The Cacique cicada, having sang all summer, found itself very deprived when the economic slowdown came.
As in La Fontaine’s fable, the Legault government will have to tighten its belt over the coming years, having spent cheerfully since coming to power.
In the economic update presented Tuesday, Finance Minister Eric Girard had to cut his economic growth forecast for next year in two, from 1.4% to 0.7%. We are flirting with recession.
The checks ? Tax cuts? Forget that !
The electoral candy of the Coalition Avenir Québec (CAQ) is over. And this is very well so.
Already, households will be overcompensated in 2024, since the automatic indexation of the tax system is based on inflation from the previous year.
From January, all allowances, credits and tax measures will therefore increase by 5.08%, which is almost twice as high as the inflation rate expected for next year (2.7%). Casually, this will bring more than $1,000 to a family of two children, with two salaries totaling $80,000.
So there was no need to do more. And in any case, Quebec does not have the means, because its room for maneuver has disappeared.
By eating into its reserve, Quebec still promises a return to budget balance in 2027. But we will not achieve this result without pain, since the CAQ scenario is based on an annual increase in spending of 2.3% in average within five years, including an increase of just 1.6% next year.
However, the population has cried out for austerity each time the increase in spending in Quebec has been contained at these levels, that is to say in the early 1990s when the recession was hitting hard, then when the Liberal Party cleaned up its finances. public in the mid-2010s.
The new lean period ahead will contrast enormously with the CAQ’s first five years in power, which were marked by strong growth in spending (+7.3% per year).
Of course, there was the pandemic, during which the CAQ sent much more money to taxpayers than the other provinces. Then, the CAQ continued to spend, so much so that we found ourselves with a level of spending that has never been so high in 30 years, compared to the other provinces.
Yet the government could not ignore that the inflation that boosted its revenues and filled its coffers while the economy overheated would come back in its face, like a boomerang.
This is what is happening today with the rise in interest rates which is increasing the cost of its debt and with civil servants who are demanding salary increases to absorb the increase in the cost of living.
If Quebec has to release more money as part of the negotiations, which is very likely, it will be all the more difficult to contain spending growth at 2.3%.
Efforts for budgetary austerity risk going unnoticed by the population, because services are not up to par in many areas and the state of our infrastructure continues to worsen.
The government, which gave the impression of swimming in abundance during the elections, therefore has a serious communication exercise to do so that citizens understand its choices.
Because necessarily, we will have to prioritize. This is what the CAQ was able to do in its update by targeting pressing issues, such as adaptation to climate change, the fight against homelessness or support for food aid.
But it is housing that gets the lion’s share, or 1.8 billion in five years, to build 8,000 affordable and social housing units. This helping hand will be welcome to help the less fortunate find housing.
But it’s just a drop in the ocean. Imagine: CMHC estimates that 1.2 million housing units would have to be built in Quebec by the end of the decade to resolve the housing shortage which also affects the middle class.
In its update, Quebec mentions initiatives to accelerate the construction of housing, in particular by reviewing zoning rules and allowing the construction of accessory dwelling units. This needs to come to fruition as quickly as possible. We need a comprehensive plan like in Ontario and British Columbia to tackle the housing crisis that the CAQ has been slow to take seriously for too long.
For the moment, nothing is moving the needle: the CAQ predicts that housing starts will stagnate below 45,000 units per year, within five years, when the rate should at least triple.
Except we’re not just short of money. There is also a shortage of construction workers. Here too, Quebec will have to prioritize. Housing ? Hydroelectric dams? Schools, hospitals and roads in good condition? REMs and trams? We won’t be able to do everything at the same time.
The Caquiste cicada is at the time of choice.
The position of The Press
The government, which gave the impression of swimming in abundance during the elections, has a serious communication exercise to do so that citizens understand its choices.