Quebec spends on health, education in pre-election budget

The final Quebec budget before the provincial election sets aside big money for health and education as well as more help for families—areas expected to become campaign battlegrounds in the lead-up to October’s vote.

While annual spending growth has averaged 2.4% since 2014-15, the 2018-19 budget increases it by 5.2% and promises $16 billion in additional money over the next five years.

Despite the substantial hike, Finance Minister Carlos Leitao maintains his budget is not political and that the Liberal government is not trying to buy votes.

“Those tactics just don’t work,” Leitao told reporters Tuesday before tabling the budget in the legislature.

”What we’re doing is responding to the needs of the population. We’ve established a rhythm of spending that is coherent with the rhythm of revenue increases. The economy has improved greatly since 2016.”

Read: What to expect in Ontario’s budget

Treasury Board President Pierre Arcand added that the last time the Quebec government increased spending by more than 5%—about 10 years ago—it came with a budget deficit.

“We are spending money we have,” Arcand said.

Those justifications didn’t wash with Parti Quebecois finance critic Nicolas Marceau, who accused the Liberals of doling out ”big candies” ahead of the election.

“Now we are getting the distribution of goodies and after (the election) they will go back to cuts,” Marceau said.

Another major budget theme is debt reduction.

Instead of further reducing the tax burden of individuals, Leitao has launched an aggressive plan to spend $2 billion a year over five years to lower the province’s debt. He said that will save the government more than $1 billion in interest payments during that period.

Gross debt has decreased for three years in a row and, as of March 2018, stood at $204.5 billion, representing 49.6% of GDP, down from the peak of 54.3% in 2014-15.

Total revenues in 2018-19 are estimated to be about $110 billion, with spending equalling roughly $109 billion, yielding a $904-million surplus that will go to a fund reserved to lowering the debt.

Quebec’s GDP grew by 3% in 2017, up from 1.4% in 2016.

The finance minister predicts it will dip to 2.1% this year and to 1.7% in 2019.

While those are “conservative” figures, Leitao said he believes the GDP will fall due to an expected drop in consumer spending.

The strong economy has forced the opposition to keep away from the Liberals’ strong suit and instead campaign ahead of the election on the needs of the health and education sectors.

In order to blunt some of their attacks, the Liberals are increasing program spending in health and social services by 4.6% in 2018-19.

Out of total provincial revenues, $43 billion is slated to be spent on healthcare.

The government has faced an almost daily deluge of criticism over the health sector, regarding poor hospital infrastructure, high nurse-patient ratios, and long wait times.

Education is the second-largest expenditure, with the government set to spend $23.3 billion overall.

The increases in health and education are far removed from the early years in the Liberals’ mandate, when those two networks had to cut back tens of millions of dollars due to budget compressions.

The budget also includes measures to help families, with $800 million over five years in tax credits and spending on child and senior care. First-time homebuyers will also benefit from a tax credit up to $1,376.

Small- and medium-sized businesses in the services and construction sector will get a tax cut for revenues and in payroll tax, equalling $2.2 billion by fiscal year 2022-23.

The province is also proceeding with plans to impose the provincial sales tax on Quebecers who subscribe to online giants such as Netflix or who make purchases from Amazon.

The changes will also apply as of September 2019 to Quebecers who buy online from Canadian companies based outside the province.

Leitao says a pilot project involving Canada Post will begin in a few weeks.

Highlights of the budget:

• Projected surplus of $904 million on total revenue of $109.6 billion, including $23.7 billion in federal transfers. The surplus will go to a fund aimed at lowering the province’s debt.
• Estimated gross debt of $204.5 billion as of March 31, 2018. That represents 49.6% of gross domestic product, down from the peak of 54.3% in 2014-15.
• Expected economic growth of 2.1% in 2018 and 1.7% in 2019.
• Increase of 4.6% in health spending—an area in which the opposition parties will target the Liberals before and during this fall’s election campaign.
• Investment of $500 million by 2022-23 to modernize the province’s justice system, partly aimed at ensuring no proceedings are stayed because of unreasonable delays.
• An additional $65 million in tax credits by 2022-23 to support the digital transformation of print media companies.
• Free visits to museums one Sunday a month in a measure that is expected to cost $5 million.

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