Investment Quebec | A bill of more than 100 million in fees

The Legault government is relying more and more on Investissement Québec (IQ), but this is accompanied by a bill of fees that continues to climb. It has just crossed the 100 million mark and has not finished increasing, recognizes the Minister of Economy and Innovation, Pierre Fitzgibbon.

Julien Arsenault
The Press

In order to carry out the mandates entrusted by the Quebec government, the financial arm of the State will receive a sum of 108 million in compensation for the fiscal year that ended on March 31, according to a recent decree published in the Official Gazette. This is an annual increase of 37%.

“The answer is yes, I expect to see an increase next year [exercice 2022-2023], explains Mr. Fitzgibbon, in an interview. There were transfers to IQ and additional hires for certain mandates. There will still be increases. »

IQ wears many hats. The Crown corporation intervenes with its own funds – where decisions are approved by its board of directors – but it also acts as an agent for the Government of Quebec when the time comes to allocate funding.

The government’s financial arm plays this second role when carrying out interventions through the Economic Development Fund (FDE), the Natural Resources and Energy Capital Fund (CRNE) and the Fund for the Growth of Quebec Enterprises (FCEQ). – three tools that allow the State to intervene directly in the economy. It is on this aspect that Quebec pays him an annual sum in fees.

Since coming to power, the Legault government has expanded the role of Investissement Québec with the goal of accelerating business investment, attracting more foreign investment and increasing Québec exports.

Bigger, more expensive

Mr. Fitzgibbon explains the marked increase in professional fees paid to IQ for its role as agent by three factors: the transfer of employees from the Ministère de l’Économie et de l’Innovation as well as other entities to IQ, the addition of resources for certain “targeted mandates” as well as an increase in staff compensation.

“Let’s take the battery sector, we hired seven or eight more people,” he said. I think that we will surely conclude, in the coming years, that it will have been a good investment. »

According to its most recent annual report, IQ had 1,022 permanent employees on March 31, 2021 – an increase of 80% compared to the same time the previous year. Since the Legault government has enhanced the activities of the Crown corporation, it has welcomed 168 employees from the Ministry of the Economy and 210 workers from the Center de recherche industrielle du Québec, whose management has been entrusted to IQ.

Asked about the increase in the amount of fees, Luc Bernier, professor at the Graduate School of Public and International Affairs at the University of Ottawa, recognizes that this is a “medium leap”.

“Should we entrust all of this economic management to an independent body and no longer carry it out through the ministry? [de l’Économie] who is supposed to do it? he asks himself.

According to the expert, it is difficult, for the moment, to analyze the significant increase in fees paid to IQ by the Legault government. The portrait of the next few years will follow. Even if the bill is expected to increase, it will not go so far as to double, assures Mr. Fitzgibbon.

Rising fees

While IQ is doing more for Quebec, the management expense ratio—expenses as a percentage of assets under management—for FDE, CRNE, and FCEQ keep rising. This indicator rose by 16 percentage points between 2019 and 2021, to reach 0.41%. However, the trend has been downward on the equity side of the Crown corporation.

Asked about the subject, the Minister of the Economy wanted to temper the increase in the indicator by saying that it should not be analyzed annually. He took up the example of the battery sector.

“We’ve been working on this for a year and a half, and we’re starting to reap the benefits,” said the Minister. During this period, you have expenses, but zero investment. The nature of the operations makes it necessary to pay attention to these statistics. »

The increase in the management expense ratio for IQ’s agent business should eventually stabilize, agrees Fitzgibbon. However, he did not specify how much the management expense ratio would continue to climb.