Last December 8th, Quebecers brought Jean Charest’s Liberals back into power with a majority government. This Bulletin will paint a purely factual picture, without analysis or criticism, of the economic program that Mr. Charest’s Liberals have proposed to Québec voters.
Financial and Economic Perspectives
On November 4, 2008, the night before the election was called, Ms. Monique Jérôme-Forget, Minister of Finance, announced the government update on Québec’s economic and financial situation.1 The report noted a severe slowdown in the Québec economy, projecting economic growth at 0.8% in 2008 and 0.6% in 2009 compared to the forecasted economic growth previously estimated at 1.5% and 2.0% respectively. However, the budget for 2008-2009 will be balanced, despite a dip in budgetary revenues and rise in program expenses, due to a slight increase in federal transfers and the $1.2 billion budgetary reserve taken from the 2006- 2007 and 2007-2008 surplus.
According to the Minister of Finance, Québec’s economic expansion will continue, albeit at a significantly lower rate. The real GDP will fluctuate between 0.8% in 2008 and 0.6% in 2009, consumer spending will only grow by 4.0% and 1.8%, and housing starts will drop to 45,600 and 38,500. Québec’s international exports, in real terms, should decrease by 2.8% in 2008 and 1.7% in 2009, resulting in a significant slump in job creation (28,300 in 2008, 18,400 in 2009) and a steep climb in the unemployment rate to 7.4% in 2008 and 7.6% in 2009.
An economic study published on December 10, 2008 by Desjardins Group economists tends to confirm these forecasts.2
The Liberals’ Economic Action Plan
The economic engagements proposed by the Liberals break down into three parts: emergency measures for confronting the crisis, medium-term measures to position Québec as it emerges from the crisis, and finally a long-term vision of economic development: the Northern Plan.
Over the course of the last campaign, the Liberal Party of Québec announced a series of measures that will protect jobs:
- by increasing the pace of its infrastructure spending by 10%, up from $37 to $41 billion for the 2008-2013 period. Combined with the Hydro- Québec investments, the announced investments could total $19.9 billion in 2009-2010, and $13.8 billion in 2010-2011, and will mobilize more than 100,000 people in all Québec regions. These investments will affect road infrastructure, public transport, hospitals, universities, colleges and schools, cultural facilities and municipal infrastructures;
- by providing more support for training, increasing from 50% to 75% the financial assistance given to provide work-force training programs;
- by setting up a home-renovation aid program in the form of a 20% reimbursable tax credit to support middle class households wishing to renovate their homes. The purpose of this measure is to help support renovation expenses exceeding $7,500 for up to a maximum sum of $2,500. The Liberal Party estimates that 250,000 households will take advantage of this tax credit over the next two years. This tax credit also aims to stimulate the construction industry, which is often one of the most affected industries in times of economic slowdowns;
- by accelerating the start up of major private projects through the creation of a special task force led by directly by the Premier to help accelerate major private projects and reduce delays by accompanying developers in their project financing process;
- by attempting to stimulate entrepreneurship and innovation while stimulating the marketing of innovations based on Québec patents, offering a ten year tax holiday on revenue resulting from the marketing of Québec patents for every new business that markets a product protected by an intellectual property developed in a Québec university, college, or research institute;
- by trying to support the cultural industry, specifically by abolishing the sales tax on Québec cultural products during his term in office.
Positioning Québec As It Emerges From The Crisis
The PLQ’s economic plan provides for the establishment of levers to secure a long-lasting prosperity for the province as soon as the economy picks up. It is with this perspective in mind that Mr. Charest announced the creation of a new economic space developed along three axes:
- Québec-Ontario Alliance that is currently in negotiation and will be concluded in 2009, and will create the 4th largest economic power in North America after California, Texas and New-York;
- France-Québec agreement on labour mobility, internationally unprecedented, signed during President Sarkozy’s visit, which aims to respond to one of Québec’s main economic challenges: labour shortages;
- Transatlantic agreement between Canada and the European Union focusing on the negotiation of a new-generation free-trade treaty whose principles, under Québec leadership, were established during the French President’s visit: in Québec, 40% of foreign investments come from Europe, which is twice as much as elsewhere in Canada.
The Northern Plan
In the long term, the Liberals propose establishing the Northern Plan, the goal of which is to allow for the occupation, exploration and mining of Québec north of the 49th parallel (which represents 70% of the province’s territory), a land that abounds with hydraulic and mineral resources. Implementation of the Northern Plan will require the collaboration of local and First Nation communities, and the Liberals are committed to implementing the plan with a respectful approach to the environment.
Northern Québec will gradually be equipped with the infrastructure needed to develop its energy. The construction of facilities capable of producing 4,500 MW is already underway in Québec, mostly on the territory covered by the Northern Plan. The Northern Plan also provides for the establishment of projects adding 3,500 MW of electricity to the territory, of which 20% will be alternative solar, wind, wave and other forms of energy.
Northern Québec possesses immense mining wealth, some known, some suspected and others yet to be discovered. Metals found there include iron, nickel, copper, zinc, gold and silver. Géologie Québec will accelerate cartography work on this immense territory, in an effort to promote mineral exploration within this territory.
Do not hesitate to contact Jean Masson or any other member of the national Government Relations and Ethics Bulletin practice group for more information on Mr. Jean Charest’s Liberal government program.