Quebec government looks to invest in the future
On March 17, 2016, the Government of Quebec released the details of the 2015-2016 fiscal year. According to the documents, the province has managed to balance the books and simultaneously cut their health tax.
The year’s budget is balanced, but the province’s gross debt will be about $208 billion at the end of this month, according to the documents. Quebec is the most indebted province in Canada, with a debt-to-GDP ratio of 55 per cent. The debt-to-GDP ratio is the relationship between a government’s debt and their economic activity, as in the dollar value of goods and services in a given place. The ratio is down from 55.1 per cent last year, which indicated the first time it has dropped since the 2008 recession.
[pullquote align=”left” cite=”” link=”” color=”” class=”” size=””]…allotted $1.7 billion over the next decade…[/pullquote]
Quebec finance minister Carlos Leitao detailed how increases in household spending from 1.4 per cent to 1.9 per cent, combined with an increase in exports up 2.8 per cent from last year, has contributed to an overall growth of 1.5 per cent.
“Achieving these results was a collective effort. I want to underscore the role played by all Quebecers in getting government finances in order,” said minister Leitao in a speech delivered on March 17.
In terms of a debt-reduction strategy, Quebec also managed a $2 billion contribution to the Generations Fund, which is a reserve designed to help bail the province out of any prospective net debt. The provincial fund is expected to grow by another $14 billion between now and the 2021-2022 fiscal year.
Minister Leitao called the Generations Fund “the most powerful instrument of intergenerational equity ever adopted by a government.” He went on to praise the “exemplary” spending control exhibited by the provincial government.
Balancing the budget was no small feat—it’s the first time since the global recession of 2008 that Quebec has had two consecutive fiscal years without debt.
To put the balanced budget into context, British Columbia is the only other major province expected to post a similar budget for the 2016-2017 fiscal year. Alberta, however, has taken blow after blow in the energy sector and is expected to post a deficit hovering near the $10 million mark. Ontario is still digging itself out of its $4.3 billion debt, but is expected to make gains this year.
Minister Leitao also announced the latest focal points of funding, namely in forestry and education.
Quebec is planning to funnel $850 million into the forestry sector over the next five years, in order to revamp and innovate the industry. The majority of the funds will be for an energy rebate to stimulate more investments into manufacturing and natural resources.
In addition, the province has allotted $1.7 billion over the next decade to restore abandoned mining sites. The move supports green infrastructure and will simultaneously fix man-made ecological imbalances, as well as support domestic forestry companies, who currently employ about 60,000 Quebecers.