Demystifying 2017-2018 Quebec Budget

Don’t be gamed by the “balanced” budget from the Quebec Government: overtaxation coupled with austerity measures and marginal expenditure growth rates define this budget, not a meaningful increase in Quebec’s economic growth. The province was $207-billion in debt in 2016-17 with the highest debt-GDP ratio in Canada of 52.7 per cent. Its GDP is projected to grow at 1.7 per cent for the 2017 fiscal year and decrease to 1.6 per cent in 2018, well below the national growth rate of 2.2 per cent.

With a slowing GDP, how did the Quebec Government manage to balance the budget?  For starters, the average citizen’s taxes and fees were raised by $817/year (Legault, 2017) which was embedded in: an increase in sales tax by two percentage points, a rise in gas & diesel tax and a Health Tax. Moreover, hiring freezes and severe cuts to education and healthcare were implemented, not to mention billions in government contributions were cut from the pensions of 65, 000+ public sector employees. The latter indicates that a reduction in spending, a decrease in services and an increase in taxes balanced this 2017-2018 budget, not economic growth.

Montreal is a prime example of the province’s taxation philosophy: cuts to education and other human capital services at the expense of residential, sales and commercial tax revenue. Reflected in this fiscal philosophy, Mayor Denis Coderre opted to give a $400 million project to Devimco to build condominiums at the former Montreal Children’s Hospital location without  serious consideration or contingent for a school on site. The mayor shortsightedly aimed for property tax revenue rather than sustainable long-term revenue from an improved education system. Quebec is in dire need of continuous investments in education as the province has an abysmal drop-out rate which leads the nation; teachers are underpaid, pegged with the lowest salaries in all of Canada; the curriculum is outdated and out of touch with the 21st century global economy; limited resources and shortages of support staff adds to Quebec’s hazardous education system. While the budget provides education with $3.4 billion over the next 5 years, education should have not been cut in the first place.

This budget pleases Quebec’s Liberal Party members, specifically Finance Minister Carlos Leitao’s who proclaimed that the province was in “economic and fiscal health”. On one hand the Finance Minister applauds the budget with “confidence and optimism” while on the other hand he is already requesting Ottawa to assist Quebec’s future healthcare expenditures.

With an aging population expected to implant additional fiscal pressure on healthcare, tax revenue and pensions, political leadership should be honest with themselves and the voting citizenry about Quebec’s economic, education and healthcare situation. Politicians in Quebec are best to include leaders with an expertise and penchant for education reform as a mechanism for sustainable economic growth to truly balance future budgets rather than falsely “balancing” the budget with austerity measures and tax hikes. 

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