It’s difficult not to agree with the objective of increasing the economic well-being of Quebecers. It’s afterward that things become less clear and more complicated.
The Legault government called on “eminent experts” to help it find ways to “increase Quebec’s economic potential.” More than twenty of them responded to the invitation and took part in the consultation exercise. The opinions obtained were “relatively heterogeneous”, notes the report drawn up following the exercise and unveiled at the same time as the economic update from the Minister of Public Finance, Eric Girard, on Tuesday. “Some recommendations contradict each other. Some experts ask us to do more, and others less. We will analyze that in the coming months,” the minister candidly explained, quoted by The Press.
We remember that the government set itself the objective of reducing the gap that Quebec lags behind Ontario in terms of standard of living to 10% by 2026 and of having eliminated it by 2036. He says continue to believe that this is possible.
What delay?
In one of the expert briefs it received, the Chair in Taxation and Public Finance at the University of Sherbrooke strongly doubts this and concludes that these targets are “possibly too ambitious”. While it is true that Ontario was more than 25% behind at the turn of the 1990s, real gross domestic product (GDP) per capita in Quebec was only behind by 14% per year. last, this gap will probably still be – even if we increase productivity gains by 20% and join the leaders of the rich countries in terms of employment rate – of a little more than 9% in 2036.
The standard of living in Quebec has already caught up with that of Ontario, estimates emeritus economist from the University of Quebec in Montreal Pierre Fortin. To realize this, you just need to take into account the lower cost of living in Quebec than in its neighbor.
The idea of increasing per capita wealth in Quebec remains good because it alone would explain more than 75% of the feeling of well-being measured by the population by the Gallup World Happiness Index survey. Also because, whatever the delay that Quebec may or may not be behind Ontario, it is also falling further and further behind many other countries, starting with the United States, but also the perennial first in class in Northern Europe.
From 14% in 1981, the gap with the Americans was, for example, down to 44% in 2018 and even exceeded 50% last year.
Low productivity
What harms Quebec’s performance in this area is notably its lower productivity, that is to say the quantity of wealth produced per hour worked. This would be due, among other things, to a large number of jobs in lower-wage industries, the greater presence of SMEs in its economic fabric, a lower level of business investment, weaker entrepreneurial dynamism and to a higher corporate tax burden.
If Quebec companies invested as much as their Ontario counterparts in proportion to the number of jobs, this would result in an increase in private investment of 7 billion, the long-term addition of 27.5 billion to GDP per year or the equivalent of $3,200 per capita.
One of the key words of the experts consulted by Minister Girard is innovation. Both in terms of products offered and manufacturing, marketing and organization processes, explain professors Wilfried Koch and Alain Paquet from UQAM. One that leads to “creative destruction” where “new technologies constantly replace previous ones,” says Robert Asselin of the Business Council of Canada, quoting another expert. But be careful, changes which will inevitably come more from the imitation of innovations from elsewhere than from those which would be designed locally due to the modest size of the Quebec economy, like that of Canada.
To do this, the government must adopt an industrial policy in which it will identify “economic sectors with high potential for productivity and synergy with the entire economy in order to maximize their impact”, recommend economists at Scotiabank. For many, this will require the continued development of innovation zones, such as that of the Energy Transition Valley, as well as the establishment of laboratories of excellence (Advanced Research Project Agency in English or ARPA).
” No, it’s the opposite. The government should, with its programs, seek to support the development of all industries rather than seeking to accelerate the development of those subjectively identified as promising by the government apparatus,” argues the Center on Productivity and Prosperity. from HEC Montreal.
The human factor
There should also be an imperative question of expanding the labor pool, better integration of immigrant workers and the promotion of lifelong education and training.
In 2018-2019, the high school graduation rate rose to 83% in Ontario, compared to only 75% in Quebec, we recalled this week. This delay was particularly due to boys, only 69% of whom obtained their diploma within the expected time frame, compared to 81% of girls.
If Quebec caught up with Ontario in this regard, the addition of qualified workers would make it possible to fill 27,400 more jobs, including more than 23,000 requiring college or university training. The GDP would gain 2.4 billion per year and Quebecers the equivalent of $250 per person, calculated the Ministry of Finance.
The UQAM Research Chair on Intergenerational Economic Issues emphasizes that better mathematical skills have a particularly positive long-term effect on individual income and that periods of economic slowdown are conducive to the reskilling of workers. Scotiabank economists, for their part, suggest that admission to training programs that are less aligned with industrial policies be subject to restrictions.
The Ministry of Finance lists around fifteen other major recommendations ranging from a reduction in corporate and personal taxes to better support for fundamental and applied research, including the adoption of a law specifying and formalizing the objective of collective enrichment.
All this is only a first step, the ministry concluded in its report this week. “The range of possible solutions received demonstrates the complexity of the issue. The government must therefore remain prudent and adjust to act effectively. »