Figures and highlights
- Expected growth for 2023 estimated at 0.6% and 1.4% in 2024
- $147.9 billion in expenses for 2023-2024, a 0.7% increase. For 2024-2025, the forecast increase is 2.4%
- A $1.5 billion contingency reserve for this year and $1 billion for the next year
- A $4 billion forecast for the current exercise after payment to the Generations Fund
- A return to a balanced budget expected for 2027-2028
- Net debt will be 37.4% of GDP in 2023, falling gradually to 35.8% by 2027-2028 and 30% by 2038
- In all, the budget provides for $24.5 billion in investments by 2027-2028, of which $12.1 billion is to create wealth and increase Quebec’s economic potential
A committed Quebec
The title capping this Finance Minister’s fifth budget is hardly innocuous: “Committed”, which naturally evokes “Commitments.” On reading the 472-page budget plan, we can see that today’s exercise converted the Coalition avenir Québec’s electoral platform into the Finance Minister’s columns of numbers.
With a slow economy and a recession threatening, it is taxpayers—hamstrung by inflation and rising interest rates—who are receiving the lion’s share of the Finance Minister’s elbow room. Generous tax cuts could be as much as $814 for a single person and $1627 for a couple.
In the middle of tax season, 4.6 million Quebecers will be glad to know that the first two tax brackets will be lowered by one percentage point. “90% of these people earn less than $100,000 a year,” Minister Girard hastened to say, anticipating the criticism to the effect that the tax cut would mainly benefit the wealthiest. The Minister also promised that this tax relief would have “no impact on services.”
The tax cut will be financed by economic growth and a 10 to 15-year delay in reaching the debt-to-GDP target. In other words, by reducing payments to the Generations Fund.
Premier François Legault received said that he was ready to “draw on his reserve of courage” to achieve some of his ambitions. He visibly opted to not do so: this budget contains no measures that might upset anyone.
With an overwhelming 89-seat majority, great popularity with the voting public, and decimated opposition parties, the government—which is entering the first year of its second mandate—could have allowed itself to implement unpopular or courageous measures. Rather, he chose the reverse strategy by presenting as of year one of the mandate, a “roadmap to respect our commitments.”
Safe from recession?
The budget contains one surprising sentence: “a recession is not expected in Quebec.” Such confidence no doubt explains why very few economic stimulus measures for key sectors of Quebec’s economy have wound up in this budget. Of course, there is the new tax holiday for major investment projects ($373 million over five years) and some measures for the biofood, forestry, and tourism sectors, but nothing spectacular.
The government has announced a contingency reserve ($1.5 billion) in case the economy were to deteriorate, but that remains a relatively modest package compared with the instability and uncertainty ahead.
While the climate emergency is very real and decarbonisation efforts must accelerate, the government is not planning new energy transition initiatives. At a time when energy supply remains critical for industry, the budget provides very few answers. The environmental measures essentially involve creating the Fonds bleu and implementing the Plan Nature 2030 to protect biodiversity.
State effectiveness: the CAQ reclaims its DNA
In its first mandate, the CAQ—that once dreamed of reforming the state—put its project on hold to properly manage the surpluses it inherited from the Liberal government. However, since the pandemic ravaged state revenues and slowed the economy to 0.6% in 2023, the CAQ advocates increases in effectiveness and efficiency reaching $1.5 billion, which is a more politically enticing choice than venturing into austerity.
The Quebec infrastructure plan continues to explode with $150 billion in investments over 10 years. Since the CAQ came into power, it jumped by 50%, or $49.6 billion. On the other hand, with inflationary pressures and an overheating construction industry, everyone realizes that it is more expensive to finance the infrastructure projects the government already retains. With the economy slowing down, accelerating infrastructure projects remain a stimulus focal point.
With this fifth budget, the CAQ government has made its bed. Between everyone’s interests and the economic turbulence that might have reordered priorities, it chose promises first.
Major tax and budgetary measures
- Tax cuts totalling $9.2 billion by 2027-2028 for individuals, made possible by reducing the first two tax rates by one percentage point: 4.6 million Quebecers will benefit
- A new $373 million tax holiday for major investment projects to complete 100 new investment projects that will generate $24 billion (up to 25% of eligible investments). The new holiday broadens the sectors that can benefit (agrifood, forestry, critical and strategic mineral extraction, transport, information and cultural industry, art, professional services). Many sectors are excluded, including the aluminum and construction sectors. The government is continuing its analyses of the aluminum sector and the status of the latter may be reassessed
- To accommodate major investment projects, notably those in the battery sector, Quebec needs large-scale industrial land. $40.0 million will be allocated to attracting these projects and $135.5 million to develop the land. An amendment to the Quebec Pension Plan to incite people 65 and over to keep working, without raising the retirement age
- $1.4 billion over five years to support prosperity of the remote regions and stimulate their vitality (sectors: biofood, tourism, forestry, and mining)
- Tax holiday for major projects: differentiated treatment for projects in remote regions and devitalized regions (up to 25% of the investment)
- Development and enhancement of our tourist attractions: $153.1 million over five years and development of business tourism
- Investment in the forestry sector ($98 million)
- Continued development of innovation zones ($100 million over five years) and the Plan Nord ($90 million over five years)
- Initiatives totaling $615 over six years to address the labour shortage by better integrating immigrants. This amount is to support Francisation Québec and short-term training programs prioritized by the Commission des partenaires du marché du travail
- $1.5 billion over five years to increase student retention, improve the network, make professional training attractive, and enhance maintenance of the housing stock
- $717 million over five years to promote access, retention, and graduation from higher education
- $88 million to support the practice of sport and physical activity
Health and social services
- A total of $5.6 billion to enhance the health network’s performance and humanize it, including over $2.2 billion to adapt the sector to post-pandemic realities (vaccination and screening centres, reduction in surgical waiting lists), $717 million to open new front line access clinics, develop the Votre santé (Your Health) platform, and setting up a helicopter medical transport service
- $2 billion for seniors (sustainability of services in private residences, home care, senior residences, and harmonization of private and public CHSLDs)
- $565 million over five years to support the most vulnerable individuals (mental health, homelessness, at risk youth, armed violence, and sexual violence), of which $194 over five years will support the community sector (of which $40.8 million will support the global mission by an additional three years)
- $211 million for mental health and $124.6 million to provide free access to the shingles vaccine
- Implementation of the Santé Québec agency as of 2024 ($60 million over two years for the transition)
- Countering inflation: $125 million over five years destined in part to community organizations
- Strengthen care and services for at risk youth ($110 million over five years)
- Additional support for life sciences: $12 million into BioMed Propulsion
- $32 million over three years to support biogas production projects, which is added to the Fund for the Quebec Green Hydrogen and Bioenergy Strategy
Sustainable development and water
- The budget provides for initiatives to diversify and consolidate environmental actions for an overall amount of $2.4 billion, including $520 million over five years to protect water resources and ensure the safety of dams, and $475 million to protect biodiversity
- Creation of the $500 million Fonds bleu, of which a portion will be financed by water usage fees
- Support for clean technologies and the circular economy ($30 million over five years)
- $722 million over six years to support the effectiveness of the transportation networks, including $400 to support the relaunch of mass transit
- Taken from the Québec Infrastructure Plan (QIP): $1.9 billion to improve the mobility and electrification of mass transit
- $1.1 billion will be devoted to maritime and rail transport
- $75 million allotted to the Contrecœur terminal
- Promote innovation in transportation ($55 million over five years)
- Critical and strategic minerals subject to the new major project plan, excluding aluminum
- $10 million over two years to ensure the harmonious development of critical and strategic minerals in remote regions (social acceptability)
Digital, IT, and cyber security
- The government is allotting in part $201.9 million over five years to extending the cyber security enhancement program ($70 million) and the digital transformation offensive ($50 million)
- $108.7 million for better connectivity
Construction and QIP
- Use of public contracts as an engine for economic development by pursuing efforts to promote buying in Quebec by reserving public calls for tenders for small Quebec companies, giving them an advantage in terms of Quebec value added or requiring Quebec-made products, services, and construction works
- Implementation of a directory of local suppliers and businesses by increasing their visibility when awarding public contracts
- Upcoming proposal for a regulation on payment terms and settling disputes for the construction industry
- A review underway to award calls for projects and tenders to modernize and update the process
- Record $150 billion investment to strengthen the quality of Quebec’s infrastructures over 2023-2033 for the mobility and electrification of public transit ($1.9 billion), hospitals ($2.3 billion), restoring schools ($2.4 billion), roads and highways ($1.8 billion), and the rehabilitation of rail and maritime infrastructures ($1.1 billion)
Protecting and promoting the media and French language
- $649 million to promote Quebec culture and the French language, including $88 million to augment efforts to defend and promote the French language, and $561 million for culture (digital world). Digital cultural content: $95 million including $13.3 million in continued aid to the media sector
- An additional $121 million, including $49.8 million over five years for housing assistance and enhanced services, and $43 million over three years for housing in Nunavik (warehouse and reconstruction of damaged housing)
- $6.5 million to house Indigenous people experiencing homelessness
Social housing and daycare
- $1 billion over six years to promote accessibility to housing, including $650 million to build 5250 social housing units, improve assistance through the solidary tax credit and an increase in the budget for the Rent Supplement
- $376 million to convert non-subsidized daycares
Education (primary, secondary, higher)
- $2.4 billion allocated in the QIP to support the restoration of schools, and expansion and renovation projects for cégeps and universities
- Budget debate (25 hours)
- Study of budget appropriations in parliamentary committees (100 hours)
- Adoption (in May)