Uncertainty of Quebec separation referendum costs province $20M every year: finance minister

The possibility of a referendum on sovereignty is already costing Quebec $20 million a year, according to Finance Minister Eric Girard.

At a press conference at the National Assembly on Wednesday, Girard explained that the uncertainty surrounding the referendum is increasing Quebec’s borrowing costs by at least five basis points.

“If our average borrowing cost this year was four per cent, it is actually 4.05 per cent given this risk premium. And since we borrow $40 billion per year, that’s $20 million per year,” he explained. “After five years, that’s $100 million, and after 10 years, that’s $200 million.”

He said he arrived at these figures after studying the differences in borrowing costs between Quebec, Ontario and British Columbia.

The minister of finance, who voted “no” in the last referendum, also pointed out that the federal government “spends on average more than $20 billion more than it collects in Quebec.”

Quebec receives, year in and year out, $12 billion in equalization payments per year, he pointed out.

“Sovereignty is a legitimate political project, but economically, the transition period would be extremely difficult,” the minister stated. “It would be very difficult for public finances.

“Economically, it’s not a good project at all, and I think Quebecers understand that.”

His colleague, Minister for the Economy and Small and Medium-Sized Enterprises Samuel Poulin, argued that the prospect of a referendum would have negative impacts, “particularly on the manufacturing industry.”

“Not only is there a financial impact for the Quebec government, but business owners are telling us that expansions and projects are not going ahead,” he stated.

“Obviously, in the current geopolitical context, this is perceived as an additional risk,” added Quebec Liberal Party leader Charles Milliard in an interview with Radio-Canada.

Paul St-Pierre Plamondon’s Parti Québécois, which has been leading in the polls for the past two years, promises to hold a referendum on Quebec sovereignty during its first term.

However, St-Pierre Plamondon acknowledged on Monday, after his party’s victory in Chicoutimi, that Quebecers have some reservations about holding a referendum during a period of economic turmoil.

According to a Pallas Data poll published Wednesday, support for sovereignty has declined, dropping from 41 per cent in January 2024 to 32 per cent this month.

Girard spreads ‘falsehoods,’ says PQ leader

Girard’s statements provoked a strong reaction from the Parti Québécois leader. He quickly called a press conference where he accused the minister of spreading “falsehoods.”

If Quebec’s borrowing costs are rising, it’s primarily due to Girard’s “budgetary mess” and the downgrade announced by Standard & Poor’s, according to St-Pierre Plamondon.

“It was cheaper for Quebec to borrow than for Ontario until Minister Girard tabled a budget (in March 2024) that included a historic $11 billion budget deficit,” he argued.

“The market has looked at what Mr. Girard himself created in terms of … budgetary mess. … It takes real nerve to then try to take responsibility for that and blame it on holding a referendum,” he added.

Furthermore, for Québec solidaire co-spokesperson Sol Zanetti, “$20 million compared to the cost of remaining in Canada is truly ridiculous.”

“In the last election, we did the math: … it costs us $5.6 billion to remain in Canada, just in the duplication of unnecessary programs or ministries,” he argued.

Both men accused the federalists of waging a “fear campaign.”

“Fear, Gandhi said, is even worse than hatred,” St-Pierre Plamondon said. “It is the worst enemy of the common good. Quebecers are better than fear, and they should have faith in themselves.

“How can we overcome fear and the lies that breed fear? … Gandhi would tell you that serving the truth non-violently is the best response to fear.”

–This report by La Presse Canadienne was translated by CityNews