A budget presented a few months before the elections is, by definition, an electoral budget. In this specific context, the question that arises is clear: has the fourth budget tabled by the Minister of Finance, Eric Girard, yielded to the temptation of electoralism? Despite the criticisms of the $500 “cheque” handed out this year, the minister and his government have, on the whole, resisted it quite well.
Posted at 11:00 a.m.
The refundable tax credit of $500 paid to 6.4 million Quebecers can be criticized for three reasons. First, such an injection of liquidity into the economy risks increasing consumption, and therefore adding inflationary pressures to already very high inflation. Then, this generous measure will cost $3.2 billion, a very large sum given the $7.5 billion deficit incurred in 2021-2022. Finally, such an amount could have been better targeted and limited to helping the 3.3 million people with lower incomes who benefit from the solidarity tax credit.
That being said, giving in to the multiple demands to freeze hydroelectricity rates, reduce gasoline taxes, zero-rate certain basic products or lower taxes would have had far greater consequences. The impacts of such measures on public finances would be recurrent, while inflationary pressures will have an expiry date. Moreover, these measures are regressive, because the wealthiest consume more than the less wealthy and would therefore benefit much more.
Finally, hydroelectricity rates and gasoline taxes are already lower than in most North American jurisdictions, which means that we consume too much of these resources, a trend that must be reversed in order to achieve the energy efficiency and greenhouse gas reduction objectives set by the Government of Quebec.
Health: ways to act
The announcements in this budget represent a considerable envelope of 22.3 billion (over six years), a record sum, especially in a context where the budget balances are still in deficit over the entire financial framework. Fortunately, the interventions are well targeted and are intended for longer-term actions.
The increase in health spending forecast in this budget is major: an additional $8.9 billion is forecast over the period from 2022-2023 to 2026-2027.
This amount represents 40% of the additional spending announced in Minister Girard’s speech. In 2024-2025, spending on health and social services will reach $59 billion, or 43.8% of spending in all portfolios.
These major expenditures aim to improve a health system whose shortcomings and dysfunctions have been evident during the pandemic. It remains to be seen whether this massive injection of funds will allow the government to achieve its objectives of “restoring the health and social services system” and “improving care and services for the population”.
Labor and the environment: we remain on our appetite
Expected initiatives to alleviate labor shortages in many regions and sectors have not materialized. Measures to increase the retention of workers aged 60 and over, to attract and retain more international talent and to support in-company training would have been most useful in increasing our economic potential and providing some relief to companies already struggling with major supply chain disruptions.
As for new environmental measures, we will have to wait to see the next version of the implementation plan for the Plan for a Green Economy 2030 (PEV), but, a priori, nothing indicates a change in approach that would turn the tide and allow Quebec to reach the established greenhouse gas reduction targets. Nor is there any intention to start integrating the financial risks of combating and adapting to climate change in the budget. That’s a shame.
A prudent budget
Despite strong economic growth in 2021, future years are weighed down by high inflation, lingering supply chain challenges and a darkening economic outlook due to Russia’s invasion of Ukraine . In this context, one might have hoped that the increase in revenue presented in this budget would serve to advance the achievement of a balanced budget by a year or two.
That being said, the buffers built into various places in the budget are reassuring and confirm that the government has not used all the wiggle room available to swing more votes. It is therefore a budget that deviates from the policies of scattering and multiplication of gifts that can characterize the budgets that precede the elections.