The Girard budget marks a breaking point in the management of public finances in Quebec. The record deficit of $11 billion for the 2024-2025 fiscal year eclipses in its scale the abyss of the pandemic (-10.7 billion in 2020-2021). It is a harbinger of heartbreaking choices to be made in the near future. It will in fact be difficult to pursue two public policy objectives as important as improving public services and reducing the tax burden on Quebecers.
In good French, Quebecers cannot have it both ways. It will be illusory to invest in improving services without considering an increase in taxes. The Minister of Finance, Eric Girard, has clearly closed the door to the second option… For now. On the other hand, he did not want to move forward on the promise of the Coalition Avenir Québec to lower taxes in a third mandate, despite repeated questions from our journalist Clémence Pavic.
Minister Girard, always a good teacher, has put things into perspective. Net debt relative to gross domestic product remains at 39%, a completely acceptable threshold as Quebec enters the depths of the recession. The economic recovery will be synonymous with good times and brings hope of a return to balance for 2029-2030. The deficit also includes a provision of 1.5 billion for unforeseen events, and the payment to the Generations Fund accounts for 2.2 billion. At the same time, the minister concedes that the “structural” part of the deficit is around 4 billion, which will require us to take firm action to avoid mortgaging the future of future generations.
The Legault government has mentioned a project to optimize state actions. It is an avenue that a responsible government cannot ignore, although it carries ambitious hope. The initiative will come with inevitable resistance from the bureaucracy and it will not make it possible to absorb the entire structural deficit on its own. Minister Girard also mentioned the review of multiple tax credit programs: nearly 280 measures cost the State 50 billion per year, and some of them have not been revised since. the time when the unemployment rate hovered around 10%. As we experience a situation close to full employment and the artificial intelligence revolution takes hold in all spheres of activity, the opportunity is ripe for re-examination. However, we must keep in mind that businesses, SMEs in particular, will still need incentives to invest and contribute to collective enrichment.
Measures to return to budget balance remain to come. The Legault government intends to communicate its plan in the next year. This is where we will experience the difficult and painful trade-offs in the spending that will be necessary to regain control of public finances. In terms of income, predictability is not assured. The astonishing $1 billion hole in Hydro-Québec’s royalties, attributable to drought and the reduction in water levels in hydroelectric reservoirs, is a phenomenon called “climate change.” It is likely to repeat itself.
In the immediate future, the CAQ government continues to cause surprise without obtaining recognition. It will invest an additional 4.9 billion over six years for education and health. He understood very well the high expectations of the population with regard to these two priority missions of the State, which he continues to support. The agreements with public sector employees will cost him 3 billion more than expected. “We made choices to invest in our human resources,” said Minister Girard. He is no less shunned by the left. As proof, the education unions barely give it a passing grade for its budget.
On the other side of the spectrum, the right had high hopes for a downsizing of the state during the election of François Legault. The record deficit of 11 billion appears to him today as a stain on the CAQ’s reputation for rigor. The anemic nature of measures aimed at stimulating investment and business productivity is seen as a missed opportunity by the business community.
In all that Quebec has of unions, business groups and public interest groups, there were very few people happy at the end of the closed budget session. The government still managed to achieve unanimity against him. The coming years will be characterized by an important social debate on public finances even if the subject does not trigger passions. Given the scale of the challenges, somewhere between improving public services and reducing the tax burden, the 2026 election could well become a referendum on our attachment to social democracy.