Quebec reveals $1.5 billion plan to kickstart economy struggling under COVID-19 restrictions
Province hardest hit by pandemic expects to see GDP shrink by 6 per cent this year
The Quebec government will spend an additional $1.5 billion in the coming years to revive an economy that continues to be weighed down by ongoing closures caused by the COVID-19 pandemic.
Finance Minister Eric Girard provided an update Thursday on Quebec's spending plans for the rest of the year, saying public health remains the government's priority as a second wave of infections sweeps through the province.
But he added the government also wants to return its attention to one of its goals when it took office: closing the long-standing productivity gap between Quebec and the rest of Canada.
"The pandemic doesn't change one bit our objective of reversing this historic tendency," Girard said at a news conference in Quebec City.
The $1.5 billion in new spending will be spread over three years, but includes $522 million in stimulus measures to be rolled out this year.
These near-term measures include:
- $250 million for retraining workers.
- $70 million in "buy local" initiatives
- $74 million for research and technology initiatives
With this new money factored in, Quebec is now on track to spend $10.5 billion in 2020-2021 simply on financial support for individuals and businesses affected by the pandemic.
A further $5 billion will go to the health-care system to pay for the increased costs of treating COVID-19 patients.
Since June, the government has spent $1.3 billion on things like salaries for new hires, medical equipment and lab tests, all in effort to prepare the system for the second wave of infections.
Back to zero deficit by 2025, minister pledges
As part of his economic update Girard confirmed that Quebec is on track to post a $15-billion deficit this year. That will translate, he said, into a recurring (or structural) deficit of between $5.5 billion and $7 billion.
He pledged the government will return to a balanced budget by 2025 without raising taxes, a timeline that economists consider unrealistic without spending cuts.
The government's chances of doing so will be helped by the spurt of economic growth that is expected to accompany the end of the pandemic. Girard is planning for GDP growth of five per cent in 2021.
But the coming months are shrouded in uncertainty. Much of the province has been under partial lockdown for at least a month, and yet the number of infections, and deaths, continue to rise.
Only minutes before Girard released the economic update, Premier François Legault said the government might be forced to temporarily close schools this winter if they continue to be sites of infection.
Before cases began mounting rapidly in September, the Quebec economy had been showing signs of recovering some of the momentum it had last year.
Employment had nearly returned to pre-pandemic levels and domestic demand did not drop as severely as many feared, thanks to huge inputs from the the federal and provincial governments.
But with large parts of the service and cultural sector closed because of public health regulations, and following the more widespread closures in the spring, Quebec is still expecting its economy to shrink by six per cent by the end of the year.
That's the largest annual decline in real GDP since 1981, when modern accounting methods started to be used in the province, and far outstrips the decline that followed the 2008 financial crisis.
Opposition concerned about timeline
Quebec's opposition parties all questioned why the finance minister was focused so intently on balancing the budget in five years, given the need for public services remains high.
The Quebec Liberals, who form the Official Opposition, accused the government of offering a series of half-measures and of not doing enough to increase health-care services.
"It's as if they started by saying 'how do we balance the budget,' as opposed to starting by saying 'how do we meet the needs of Quebecers,'" said André Fortin, the Liberal public finance critic.
Vincent Marissal, finance critic for left-wing Québec Solidaire, said the province was headed for a period of heavy budget cuts after the pandemic because the government is refusing to raise taxes while sticking to the 2025 timelines.
The Parti Québécois finance critic, Martin Ouellet, said the government had left Quebecers in the dark by failing to provide more details about how it plans to balance the budget.
"It's ambiguous, it's black, it's an abyss," he said.