The Parti Québécois' new budget failed to impress provincial opposition parties Tuesday, who say they will oppose it, raising the possibility that the recently elected minority government of Pauline Marois could be toppled.
According to Coalition Avenir Québec, its 19 elected members are set to reject the proposed financial plan. This would leave the fate of the newly-elected PQ government up to the provincial Liberal Party.
Raymond Bachand, the Liberal's finance critic, hinted that some of the party's members may not attend the budget vote in order not to topple the Marois government, which was elected in September.
He said it would be too soon to launch into yet another election.
"It's a deceiving budget and we are going against it," said Bachand. "Can we change the choice of voters less than a hundred days into a new government?"
"We’re going to oppose this budget because it’s a disappointing budget. It’s an incomplete budget and it contains many uncertainties." —Liberal finance critic Raymond Bachand
François Legault, leader of the CAQ, turned down the idea of a coalition with the Liberals to take down the PQ.
"We don't want to dance with someone with dirty hands," said Legault.
Bachand also rejected the idea, saying "François Legault only thinks about himself. It's been less than 100 days since the government was elected. Is that responsible?"
Legault blamed Premier Pauline Marois of backing out of her electoral promises – including the abolition of the health tax. The budget maintains it as a progressive tax based on income.
Québec Solidaire spokeswoman Françoise David said it is unlikely her party will support the proposed budget.
"[The government] is once again making life difficult for the least fortunate and the middle class," said David.
'A responsible plan,' says finance minister
Finance Minister Nicolas Marceau called his first budget a responsible plan for the province’s economic future.
"This budget clearly sets forth our economic vision and our government will not stray from it," Marceau said.
"We are laying today the groundwork for sound, long-lasting prosperity for all."
- 2012-2013 $1.5 billion (projected)
- 2011-2012: $3.3 billion
- 2010-2011: $4.2 billion
- 2009-2010: $3.2 billion
The $72.4-billion budget doesn’t contain any drastic changes in spending or tax collection, but it does hitch its plans to less stable sources: wealthy Quebecers and big industry. It also proposes strict limits on spending hikes.
The province plans to cap its spending increase at 1.8 per cent in 2013-2014. That represents the lowest budgeted growth rate in the last 14 years.
It’s a dramatic reining-in that was made necessary by the Parti Québécois's determination to fund key priority areas, while attempting to appease the opposition and eliminate the deficit by the target of spring 2014.
Those priorities include further increases to subsidized daycare spaces, a tax credit for children’s activities, cancelling the Liberal’s proposed tuition hike and a rejigging of the health tax.
The opposition parties, whose support the minority PQ government needs to pass its budget, were quick to dismiss the government’s financial plan as a hasty patchwork.
"We’re going to oppose this budget because it’s a disappointing budget. It’s an incomplete budget and it contains many uncertainties," said Liberal finance critic Raymond Bachand.
Coalition Avenir Québec Leader François Legault said his party’s 19 MNAs will not support the PQ budget either.
"They don’t respect their promises," he said, pointing to the government’s backtracking on platform issues. "They were elected on false representation."
The PQ election promise to scrap the $200 health tax morphed into a sliding scale system that puts more of the burden on higher income residents.
Overall, about two-thirds of Quebecers will pay less or be exempt from the health tax, according to Marceau.
Workers who make between $18,000 and $40,000 will see their contributions drop to $100. Those on the high end of the income scale, over $130,000 a year, could pay up to $1,000 in health tax.
That, combined with an income tax hike for those making more than $100,000, will bring in more than a billion dollars in 2013. It’s the same amount previously generated by the flat universal health tax.
About four per cent of Quebecers fall into the $100,000 or more a year income bracket.
"I understand that our wealthier families already pay a significant share of our taxes but, in recent years, most of the burden has been on middle income families and we feel that was unfair," Marceau said. "So we are asking those wealthier families to pay a larger share."
The PQ budget took specific aim at the hearts and pocketbooks of Quebec families.
Included in the plans are a new tax credit for children’s sports and cultural activities, the creation of 15,000 more subsidized daycare spaces and a new plan for increases to electricity costs.
The goal, according to the government, is to ease the burden on families while curbing spending in areas that have less direct and immediate impact on the public.
"We want to have cost reductions where it doesn’t touch citizens," Marceau said.
‘Sin taxes’ hiked
While the shift in income taxes may affect only a small portion of Quebecers, a hike on tobacco and alcohol taxes is likely to be felt by the wider population.
The increases to the so-called sin taxes will generate around $230 million a year.
The hikes break down to:
- $0.02 per cigarette ($0.50 a pack)
- $0.03 per bottle of beer
- $0.17 per bottle of wine
- $0.26 per bottle of spirits
The increases won’t change Quebec’s standing when it comes to comparing prices with Ontario and New Brunswick.
It’s still cheaper to buy beer in Quebec than in neighbouring provinces and a bottle of wine will still cost more in Montreal than it will in Ottawa.
Part of the government’s attempt to balance the books also came in the form of infrastructure spending discipline. Over the next five years, a cap on capital investments will see a reduction of $1.5 billion over the plans laid out in the previous budget.
"It’s a question of capacity of paying," Marceau said. "I think the level of infrastructure spending was above our capacity. It’s a bit like a family that buys a house that is too large and is not able to pay for essentials."
Time-sensitive projects, like Montreal’s Turcot Interchange, won’t be impacted by the spending cap, he said.
Streamlining the management of the province’s large infrastructure building projects will also realize savings, according to the PQ.
With the province’s two main opposition parties refusing to support the budget in its current form and Québec Solidare saying it would be difficult to support a document that mirrors what the former Liberals could have proposed, the future of the PQ’s financial plan is unclear.
The Liberals are holding a caucus meeting tonight to discuss their position.
The final vote on the budget isn’t expected to take place until early December.
Lifting the freeze on heritage hydro prices
Quebec’s heritage hydro pool represents the original capacity of the provinces first big hydro electric projects.
The supply price for that hydro, which represents almost 95 per cent of all the electricity consumed in Quebec, was fixed to compensate Quebecers for the cost of building the network.
In the 2010-2011 budget, the Liberal government announced that the freeze would be lifted and an average $0.01 per kilowatt hour increase on the pool over five years would be implemented to pay down the province’s debt.
The PQ budget presented today cancels that increase, instead indexing increases to inflation.
According to the PQ, that change represents a saving of $288 a year for the average household over the Liberal plan.