The record deficit in absolute figures of $11 billion is “reasonable”, judges François Legault.
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The day after unveiling his budget, the Prime Minister downplayed the extent of the shortfall in state coffers.
Even if the deficit of $11 billion is the highest in the history of Quebec in absolute figures, after the payment to the Generations Fund, François Legault wanted to recall that several governments before him presented a hole representing more than 1, 5% of GDP.
A level that he does not consider disproportionate. “I think it’s something reasonable,” said the Prime Minister. He believes that the economic situation must be taken into account to judge the extent of the deficit.
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“There is an economic slowdown, there is a special situation at Hydro-Québec because of the water levels which is causing us to lose a billion dollars, we are in the process of straightening out the two major networks [de la Santé et de l’Éducation] and for that, we also need to invest,” he insisted.
Continue to lower taxes
François Legault defends tooth and nail the tax cut he offered to Quebecers after the last elections.
“It was necessary to do it because of the increase in the cost of living,” he insisted, in a press scrum at the National Assembly.
Originally, the CAQ promise to reduce the tax burden on citizens by two and a half points was spread over ten years. Without reiterating his commitment, the Prime Minister praised this strategy. “I think we must indeed look to continue to [baisser] Quebecers’ taxes in a third mandate.
François Legault promises to clean up government spending and reduce bureaucracy to replenish coffers, but there is no question of firing civil servants.
The reduction through attrition of administrative staff upon retirement will be sufficient, according to François Legault.
Lack of rain increases the deficit
What is weighing down Quebec’s financial health is notably the drop in Hydro-Québec’s dividends, which can be explained by the lack of rain. Last year’s drought lowered the level of water basins used to produce electricity, reducing energy exports. The consequence: public coffers were deprived of $1.5 billion.
The Prime Minister is confident that the state corporation will not be unduly affected by the vagaries of nature until the return to balanced budget.
“What they explain to me at Hydro-Québec is that, for a long time, there has always been a year or two when there is less water, and then that leads to a significant correction. I am told that this existed even before climate change, but I do not think that we can anticipate, for the next five years, a loss of income of one billion per year.