[Chronique de Konrad Yakabuski] The sand castle

Liberal MP Marwah Rizqy sparked controversy within her party in 2019 by suggesting that the PLQ apologize to Quebecers for the years of austerity they had to endure at the hands of the government of Philippe Couillard.

The suggestion of M.me Rizqy, elected for the first time in 2018, had been rather poorly received by several of her colleagues in the Liberal caucus, they for whom the return to a balanced budget had been one of the Couillard government’s greatest successes, including they had been part of. Admittedly, the years of fiscal restraint had seriously mortgaged the Liberal brand in the 2018 election. But the rise in the province’s credit rating, which in 2017 had surpassed that of Ontario for the first time, testified to the road traveled.

While the province’s net debt reached 53% of gross domestic product (GDP) in 2012-2013, it fell to around 42% in the last year of the Couillard government’s mandate. (It has since fallen to 38% of GDP.) Quebec has gone from bottom of the class in Canada in terms of public finances to a model to be emulated.

In fact, in its latest report on the financial viability of Canadian governments, published last July, the Office of the Parliamentary Budget Officer concluded that, of all the provinces, Quebec had the greatest leeway budgetary. He estimated that the province could cut taxes or increase spending by 1.2 percentage points of GDP (or about $4.4 billion a year) without the province’s debt ratio rising to short or long term. This is not a huge amount in a budget that will exceed $138 billion this year. And a recession in 2023 could quickly change the situation.

Now, since the start of the election campaign, all the political parties have been promising billions in tax cuts and/or increased spending as far as the eye can see. Although they all commit to publishing a financial framework during the campaign, it is clear that the debt and deficits do not seem to worry them too much. Under Dominique Anglade, the Liberal Party of Quebec (PLQ) abandons any pretense of fiscal correctness to bet on enticing promises. If the Liberals do not want to put an end to contributions to the Generations Fund, they would nevertheless finance their promises by increasing the province’s debt.

The Coalition avenir Québec (CAQ) proposes, for its part, to reduce by 39% the planned contributions to the Generations Fund over the next five years in order to finance tax reductions of the order of one percentage point for households earning less than $92,000. However, with respect to its other promises, including the introduction of a tax credit of up to $2,000 for Quebecers over 70, the CAQ is not currently proposing any compensatory measures for finance.

This led the Conservative leader, Éric Duhaime, to accuse the party of Premier François Legault of wanting to “dip into the money of young people [pour] give it to the elderly so that[elles] vote for the CAQ”. Mr. Duhaime claims to be able to finance the tax cuts promised by his formation – the most generous of all the parties – by cutting government fat and using revenues generated by the exploitation of hydrocarbons. Good luck.

Of all the parties, Québec solidaire is the only one to admit loud and clear that the debt and deficits do not worry it. Explaining his promise to redirect the sums intended for the Generations Fund to current expenditures, Gabriel Nadeau-Dubois said: “To continue to deprive ourselves of several billion dollars a year, because that is what the Generations Fund is, I think it’s an old reflex that belongs to another era in Quebec politics, where accounting issues were put before people’s well-being. »

It obviously depends. By 2030, the proportion of the Quebec population aged 15 to 64 should increase from 64% to 60.4%, and that aged 65 and over, from 20.3% to 24.8%. In all scenarios, the Québec government’s budgetary leeway will shrink in the face of the rapid aging of the population. In 2022, Quebec’s public finances are more like a sandcastle on the eve of a tsunami. And no political party seems to want to erect dikes.

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