The Minister of Finance, Eric Girard, spared the goats and the cabbage during the presentation of the economic update. Quebec halves its economic forecasts for 2024, projecting future GDP growth of 0.7% instead of 1.4%. Balancing the budget, planned for the 2027-2028 financial year, will require drawing on reserves.
Public service unions will no doubt see this as a subterfuge to deflate their salary expectations, but there comes a time when you have to have the courage to name things. Raising wages and improving public services will not be zero-cost operations. They will involve either cuts in other sectors, recurring deficits, an increase in the tax burden on taxpayers who are already the most taxed in North America, or a mix of all these options.
These are societal choices that we must make collectively, in a context of economic uncertainty which is very real. Preliminary data from Statistics Canada suggests that the Canadian economy has already entered a technical recession now that rising interest rates are starting to have their effect on consumer spending. Quebec is showing remarkable resilience, so much so that the Minister of Finance does not foresee a technical recession in the short term. The fact remains that Quebec does not operate in a bubble isolated from its economic environment. It has also entered a slowdown phase that we cannot ignore.
Some will say that this is all a budgetary bluff. This is to misunderstand the deep nature of the Minister of Finance and the respect he has for macroeconomic indicators. However, the decision to lower taxes and return checks to categories of citizens who did not need them, in the two previous budgets, diminished this enviable reputation. It is now having a boomerang effect on the Legault government. He deliberately chose to cut off part of the room for maneuver that would have allowed him to reinvest in public services.
For the rest, the investments of $2.5 billion over five years in housing, homelessness and the fight against climate change remind us that despite all the criticisms made of it, the Legault government is not as on the right that it is depicted. Note, however, that these measures are excessively ambitious in a context of labor shortage and cumbersome municipal bureaucracy which hampers construction starts.
Cities repeat that the Legault government is not doing enough for public transportation and adaptation to climate change, but they have to examine their conscience about their priorities and their management practices. Among the Liberals in Ottawa, and within the Plante-Ollivier administration in Montreal, the left in power is Keynesian at all times. By dint of looking for new responsibilities, she purchases increased expenses. This left should integrate into its discourse the responsible management of public funds and the search for a minimum of fiscal prudence to broaden its base.
This is the bet that the Legault government is making. It is politically risky in the tense context of negotiations with the public sector, but it remains anchored in the deep conviction that the state coffers are not inexhaustible, to quote Minister Girard.