Analysis

The Rorschach budget: What do you see when you look at Quebec's economic plan?

Quebec’s 2017 budget was a work of art. Or not. It all depends on how optimistic you are about the future.

Quebec’s 2017 is a budget of hope. Unless, of course, it’s not.

Quebec Finance Minister Carlos Leitao, centre, is applauded by members of the government as he stands to present the budget speech at the legislature in Quebec City. (Jacques Boissinot/Canadian Press)

The 2017 Quebec budget is a responsible piece of fiscal planning, elegant in its foresight and thrift.

Or it is a myopic disaster, one that ignores the painful legacy of budgets past and jerks the public ledger around in a shallow electoral ploy.

If, as Wallace Stevens once wrote, there are 13 ways of looking at a blackbird, then there at least as many ways of looking at a government budget.

It's something of a fiscal Rorschach test. What you see in Carlos Leitao's latest effort will depend, largely, on how you understand the present; a glass half-empty, half-full kind of thing.

The government is projecting a $2.5 billion surplus for 2017-2018. That can't be bad. Saskatchewan, by comparison, just tabled a budget with a nearly $700 million deficit, not to mention a one percentage point hike to the provincial sales tax.

Quebec's surplus, on the other hand, will help finance small tax cuts and a hefty payment on its debt. Such largesse is permitted, according to Leitao, by the province's sound economic fundamentals.

Unemployment is dropping, so is the debt to GDP ratio, and government revenues are picking up thanks to healthier than expected economic growth.
Change in the gross debt as of March 31. Bar graph represents gross debt in billions of dollars, line graph represents gross debt as a percentage of the GDP. (Quebec budget)

"Quebec is in much better economic and fiscal health," Leitao said in his budget speech. "We have put Quebec back on the road to prosperity."

So where's the problem?

Looks great, right? So where's the problem? Well, if you step a little to the left, or right, the picture takes on a different hue.

The current surplus was enabled by a dramatic — some say draconian — spending slowdown in the first two years of the Liberals' mandate.

Doctors overburdened with paperwork, nurses exhausted to the point of burnout, a justice system so slow its delays became unconstitutional: aggressive debt-slaying looks great on a bar graph, but it's experienced somewhat differently on the ground.

The sizeable reinvestments in health care and education this year might amount to a tacit acknowledgement by this government that it got a little scissor-happy at the start of its mandate.

Quebec school teachers were also affected by the Liberals' so-called austerity measures, and staged a number of demonstrations in 2015. (Graham Hughes/Canadian Press)

Moreover, it invites cynicism to claim, at the outset, that the province is in the death-grip of debt, only to stumble upon excess billions when another election appears on the horizon.

No surprise, then, that opposition politicians called out the government's "stop-and-go" approach as a reckless electoral tactic.

Two roads

Where the three parties diverge is how these gains ought to be redistributed.

The Parti Québécois and its sometime ally on the left, Québec Solidaire, want the surplus to be plowed back into the ministries that had their budgets ravaged — namely education and health.

They see Quebec's welfare model as being in a state of crisis. In which case, no wonder debt repayment is way down their list of priorities.

François Legault's Coalition Avenir Québec, though, is far from wedded to the welfare model. For the CAQ, the crisis lies less in program spending than it does in the tax burden of Quebecers.
Coalition Avenir Québec Leader Francois Legault wants to see more tax relief for Quebecers. (Graham Hughes/Canadian Press)

Debt payment drops down the list for the CAQ too, but only because it gets in the way of tax relief more substantial than the crumbs offered in the budget. 

Why the hurry? Legault doesn't see in Quebec an economic engine ready to roar to life, but one sputtering as its neighbours open the throttle.

"The budget only anticipates GDP growth of 1.7 per cent, while we anticipate two per cent growth in Ontario and 2.5 per cent in the U.S.," Legault told Radio-Canada.

"We have to kick-start the economy."

This is not mere bickering about how to spend a multi-billion dollar surplus. This is a debate featuring fundamentally different views about the current fiscal and economic health of the province.

About the Author

Jonathan Montpetit

Journalist

Jonathan Montpetit is a journalist with CBC Montreal.