Parti Québécois budget aimed at triggering election, opposition says

Parents relying on Quebec’s subsidized daycare could be paying more in child-care costs if the budget presented today by the Parti Québécois government passes.

Daycare increases, no new tax hikes part of Quebec government’s ‘prosperity’ budget

Quebec Finance Minister Nicolas Marceau says he looks forward to discussing the 2014 provincial budget when the national assembly resumes in two weeks. (Adrian Wyld/Canadian Press)

Parents relying on Quebec’s subsidized daycare could be paying more in child-care costs if the budget presented today by the Parti Québécois government passes.

But many political watchers are calling it an election platform, more than a financial forecast.

Quebec budget highlights

  • Gradual increase of parental contribution to subsidized daycare.
  • $125 million for four major projects to celebrate Montreal’s 375th anniversary.
  • Three per cent increase for health care and education.
  • Program spending capped at two per cent increase overall.
  • New measures to fight tax evasion.
  • New program to support high-performing businesses.
  • Extending the terms of local investment funds.
  • Examine ways to implement recommendations in patient-based health-care funding report.
  • Review of tuition fees and exemptions for foreign students studying in Quebec.
  • $1.75 billion deficit for 2014-15.

“What you are seeing today is the launch of the electoral campaign,” Liberal Leader Philippe Couillard said after the budget was presented by the PQ in Quebec City.

“In my family, when we do the budget, we have a column for revenue and a column for expenses. We’re missing one half.”

Our government prefers prosperity to austerity.—Nicolas Marceau, finance minister

While Quebec’s other political parties insisted the document smelled of campaigning, Finance Minister Nicolas Marceau said he looked forward to discussing it when the national assembly resumes in two weeks.

He dodged questions about a possible election, saying only that this is “the budget Quebec needs,” and the plan was “reasonable.”

Couillard shot back that the budget was never intended to stand up to grilling in the legislature.

“This budget will not stand scrutiny for more than two days,” he said. “It’s just an electoral tool.”

No new taxes, daycare fee hike

The broad-strokes financial plan, the PQ’s second since winning a minority government in the fall of 2012, would see growth in program spending capped at two per cent, no tax hikes and new investment in natural resources and business.

What it won’t see is balanced books, a promise the PQ made during its 2012 election campaign and affirmed it would reach by 2014-15 in its first budget in November 2012. Instead, the projected deficit for the next fiscal year is $1.75 billion. The government projects it would be in the black the following year.

The PQ, eager for a majority, has resisted drastic cuts or income tax hikes, choosing instead to pick up the financial slack through an anticipated rise in natural resource revenues, economic growth and incremental belt-tightening.

“Today, some suggest taking a false shortcut and slashing spending,” Marceau told the national assembly.

“For our government, that is not an option. Such an approach would only slow growth, cut jobs and reduce public services. Our government prefers prosperity to austerity.”

While the plan includes many specific but small-scale promises for projects in the regions and municipalities, there are few details on spending.

There were no spending estimates included in the documents, however, Marceau explained there was no need to include detailed spending plans unless it becomes clear the opposition parties will support the budget’s broad strokes.

“The current situation is one that has not been lived very often in the history of Quebec,” he said. “Minority governments have not been a regular thing. The fact we are a minority government made us conclude that it was better to get the big picture adopted by the national assembly.”

What was spelled out was a gradual move to the indexing of the cost to parents of subsidized daycare, currently set at $7 a day. 

There were some rumours, but we never believed that the government would dare to do this.— Louise Chabot, president of the Centrale des syndicats du Quebec, on the daycare hike

The government plans to raise that contribution to $8 a day starting in September, $9 the following year and to tie increases to the cost of living in subsequent years.

That would bring in additional revenues of $32 million this year, $90 million in 2015-16 and $125 million the year after.

School boards

Part of the PQ’s plan includes reducing the number of school boards in the province to increase efficiencies.

Marceau said the move would not affect the English school boards, but is aimed at some of the small French boards, including some that have fewer than 5,000 students.

“When you look at the numbers, it’s quite clear that something can be done there,” Marceau said.

The PQ government had campaigned on a promise to freeze parental contributions to the subsidized daycare program. Marceau said that the move to indexation was “reasonable” to complete the network.

Louise Chabot, president of the Centrale des syndicats du Quebec, the union that represents the majority of the province’s teachers and childcare workers, expressed surprise

“There were some rumours, but we never believed that the government would dare to do this,” she said.

“To say that it’s a fee that we have to index, I think that’s a huge mistake.… For us, it’s an unacceptable announcement.”

When first announced, the $5 parental contribution was seen as a stepping stone to a universal system that would be fully paid for by the government, she said.

Spending for Montreal

  • Shoreline boardwalk at Parc Jean Drapeau
  • Refurbishment of Place des Nations
  • New pavilion for the Museum of Fine Arts
  • Expansion of the Pointe-à-Callière history museum
  • Reinstatement of $25 million annually from the Quebec Infrastructure Plan
  • Funding maintained for the OSM
  • $18.9 million for the expansion of the contemporary art museum

CAQ won't support budget

François Legault, leader of the Coalition Avenir Quebec, said the increases proposed by the PQ would amount to $500 a year for a family with two children in daycare and that it would be a heavy burden for families already struggling financially.

“That’s huge. The Parti Québécois is abandoning middle-class families,” Legault said.

Legault said his party cannot support the PQ’s budget and will present its own document next week.

The government also plans to bump up revenue by cracking down on small-scale tax evasion in bars and restaurants with more sales recording modules and by stepping up controls on fraudulent reporting or off-the-books evasion in the construction industry. The move is projected to bring in $61 million more in tax revenue in 2014-15.

Health-care funding remodel

In health care, the push is again on to move away from institution-based financing and to a patient-based model, where facilities would be funded based on the actual volume and type of services

“It will take a while before it can provide us benefits,” Marceau said. “In the short run, we are increasing the budget of the health sector by three per cent. That is more than the inflation rate.”

Dianne Lavallée, of the CLSC, said that amounts to a cut, given that the health-care sector was expecting more than four per cent, as laid out in the budget projections last year.

Along with the budget, Marceau tabled a report commissioned last year on the funding model along with the budget and said the government “will explain soon how it intends to implement the recommendations.”

The recommended implementation for the funding schedule would start this fiscal year.

Also announced were small pots of cash for homelessness outreach, volunteer firefighter training, cultural institutions and sport facilities.

A pre-electoral budget

Some economists are calling the contents of the PQ’s budget a complete surprise.

“It’s a very conservative budget.They’re not raising taxes and they’re cutting spending — or controlling  it — more than they’ve anticipated earlier. It’s not the sort of thing you would expect from a government going into an election,” said Brett House, an economist who is a senior fellow at Jeanne Sauvé Foundation and the Centre for International Governance Innovation.

While pre-election budgets tend to outline more spending, CBC’s chief Quebec political analyst Bernard St-Laurent said the PQ wants to show Quebecers it can be financially responsible.

“For the PQ, what’s important is to be perceived as being able to manage the economy and have government finances under control. Because they are perceived as being weak on the economy – the opposition parties have been focusing on that – they have to show that they can in fact do it,” St-Laurent said.

The national heartstrings

One section of the fiscal plan says the Marois government will repeat the game-changing glory of the Quiet Revolution in the 1960s, which saw the nationalization of hydroelectricity, and the creation of the province’s powerful investment arm, La Caisse de Dépôt. The budget talks about moving forward with the exploration for oil under Anticosti Island, and strongly suggests the government would like to see at least the partial nationalization of any viable oil and gas supply which might be discovered.

“Being masters and prosperous in our own house is ensuring that we Quebecers are the first to benefit from the eventual discovery of resources,” Marceau said in his budget speech.

“Quebecers will benefit from a minimum of 60 per cent of benefits from whatever is discovered beneath Anticosti.”

The new push to strengthen Quebec’s economic engines and job creation also leans on policies aimed at ensuring corporate head offices choose or remain in Quebec.

 A policy paper released in parallel to the budget calls for an overhaul of hostile takeovers, and the roles and powers of corporate boards of directors.

With files from Sabrina Marandola