Thrill seekers will be disappointed. The budget which inaugurates the second mandate caquiste has nothing exciting, and the Minister of Finance Eric Girard must be delighted.
Budgets rarely grab attention for the right reasons. The most vivid memories go back to the Couillard government’s cutbacks or its gifts distributed just before the election campaign.
There is nothing like it in the new Girard budget. The minister brags about being predictable. Its flagship measure: lowering personal taxes as promised while remaining “prudent and responsible”.
What Mr. Girard also tries is to have the gift of ubiquity. The minister wants to be everywhere at once. He promises to reduce the debt and rebalance the budget while reinvesting in public services. He deplores the insufficiency of the federal health transfer while ensuring that he has enough money to finance the increase in system costs.
Mental health and housing receive modest sums and in the environment, tough measures are long overdue. But overall, it’s the splits budget.
Since coming to power, the CAQ has benefited from the surpluses left by the Liberals, federal aid during the pandemic and the unexpected increase in income caused by inflation.
It could spread out in the center and offer something for everyone. But the more time passes, the more this position will become uncomfortable.
The Caquists brag about reducing taxes without reducing services. In the short term, it works. The tax reduction is in fact financed by a reduction in contributions to the Generations Fund, without increasing the debt.
But for the rest, the curves do not lie.
Average revenue growth is around 3%. Same thing for expenses. However, in health, the increase in system costs exceeds 4%. It eats up an ever-increasing share of public funds. There will therefore be less and less for the rest. As for access to justice already blocked, for municipalities with deficient public transport as well as for nurses, teachers, psychologists and other state employees on whom the quality of public services depends.
The long-term CAQ approach could be summed up as follows: offering more with less.
It is far too early to cry austerity.
In the short and medium term, the projections are reassuring. The deficit will decrease every year. In five years, it will be eliminated.
But if we look a little further, the clouds appear. The Institut du Québec predicts that in 2030, expenses could exceed revenues.
Delicate choices will then have to be made, and Mr. Girard complicates the task. There will be a second tax cut. Once the budget has been balanced, it undertakes to do it again with a new fiscal respite. In 2027, if his plan works. By magic, this calendar will coincide with the next election campaign.
At the same time, Mr. Girard will also be under pressure to improve services. Because there is a political version of inflation, that of constantly growing needs. While insured services are struggling to be offered throughout the territory, there is a demand to expand the offer. Two recent examples: requests to reimburse psychotherapy consultations and dental care for the less fortunate.
The same mechanics can be observed with infrastructures. Schools, hospitals and roads are deteriorating faster than they can be repaired. And at the same time, we promise to build more and more. The amounts earmarked for new projects increase four times more than those dedicated to repairs.
Mr. Girard maintains that his plan remains prudent.
Quebec’s debt is down while that of the other provinces is up.
Our target for 2025 (debt/GDP ratio of 45%) has been achieved. The next target would also be achieved, although postponed for five years. And the cost of interest on the debt is going down.
According to him, there would be room for manoeuvre. And a need, because Quebec is the province that taxes individuals the most.
But in return, Quebecers receive more services. Taxes and services are inseparable. As economist Pierre Fortin summarizes in his pre-budget brief: the pressure on public services will be “explosive”. Promising to respond while cutting funding would be “nonsense,” he said.
The Caquists believe they have the population behind them. Their position pays off. They seduce the “middle class”, a vague category that could be defined politically as follows: all those who have the impression of paying too much tax and being less rich than their neighbor.
This is one of the recipes for CAQ success. It will be easier as long as we can promise to do everything at the same time. In other words: for a limited time.
We could see the reappearance of his discourse set aside since he came to power, that of the “efficiency” of the state.