The five major economic events of 2021

2021 was a year of twists and turns. COVID-19 made us see all the colors, but beyond the vagaries of the virus, what were the significant economic facts? I suggest five of them, ranging from the missed opportunity to the surprise of the year, including the good shot, the inescapable decision and the stubbornness of the year.

The opportunity soon missed: the contract with Massachusetts

Was the bear skin sold before it was killed?

Hydro-Quebec welcomed the historic $ 10 billion contract with Massachusetts, after years of discussions, and began work on the transmission line with its American partner, via Maine. All permits had been granted.

But now, the opponents of the project have not given up. Cleverly financed by distributors of fossil energy – who lost a lot -, they were able to obtain the rejection of the project to 60% in a referendum, at the beginning of November. And the Hydro-Quebec partner stopped work two weeks later, at the request of Governor Janet Mills, who wants to see what the courts think of the validity of the referendum.

The referendum vote could be transformed into law at the beginning of January, making it almost impossible to approve a renovated project. The debate may be settled by the courts, whose hearings began in mid-December, but it will likely take several months before a final decision. And it is not clear that she will be favorable to Hydro.

When you consider that the contract was to reduce greenhouse gas (GHG) emissions by the equivalent of 700,000 cars. Such a waste !

The surprise of the year: Quebec’s budgetary situation

We expected the worst. However, Quebec’s deficit was half the $ 15 billion forecast last year, at $ 7.5 billion. And for the current year 2021-2022, it will be 43% lower than expected, at 6.8 billion, estimates the Ministry of Finance. This turnaround can be explained by the resilience of Quebec’s economy, which has enabled the state to pocket more tax revenue.

Quebec is not the only province to experience such an improvement. Ontario also revised its deficit forecast for the current year, by 34%, to $ 21.5 billion. In Alberta, the deficit target is now $ 5.8 billion, down 68%. As for British Columbia, the revision (before the impact of the floods) is 82%, to 1.7 billion.

All things considered, Quebec will have a deficit in 2021-2022 of 0.7% of GDP (before payment into the Generations Fund). It will be smaller than that of Ontario (2.2% of GDP) and Alberta (1.7% of GDP), but larger than that of British Columbia (0.5% of GDP) . As for the federal government, its deficit, now estimated at 144.5 billion, is down 6.5% and is equivalent to 5.8% of the GDP.

Ottawa has a larger deficit, proportionately, and smaller because it spends more than the provinces. The Ottawa checkbook, it must be said, is used in particular to finance the effects of COVID-19, which benefits the provinces.

It remains to be seen, now, how the labor shortage, inflation and the possible rise in interest rates could cloud the picture.

Stubbornness: Quebec’s position on private casinos

The Government of Quebec’s strategy on online betting is a dismal failure. Not only the Loto-Quebec website did not prevent the proliferation of virtual private casinos, but in addition the law adopted in 2016 to block them was invalidated by the courts.

In August, Quebec asked the Supreme Court to hear its case, and a response to that request is imminent. It is far from certain that the highest court accepts. And if so, a long debate on the substance is not a guaranteed success for Quebec. During this time, the process will have taken many months and nothing will have changed.

The government should have taken advantage of the recent change of guard at the head of Loto-Québec – with the arrival of Jean-François Bergeron – to change its mind.

The Criminal Code prohibits private casinos, but they circumvent the rules to continue their practice on the Internet. The federal Department of Justice turns a blind eye to this legal vagueness, judging that it is up to the provinces to regulate private online gambling.

Rather than stubbornly, the Quebec government should take the path chosen by many other jurisdictions around the world, including Ontario. Elsewhere, private casinos must be licensed to operate a network. On the other hand, these casinos are highly regulated.

Such an approach would allow the government to better prevent gambling addiction and possible abuse of private platforms, in addition to collecting licensing revenues that it could partially devote to the consequences of gambling.

The good thing: the increase in teachers’ salaries

In April 2022, the salaries of elementary and secondary school teachers will essentially catch up with those of other Canadian provinces. For example, the salaries of senior elementary and secondary school graduates will rise to $ 92,027, an increase of 11.4%.

We must take our hat off to the government for this progress. The upgrade has been demanded by many for a long time and is all the more important today in the context of labor shortages.

Nowadays, teachers in regular public schools face great challenges, with the increase in cases of students with learning difficulties and the skimming, in secondary, that the private and special purpose schools are doing.

It is to be hoped that this increase in wages will enhance the profession and attract the best candidates to it. Currently, education students are among the weakest in the university network.

The inescapable decision: the withdrawal of the Petroleum Fund

The pressure was growing for the Caisse de depot et placement to leave the oil sector. This will be done in 2022, when the Caisse will have sold its last oil producer titles, as promised in September 2021.

This decision by our collective woolen sock – the first major retirement fund to do so in Canada – must be welcomed, even if it was increasingly essential.

The institution also wants to increase its green investments and participate in the financing of projects that will reduce carbon in certain sectors, with a budget of 10 billion dollars. La Caisse also wants to reduce the carbon intensity of its investments by 60% by 2030.

With the very ambitious GHG reduction targets that Canada has imposed on itself, we really need this kind of leadership from the business world.