How ironic, though.
Posted at 7:00 a.m.
The auditor general’s report on public finances was supposed to prevent overspending and electioneering promises. But judging by the reaction of the parties on Monday, that is precisely what it allows.
That was not the goal. And that’s not what the report should encourage, if one bothers to read it all.
In 2014, Philippe Couillard said he had discovered a “hole” left in public finances by the PQ government. It was on this that he relied to justify the rapid tightening of spending. A bit like Jean Charest did in 2003.
To put an end to this bad film, Mr. Couillard proposed that before each election campaign, the Department of Finance publish its projections and that the Auditor General validate them afterwards.
This was to force the parties to build their financial framework from the same figures. In other words: not justifying their promises with unrealistic revenue projections.
In 2018, the Coalition avenir Québec had nevertheless stretched the rubber band by predicting that growth would be greater thanks to a mysterious “CAQ effect”. This time, she doesn’t need to invent a miracle. Reality did the work. The deficit of 6 billion has melted, in good part because of inflation which inflates the revenues of the State.
However, inflation has a serious drawback: it also increases the cost of living. The parties therefore compete in terms of electoral promises. They want to fund more public services while reducing the tax burden.
Almost everyone is happy. But this comes with two risks.
The first is uncertainty. The word comes up no less than 64 times in the Auditor General’s analysis. She describes it as “very high”. International monetary policies, the level of inflation, the war in Ukraine, the evolution of the pandemic, all of this remains “highly volatile”, she writes in passages that have not been highlighted by the parties. …
Moreover, the Department of Finance’s report is based on projections made at the end of June, which have since been revised. And financial institutions continue to adjust their crystal balls frequently.
A recession is far from impossible. The Minister of Finance, Eric Girard, estimates the probability at 35%.
The other risk is political.
It will be declined in several ways during the election campaign.
There is short-termism. Unlike economics, demographics are easy to predict. However, even if the aging of the population will exert strong pressure on public finances in the long term, the parties will be tempted to propose solutions by only evaluating their cost for the next electoral cycle. And there again, the budget planned for the end of a mandate is never very precise. Numbers are rounded to obtain the desired result. Seniors’ homes are an excellent example. Will this model be viable for the next 20 years? This is a question that the CAQ seems happy not to answer.
Another pitfall is consensus. The Auditor General’s report will allow the parties to promise anything and everything. More money for education? They will be for. Also healthy. And tax cuts for all, why not? Without neglecting targeted aid for the poor, of course. The values are reflected in the choices, but the strategy of the CAQ consists in not getting wet. This chameleon party claims to be in favor of a bit of everything at the same time. Stifling debate is his plan, but it does not serve democracy.
Finally, the anticipated return to a balanced budget risks diverting attention from a serious problem: the increase in the budget does not necessarily improve services. It’s more complex…
In health and social services, more than 37,000 positions are vacant. And even if we budget for the hiring of these people, that does not mean that they will come. To provide better care, what matters is not just “how much”. It is also the “how”. For example, the organization of work.
The improvement in public finances remains good news, without a doubt. But it is more fragile than it is said. And it should not prevent debates as unpleasant as necessary.