While inflation remains at a painful level, François Legault wonders what to do.
Posted at 5:00 a.m.
Last week, he opened the door to sending money to Quebecers again. The time will soon run out for him to do so without falling into electoral indecency.
It would take a few weeks between the announcement of the measure and the receipt of the money. A check received in the middle of the summer would give the impression of being signed by the head of the CAQ, and not by the prime minister. With a party logo in place of the Quebec flag.
In the last budget, the Minister of Finance, Eric Girard, suggested that taxes could be lowered. Mr. Legault confirmed last week that it was seriously considered.
This option would also have drawbacks.
First, if the goal is to react to temporary inflation, the measure casts too wide a net.
The Caquists will argue that the measure would be relevant even without inflation and that they have the leeway to do so. In 2023-24, expenses are expected to equal revenues. The remaining deficit will come from payments to the Generations Fund, which finances the repayment of the debt. In addition, in the very short term, inflation is felt more in government revenue than in government spending – the deficit forecast for 2021-2022 was revised downwards last week.
Still, Quebec is not immune to a recession. And in the long term, it will not escape the demographic shock that will cause healthcare spending to jump.
The other downside is strategic risk. Quebec is calling for an increase in health transfers. It would be ironic for Mr. Legault to explain to Ottawa that he is short of money, while reducing his own income with a tax cut.
Last fall, the Legault government announced a check of $200 to $270 for low-income people. Nearly 3.3 million Quebecers have received it.
In its latest budget, it was more generous and less targeted, with a $500 return for anyone reporting a net income of less than $100,000. That is 94% of the population. However, not everyone needed help. During the pandemic, the savings rate nearly tripled, and at the start of 2022, the average hourly wage rose faster than inflation.
As summer approaches, caquistes hesitate between the targeted approach of 2021 and the lavishness of the latest budget.
One thing is certain, the electorate is open to proposals… The rise in gas and grocery prices is hurting. And core inflation (excluding energy and food) is also accelerating.
The pandemic has also given good arguments to those who want the state to help the poorest.
From 2019 to 2020, the poverty rate has almost halved in Quebec (from 8.9% to 4.8%). We have become the province with the fewest poor people in the country, even ahead of Alberta1. It is true that programs helped people who did not need them. But this is an argument for better targeting them, and not for abolishing them.
When the CAQ was created, it was predicted that politics would cease to be based on the independence-federalist axis. A new divide was to appear between left and right.
It doesn’t seem like much right now.
The election campaign in Ontario gives a taste of what awaits us in September. The parties risk clashing with very down-to-earth proposals.
Of course, health, the environment and identity will also be at the heart of the debates. After all, the pandemic has revealed the fragility of the health network, the dilapidated state of schools and the shortage of teachers and educators. But the confrontation will also be around the portfolio of voters.
Already, the promises are piling up. Here is a very brief overview.
Québec solidaire wants to double the solidarity tax credit and increase the credit for those aged 65 and over by $500.
The Parti Québécois would create a “purchasing power allowance” – a refundable tax credit of up to $1,000 – and suspend contributions to the Régie des rentes.
The Liberal Party wants to eliminate the QST on essential goods and create an allowance for seniors.
Other promises would come with perverse effects.
The PQ want to cap the price of gas, which would not help the poor who do not have a car, while encouraging gas consumption when the goal is to reduce it.
Solidaires want to freeze electricity rates, an incentive to waste that favors the owners of large houses.
And the Liberals want to abolish property transfer taxes (the “welcome tax”) for first-time buyers, which would aggravate the real estate overheating.
Lagging in the polls, opposition parties will want to grab attention with simple, popular ideas. And in their defense, when they table a detailed and dense plan on complex subjects, as the PQ did with home care, the population yawns. Rigor doesn’t always pay off…
As for the caquists, another risk awaits them. May their advance finish killing what was left of embarrassment in them, and may the government give a gift to the voters instead of helping those truly in need.
But for the moment, a rumor evokes targeted aid, possibly intended for taxi drivers or truckers, who are suffering from the price at the pump. If this announcement is confirmed, it will be a sign that the electoral caravans are ready to hit the road again.