Undeniably, Quebec’s Minister of Finance, Eric Girard, has had to juggle several dilemmas in finalizing his eighth (and perhaps last?) budget, which he will table on March 18, against a backdrop of leadership succession around François Legault, an approaching election year, and ongoing economic and political uncertainty.
After several years marked by significant spending aimed at stimulating the economy, increasing Quebecers’ purchasing power, and investing in public services, the province’s finances remain under pressure, with deficits that have become structural and a still-uncertain path back to balance. It is therefore no surprise that the minister himself has tempered expectations: this will be a “measured and targeted” budget.
In this context, the budget will have to reconcile several often competing imperatives: supporting the economy amid uncertainty, responding to public expectations regarding public services, and preserving fiscal credibility as the province remains committed to returning to a balanced budget by the end of the decade. The government will also need to navigate between its economic ambitions and the reality of limited—if not nonexistent—fiscal room.
With the next election only six months away, this budget also carries an obvious political dimension. Between fiscal prudence and political signalling, here are five elements to watch.
1. Fiscal room in a pre-election year
Budgets tabled ahead of an election are often an opportunity for governments to introduce popular measures aimed at appealing to specific constituencies. The current context, however, makes that exercise more difficult. Quebec’s public finances remain strained by significant deficits ($12.4 billion) and more modest revenue growth. The size of the public service has grown substantially, as has compensation for government employees. Including the health and education networks, Quebec’s public sector has expanded by 110,000 employees (full-time equivalent) since the Coalition avenir Québec came to power. Under these circumstances, the central question will be the real fiscal room available to the Minister of Finance. Any new initiative will have an impact on the budgetary outlook, particularly as the government seeks to limit the growth of spending. The government will therefore have to strike a balance between the temptation to send political signals ahead of the election and the obligation to preserve its fiscal credibility with credit rating agencies.
To avoid falling back into the traps of austerity that contributed to the defeat of Philippe Couillard’s government, the Coalition avenir Québec has been careful to frame its spending restraint efforts around improving the efficiency of the state and reducing bureaucracy.
2. The path back to a balanced budget
The government maintains its objective of returning to a balanced budget by 2029–2030, after contributions to the Generations Fund. However, the path to achieving this objective remains uncertain.
Last November, the Auditor General of Quebec pointed out that roughly half of the effort required to reach this objective—representing $8.5 billion—has yet to be identified. The issue is therefore not simply to reaffirm the target of returning to a zero deficit, but to clarify the concrete measures that will actually make it possible to achieve it… along with the political cost that may entail.
It will be important to watch whether the Girard budget provides greater clarity on spending control measures, changes to certain programs, or the economic assumptions underlying the government’s plan to return to balance.
3. A political legacy for Legault, or the imprint of Fréchette / Drainville?
This budget will also need to be interpreted through a more political lens. Will it be conceived as another piece of the Legault government’s political legacy, or will it instead reflect the emerging priorities of figures who may be called upon to succeed the founder of the CAQ?
Christine Fréchette and Bernard Drainville may seek to embed certain priorities in this budget. It is also worth noting that the budget was developed following consultations with both figures.
Beyond the numbers, the budget could therefore provide insight into the political direction the government intends to prioritize—and potentially serve as a launchpad for an election campaign that will follow a few months later.
4. The Quebec Infrastructure Plan puzzle
Since coming to power, the Legault government has significantly expanded the Quebec Infrastructure Plan (PQI). The plan has grown from roughly $100 billion in 2018 to $164 billion in its most recent version.
While this expansion reflects a desire to accelerate public investment, it also highlights the scale of the infrastructure deficit. The maintenance deficit affecting public infrastructure remains significant—estimated at more than $40 billion—and project costs continue to rise amid labour shortages and inflation in the construction sector.
The budget will therefore need to clarify how the government intends to manage this delicate balance between ambition, delivery capacity and fiscal discipline.
5. Economic vision: the means to match the ambition?
Last fall, the Legault government unveiled a new economic vision aimed at strengthening productivity, supporting innovation and reinforcing Quebec’s competitiveness in a context of industrial and technological transformation.
Will Wednesday’s budget include the investments required to translate that vision into concrete action? Support for innovation, assistance for businesses, the development of strategic sectors or targeted industrial policies: the budgetary choices will help measure the extent of the resources the government is prepared to mobilize.
In a context of fiscal constraints, the challenge will be to demonstrate that the state can still act as a lever for economic transformation without compromising the sustainability of public finances.
The answers to these five questions will emerge in the March 18 budget, which our team will be analyzing closely for you.
