By The Canadian Press - Tuesday, November 20, 2012 - 0 Comments
QUEBEC – The Parti Quebecois government appears poised to survive its biggest early test…
QUEBEC – The Parti Quebecois government appears poised to survive its biggest early test as a minority government, with the opposition grumbling over its newly tabled budget but unwilling to trigger an election over it.
The minority government presented Tuesday its 2013-14 budget months ahead of the usual schedule, knowing that its rival Liberals would be embroiled in a leadership race this fall.
The bet appears to have paid off.
The Coalition party announced it would vote against the budget. The Liberals also promised to vote against it — then swiftly added that they would not do it in sufficient numbers to topple the government.
The Liberals’ interim leader said it would have been irresponsible to risk an election less than three months since the last one, then he added a warning: there will be a non-confidence motion tabled in the legislature in several months unless the PQ changes course.
“This budget will chase away investors,” said Liberal interim boss Jean-Marc Fournier.
“This budget is the equivalent of an economic-development plan — one for Ontario.”
The opposition fumed that the PQ tax policies would make the province a less competitive and more unpredictable business climate.
An income-tax increase for the province’s higher earners is one of the main concerns cited by both the Liberals and the Coalition party.
Coalition Leader Francois Legault was more categoric in his reaction.
He insisted that all 19 members of his right-of-centre party would be present in the national assembly to vote against the budget unless major amendments are made, particularly the income-tax hike on those who earn more than $100,000.
“If it brings us to an election, then it brings us to an election,” Legault said before dismissing any chance his party would seek to form a coalition government with the Liberals.
Former Liberal finance minister Raymond Bachand said he opposes the budget, but indicated it would be up to his caucus to decide later Tuesday whether the party would ultimately support it. Fournier announced later in the evening that the government would be allowed to survive.
It is possible that only some of the Liberals’ 50 MNAs would show up for the vote.
Finance Minister Nicolas Marceau called the budget ”rigorous” and said he believes it will be passed.
“I have lots of difficulty believing that the opposition parties could reject this budget,” he said.
The budget will see the province eliminate its deficit during 2013-14. The projection keeps the province in line with a pledge made by the previous Liberal government.
To reach its goal, Premier Pauline Marois’ government introduced several measures, such as capping annual infrastructure expenditures, cutting back increases on program spending and raising taxes on tobacco and alcohol.
The budget also calls for income-tax hikes on the well-off, something the two major Opposition parties vehemently oppose.
Marceau defended the tax increases when asked about them during a news conference before he tabled the budget.
“I understand that our wealthy families already pay a significant share of our taxes,” he said. “But in recent years, most of the burden has been on middle-income families and we feel that it was unfair.”
Budget highlights include:
— The price of a carton of 200 cigarettes will climb by $4. The measure is expected to bring in an additional $130 million in 2013-14.
— A bottle of beer will cost three cents more, a bottle of wine 17 cents more and a bottle of spirits an extra 26 cents. The government believes it will collect an extra $100 million.
— Hydro-Quebec will lose 2,000 jobs through attrition. A planned hydro rate hike will be lowered.
— Capital investments on infrastructure will be capped at $9.5 billion a year, compared with the previously announced figure of $11 billion.
Marceau said the government was able to balance the books for Canada’s most-indebted province primarily by controlling program spending, adding revenues and curbing infrastructure expenditures.
“We will achieve fiscal balance in 2013-14 and maintain it thereafter,” Marceau said.
“There was no question of letting things slide.”
The Opposition parties highlighted many concerns with Marceau’s budget.
Bachand criticized the document for curbing infrastructure expenditures by $7.5 billion over five years in a province known for its crumbling roads, bridges and hospitals.
He even recalled the deadly overpass collapse a few years ago in Laval.
“We have to renew our infrastructures, they’ve been neglected for 25 years,” he said.
Legault said few details were given in the budget about the spending cuts, the mining industry and the future of university funding.
The government has not spelled out details in two sensitive areas: its stated plan to raise mining royalty rates, and its plan to eliminate planned university tuition hikes. The mining plan was among the factors cited by the Liberals, as they argued that the PQ’s ambiguity would scare away investors.
The earlier-than-expected budget appeared to be an attempt by Marois to limit the chances that her minority government became the victim of an Opposition takedown.
The PQ has insisted the unusual budget date is a matter of fiscal responsibility, not politics.
The party said its own accounting shows that Quebec’s economic picture is worse than the previous government claimed.
With just a slim majority in the legislature, Marois needs support from at least one rival for her budget to pass.
The PQ, which tabled its first budget since losing power to the Liberals in 2003, aimed to shake off doubts it can be a capable economic manager. The party hoped to build credibility with Quebec’s business community, all while staying true to the party’s left-leaning grassroots.
Marois ran on a platform significantly to the left of the other big parties, with a program that stirred concerns within the business community.
By Stephen Gordon - Tuesday, November 20, 2012 at 6:50 PM - 0 Comments
Perhaps the most interesting aspect of the 2013-14 Quebec budget is its timing—why did it have to be brought down now, in November, instead of next March? The government noted a modest downward revision in forecasts for economic growth, but that is hardly a crisis that requires immediate action.
I can think of two quick answers:
- If you’re going to implement austerity—and this is an austerity budget—then it’s better to start sooner than later. Quebec’s balanced budget law obliges governments to make up the shortfall one way or the other.
- If the budget for 2013-14 is passed now—and as I write this, it looks as though the Liberals will let it pass—the PQ doesn’t have to worry about trying to pass a budget next March, when the Liberals will presumably have a new leader in place.
Either way, the goal of this budget seems to be to buy time. The expected loss in revenues due to slower economic growth in the current (2012-13) fiscal year are relatively small—around $195 million—and are covered by the increases in taxes on tobacco and alcohol.
Eliminating the flat $200 health tax—a central element of the PQ platform—turned out to be a very costly promise. So was the subsequent, compromise commitment to eliminating it for low-income households and increasing it to $1,000 for those with high incomes: this shift reduces revenues by $400 million. This hole is to be closed by introducing a new tax rate of 25.75 per cent (up from 24 per cent) for incomes over $100,000. The new combined federal-provincial top income tax rate will now be 49.97 per cent—not the 55.22 per cent that had previously been floated. (As an added bonus, the government appears to have taken into account the likelihood of a behavioural response to these new tax rates.)
In the absence of significant new tax revenues (the new income tax rate replaces revenues lost from making the health contribution more progressive), the budget will be balanced through a combination of spending cuts—many of which have yet to be specified—and squeezing Crown corporations for extra revenues. Among other measures, Hydro-Quebec is expected to cut its workforce by almost 10 per cent in the next year, apparently without affecting consumer services.
The next 15 months or so in Quebec City are going to look a lot like what’s going on in Ottawa: cuts everywhere, and not all will go unremarked. The difference is that the federal Conservatives have the luxury of knowing that they won’t have to fight an election for the next three years. The PQ can only hope that they can hang on to power long enough to announce a balanced budget in the spring of 2014.
By Philippe Gohier - Friday, March 20, 2009 at 6:47 PM - 58 Comments
“If there are any economists in the room, you’re no good,” Monique Jérôme-Forget told…
“If there are any economists in the room, you’re no good,” Monique Jérôme-Forget told an in camera press conference on provincial budget day. “You change your minds every month.”
With that, Quebec’s finance minister apparently believed she could justify the dodgy numbers her own budget contains:
The projected deficit for the upcoming year will be about $3.9 billion. How do you get to that figure? First, take the $2.5 billion bite the government says the recession will take out of government revenues. That leaves you with $1.4 billion left to account for. Now add the $826 million in stimulus measures the government says it has included in this unique, “recessionary” budget. And, just to be generous, top it off with the $75 million the government says Ottawa cheated Quebec out of by changing the equalization formula midway. After all that, you’re still left with a $500 million hole.