Quebec budget: $11B in deficit, no precise timeline to balance books

Quebec’s finance minister has tabled a $158-billion budget with an $11-billion deficit, and he says the government will miss its target to balance the books.

Eric Girard is committing to a balanced budget by the 2029-30 fiscal year — two years later than originally forecast — but he won’t release a specific timeline for achieving that until next year.

He blames a “stagnant” economy and lower-than-expected revenues from the provincially owned power utility for a deficit that is nearly quadruple the $3 billion figure he had forecast in the fall for the 2024-25 fiscal year.

Negotiations with public sector unions led to $3 billion in extra government spending per year compared to what had been forecast in the fall.

The budget calls for $8.8 billion in new spending over five years, with almost $5 billion going to health and education.

EXTENDED READING: Full budget available here

Girard says he will find $2.9 billion in savings over five years thanks to a reduction in wage-based tax credits, an increase in tobacco taxes, and a demand that provincially owned companies — including the power utility and the liquor authority — cut expenses.

The $11-billion deficit is the largest in Quebec history, Girard acknowledged. A lack of “engagement” from the federal government, the province’s forest fires as well as “permanent” expenses associated with the COVID-19 pandemic were also to blame, according to the finance minister.

Hydro-Quebec must decrease spending: government

While health and education received the lion’s share of investments — $4.9 billion in six years — the same is not true for the other ministries, most of which will have to limit their spending.

The government is also launching a major program review project, in addition to requiring Hydro-Québec to undergo an “optimization effort” of $1 billion over the next five years.

Girard also announced a reduction in tax assistance for businesses of around $1 billion over five years, and an increase, starting Wednesday, in the tobacco tax. Quebecers will have to pay $2 more per carton of 200 cigarettes, and an additional $2 starting January 6, 2025, which will bring in $300 million over five years.

In the environment, the subsidy for new electric vehicles, which is currently $7,000, will decrease to $2,000 in 2026. According to Girard, the measure does not sufficiently reduce greenhouse gas emissions.

Reaction from opposition

The official Opposition’s finance critic, Liberal Frédéric Beauchemin, says the Legault government is taken back by the series of “bad” decisions it has made since coming to power.

He recalled the CAQ dipped into the Generations Fund last year in order to finance tax cuts, after having distributed “electoralist” checks to the population in a context of inflation.

“The Coalition Avenir Québec has lost control of public finances,” Beauchemin said at a press briefing.

There is one word missing in this budget and it is “housing,” added Québec solidaire MP Haroun Bouazzi, who deplored the absence of significant measures to revive residential construction. “In the meantime, the crisis continues,” he said.

For its part, the Parti Québécois (PQ) highlighted the inability of the CAQ government to collect all the amounts it is demanding from the federal government, particularly in health.

“When we add up these failures… we exceed the $10 billion mark,” denounced the leader of the PQ, Paul St-Pierre Plamondon.

The Conservative Party of Quebec, for its part, deplored the worst deficit in Quebec history and predicted that it would be Girard’s last budget. “We consider it incompetence,” declared Leader Éric Duhaime.

–With files from Caroline Plante, La Presse Canadienne