We knew that this fall’s negotiations with state employees would result in significant salary increases. Two obvious conditions were pushing in this direction: recent inflation and the need for the state to retain and recruit its workforce.
However, the government’s desire to buy peace before the end of 2023 has cost a few dollars more than expected. The first estimate of the total bill is a shock. In the final year of the convention, public sector worker compensation will cost $11 billion more than this year.
Personally, I believe that when we have counted everything, it will even be a little more. There are other executive salaries which will be adjusted to the same parameters. Without forgetting the Sûreté du Québec where the conventions have still not been settled. But to simplify today’s exercise, I will take the established figure, i.e. $11 billion.
Find the money
There are no red herrings or accounting tricks here. Pay must be paid every second Thursday, pay which will cost more. We must therefore include additional billions in the Quebec budget for the years to come. In 2027-28, the last year of the convention, $11 billion more will be needed.
Even if we find these new salaries justified, we will have to find the money.
- Listen to the Maréchal-Dumont meeting with Isabelle Maréchal via QUB :
To help you measure the scale, I will give you an idea of what this amount represents for the government.
11 billion represents:
- More than 25% of personal taxes ($43 billion)
- More than 40% of QST revenues ($27 billion)
- Almost all of the company taxes ($13 billion)
- More than three times the profits paid by Hydro-Québec ($3.5 billion)
Possible scenarios
From the signing of these agreements, two scenarios can occur.
In the optimistic scenario, the economy is performing well. New businesses create paying jobs and prosper. Companies pay taxes, workers also pay taxes on their high incomes. Then they pay sales tax on their purchases.
Photo Agence QMI, Marcel Tremblay
In short, in the optimistic scenario, economic growth brings about these new billions. The Quebec government pays its employees better without needing to pass the buck to collect additional revenue.
Appeal to taxpayers
In the pessimistic scenario, the economy does not run at full speed throughout the period, state revenues stagnate and new billions are not created by growth. But these sums must be paid since the salary increases are signed in concrete employment contracts.
In this case, it is simply necessary to increase revenues by increasing tax rates. I demonstrated to you the magnitude of the figures, the bill could hurt. You must always keep an optimistic spirit, but managing means preparing for all scenarios…QST or taxes, you could pay more.