Analysis: Quebec aims right at voters’ pocketbooks with $500 budget gift

The sound state of Quebec’s finances gives Finance Minister Eric Girard plenty of leeway to roll out more election goodies in the future.

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QUEBEC — Don’t ask Quebec Finance Minister Eric Girard to describe his vision of what would qualify as an electoral budget.

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“I can’t say because I have never done one,” Girard told reporters Tuesday before tabling the 2022-2023 budget in the National Assembly.

In other words, in Girard’s mind the budget he presented, his fourth and final one before the October general election, should not be seen as an exercise in vote-buying.

Premier François Legault has said he even ordered that the budget not be electoral, arguing such a stunt has been tried by other governments and would be an insult to the intelligence of voters.

Political realities and the calendar, however, would seem to indicate otherwise. Within minutes of Girard’s budget being made public, every one of the opposition parties tagged it as crassly electoral and paternalistic.

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“François Legault is not looking any further than Oct. 3 (the date of the election),” said Liberal finance critic Carlos Leitão. “We could even tag this budget ‘horizon: election.’”

But despite the accusations, Girard’s budget is not as overtly electoral as it could have been, even if he does fall back on a few simple yet politically profitable ideas, the same kind that have kept Coalition Avenir Québec government satisfaction levels high for all four years of its mandate.

At the top of the list is the budget’s one big-ticket item: relief for the soaring cost of living being felt by millions at the grocery store and the gas pump.

Girard is offering inflation relief in the form of a one-time $500 tax credit per adult with an income of $100,000 or less.

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Pegged to cost the treasury $3.2 billion, 6.4 million Quebecers (out of a total of 7 million adults) within that income range will be eligible. Those excluded from filing taxes, like prisoners and foreign nationals, are not eligible.

There was some heated debate Tuesday on when the money would actually arrive in the hands of Quebecers.

While the tax credit will be automatically added to 2021 tax returns, the opposition suspects it will take the bureaucrats weeks to get the money out, which means the transfer might arrive closer to voting day after all.

But the surprisingly sound state of Quebec’s finances despite the pandemic helps Girard’s credibility and that means he will have plenty of leeway to roll out more election goodies in the future, closer to the actual date when voters are paying attention.

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The economic recovery is so robust that Girard reviews his projected deficit for 2021-2022 downward, from $12.3 billion to $7.4 billion. Instead of $8.5 billion for 2022-2023, the new total is $6.5 billion.

Quebec’s employment situation has returned to the full pre-pandemic level, with 4.5-per-cent unemployment in February. Quebec managed a 6.3-per-cent economic growth in 2021 after a 5.5-per-cent decrease in 2020. In 2022, it is expected to return to an almost normal 2.7 per cent.

Girard announced Quebec’s revenues will match its spending in 2023-2024, with the deficit only due to the annual contribution it makes to its debt-fighting Generations Fund.

Spending is going up across the board, including 5.4 per cent in education and 6.3 per cent in health.

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The health increase, to a total of $55.8 billion in 2022-23, is supposed to cover the costs of soon-to-be-announced reforms to the ailing and, at times, dysfunctional health system. Its many flaws were all too clear during the pandemic when the government discovered health units were still communicating by fax as understaffed hospitals and CHSLDs buckled under the strain of COVID-19 deaths.

There’s other money available too: $1.1 billion for community action groups and organizations, another billion to implement Quebec’s green plan, $12 million to speed up the processing of immigration applications.

One group that will be disappointed by the budget are students at Dawson College who had hoped the budget’s infrastructure section would contain some relief for their overcrowding problem. The CAQ government in February canceled a planned expansion — and students arrived in Quebec City last week with a 20,000-name petition calling for the decision to be reversed.

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The budget makes no specific mention of Dawson. Quebec acknowledges overcrowding is a problem in higher education in general, and is adding $232.5 million for space rentals as a “temporary solution.”

The financial situation is, however, rosy enough for Girard to open the door to a possible tax cut in the future. Girard said such a cut would be “legitimate” in the future even if Quebec does not project a return to balanced books before 2027-2028.

As for warnings of future financial woes, Girard repeated he wants to balance the books to be as painless as possible.

“The path to a balanced budget has been laid with absolutely no austerity,” Girard said.

True to his habit in his other three budgets, Girard hedged his bets, noting we live in uncertain times, which could mean surprises down the line.

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“We do not know how the pandemic may evolve, inflation is currently high and central banks are tightening their monetary policy,” he said. “Added to this is the tense geopolitical context, marked by the Russian invasion of Ukraine.”

The sleeper issue remains inflation. Girard projects the cost of living will rise by 4.7 per cent in 2022, which is much higher than he projected last November (2.9 per cent). He projects inflation will drop to 2.3 per cent in 2023.

If there is election messaging to voters, it can be summed up simply: you are better off with the CAQ in power than any of the opposition parties because the government cares about your pocketbook.

Girard’s speech notes that under Legault’s “inspired leadership,” Quebec has “weathered the storm of two years of pandemic,” and the CAQ has more to offer for the future.

“When we look at the home stretch of the mandate that Quebecers entrusted to us, we can congratulate ourselves on our fiscal solidity, the strength of our economy and the significant amounts we have put back in the wallets of Quebecers,” Girard said.

“Although there is uncertainty, Quebecers will persevere.”

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