Those hoping for a Christmas present from the Minister of Finance will be disappointed. Less optimistic than expected for 2024, Eric Girard unpacked targeted and prudent investments on Tuesday, particularly for access to housing.
“We are not in recession, but certainly in an excessively difficult period that could be described as stagnation,” Minister Girard noted at a press conference.
With the war in Ukraine and that between Israel and Hamas, “there is a lot of uncertainty in the economy,” said Mr. Girard. “The next six months will be very difficult,” he warned.
Downward forecasts
The prolonged rise in interest rates and the persistence of inflation therefore lead Minister Girard to revise downwards his economic growth forecasts for 2024, going from 1.4% to 0.7%.
Despite this, the Minister of Finance maintains the target of returning to a balanced budget in 2027-2028.
To finance its new targeted measures, it will have to draw $1 billion from its contingency reserve. The forecast deficit remains at $4 billion for 2023-2024.
Overall, the additional investments planned in its economic update amount to $4.3 billion.
For the average Quebecer, the indexation of the personal income tax system to 5.08%, as of January 1, will represent $282 more in their pockets in 2024.
Including the indexation of social assistance benefits at the same level, this measure, provided automatically based on inflation, totals $2 billion.
Housing crisis
As already announced, Quebec will match the federal outlay ($900 million) to improve access to housing, which overall will ensure that $1.8 billion will be invested to build 8,000 new social and affordable housing units by five years, including 500 for the homeless.
Food banks, which urgently requested $24 million, will ultimately receive $20.8 million to make it through the year.
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Failing to send a new check to the least well-off, as the Prime Minister had promised at the beginning of the fall, all Quebecers will benefit, when filing their next income tax return, from the effect of the tax cut which only began to appear on their paychecks last July. In other words, many Quebecers will be entitled to a higher tax refund to compensate for the tax relief they did not benefit from during the first six months of 2023.
“Now I have to defend the absence of checks, whereas when there were checks, I had to defend them. Sometimes situations evolve,” observed Mr. Girard, answering a question in English.
Far from the demand of cities
Furthermore, by analyzing the breakdown of the sum of $1.8 billion over five years announced by Minister Girard for adaptation to climate change, we see that the planned investments are still far from the $2 billion requested by the municipalities.
Indeed, in reality, only $260.6 million in new money is planned “to support initiatives” in this area. To arrive at the figure of $1.8 billion, Mr. Girard includes $696 million related to the forest fires, of which $400 million has already been spent after those that occurred during the summer.
Last June, Prime Minister François Legault and his Minister of Municipal Affairs, Andrée Laforest, indicated that municipalities had room for maneuver to invest in adaptation to climate change. Mr. Legault notably pointed out the remuneration of municipal civil servants, which is 35% higher than that of Quebec state civil servants.
“We have to make choices,” explained Mr. Girard, recalling that the demands made on him from all sides are greater than the resources available to him.
Nothing to calm union discontent, the same logic applies to state workers, to whom the president of the Treasury Board, Sonia LeBel, presented a new overall offer of 14.8% over five years.
“This is what is in the financial framework, (…) which is tight,” insisted Mr. Girard, making it clear that he does not have any additional room for maneuver, unless he borrows.
This offer, he said, is consistent “with the capacity of tax payers”, according to him.
Indexation of the tax system
How much more in your pockets?
- + $442 for a single person who earns $60,000 per year
- + $667 for a household with $100,000 in income and two young children
- + $141 for the maximum amount for the Family Allowance
- + $59 for the solidarity tax credit
- + $37 per month for basic social assistance benefit