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Public finances: A challenge that must be met

Opinion letter by Yves-Thomas Dorval, President & CEO, Quebec Employers Council
The Gazette, p. A19 - June 19, 2014
The Sherbrooke Record, p. 6 - June 20, 2014

https://www.cpq.qc.caSeveral recent reports on the state of Québec’s public finances that have been tabled by experts in the field, including one issued by economists Luc Godbout and Claude Montmarquette, paint a rather bleak picture of the province’s financial situation.

The Québec budget, which was presented in early June by Finance Minister Carlos Leitão, confirmed this fact: Québec, more than ever, is living beyond its means and is in a structural deficit position.

According to the budget figures, the deficit for the 2013-2014 fiscal year is expected to reach $3.1 billion and in 2014-2015 the deficit is being pegged at $2.35 billion.

Meanwhile, Québec is currently faced with a public debt that continues to rise, a forecast of low economic growth, and an aging population that is growing at an accelerated pace.

Considering the circumstances, it will be increasingly difficult for Québec to continue funding the generous programs it has provided for over the years without this having a significant impact on future generations, unless substantial changes are made to the way we do things.

The major question we need to ask as a society is why the province of Québec always has to be more generous than anywhere else in North America while it has a lower collective wealth and a higher public debt. We need to ask, on the one hand, how we can adjust our programs and our spending in relation to our ability to pay, and on the other hand, how we can grow our collective wealth.

There is no magic solution. The government must meticulously scrutinize each of its programs, along with its administrative structures and governance, and compare them to existing programs elsewhere in Canada. As long as our wealth continues to be below the Canadian average, our programs simply cannot be as generous as they are elsewhere; they need to be brought back to the average level.

Fortunately, the population and elected officials are becoming increasingly aware of the wall toward which Québec is heading if we take an ostrich approach and maintain the status quo.

Adopting the “deep-freeze’’ principle in terms of public spending whereby no new program would be authorized without offsetting savings elsewhere in the government apparatus, and swiftly establishing the Commission de révision permanente des programmes and the Commission d’examen sur la fiscalité québécoise for a systematic procedural and fiscal review are both fine initiatives that, in the short term, will lead to the much-needed slowdown of public-spending growth and, in the long term, to a rigorous and extensive analysis of the government ‘s expenditures and revenue streams.

This same thought process should be applied in regard to our wealth-creation potential that needs to be unleashed, especially in the area of our natural resources, including hydrocarbons, in a responsible and sustainable manner. Other countries, such as Norway, have done it, while ensuring generous social coverage and fair prospects for future generations. We have the assets to accomplish this; all we need is the will.

Beyond these considerations, Québec’s prosperity, whether we like it or not, also depends on Quebecers’ recognition of the major contribution by the business community in creating collective wealth and economic growth, and the support they provide in this regard. Without this growth and support, it will be impossible to maintain or enhance various programs – notably in education and healthcare – that are essential to our quality of life.

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Public finances: A challenge that must be met

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