making electric cars at its Quebec plant and focus instead on bringing a potentially game-changing energy storage technology to market. Zenn, once a $6 stock at its peak, now trades at about $1.