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Quebec faces wake-up call with forthcoming budget

Quebec Finance Minister Carloa Leitao responds to Opposition questions Wednesday, May 28, 2014 during question period at the legislature in Quebec City. Leitao will table a budget on June 4

Jacques Boissinot/The Canadian Press

Quebec Finance Minister Carlos Leitao will unveil on Wednesday what he calls a "transition budget" that will provide a foretaste of the nasty medicine the province needs to swallow to balance its books by 2015-16.

For Premier Philippe Couillard, this is an "inescapable goal," so that the province can rid itself of its structural deficit, which he described in his recent inaugural address as the "biggest menace to our liberty of choice."

As the budget that precedes the pivotal one of 2015, this accounting exercise nonetheless foreshadows unpleasant news for Quebeckers. The deficit for the past financial year reached $3.1-billion, or $600-million more than what the Parti Québécois government had forecast. Quebec's net debt topped $182-billion at the end of March, and now represents 49.8 per cent of the province's gross domestic product.

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"The time for cosmetic changes has past. We must act firmly and decisively," Mr. Couillard said.

How harsh will Mr. Leitao's first budget be? Here is a preview of what is at stake.

Health care

The health-care system represents 44 per cent of the province's $74-billion budget, so this is the first place the Finance Minister looked.

Just like his predecessor Nicolas Marceau, Mr. Leitao will ask the province's 18,000 physicians to spread out over a greater number of years the pay hikes they received in 2007 and 2011 so that they could catch up with their Canadian colleagues. (Those hikes were incidentally negotiated by the new Health Minister, Gaétan Barrette, who then acted as president of the Fédération des médecins spécialistes du Québec.)

The government also plans to reduce by "at least 10 per cent" the "bureaucracy" in each health establishment, as well as in the Ministry of Health, Mr. Couillard indicated in his opening speech. Those cuts will be made over four years.

The Liberals have said they want to preserve front-line services, but may cut some programs such as the costly – and controversial – in vitro fertilization program.

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Daycare

Mr. Couillard raised eyebrows when he suggested last week that wealthy parents could pay $10 a day for subsidized daycare. During the campaign, Mr. Couillard had opposed the PQ's hike to $9 a day (the fees have been frozen at $7 for the past 10 years). He merely advocated for a cost-of-living increase. But such a controversial change won't come this time around, possibly only after the Liberals examine the province's spending through what will become a permanent program review.

Education

Mr. Leitao will not touch, with a 10-foot pole, higher education tuition fees for Quebeckers – the source of massive student protests during former premier Jean Charest's last year in office. But foreign students may be in for a bad surprise.

The Education Ministry, just like the Health Ministry, will also be trimmed down with the closing of its regional administrative offices.

Business incentives

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Mr. Couillard promised to create 250,000 jobs over the next five years. The government aims to revive Plan Nord to develop Northern Quebec. Like the péquistes, they want to use the province's electricity surpluses to attract industrial investors. However, Mr. Couillard has questioned the efficiency of Quebec aid to businesses, which has been offered liberally by past governments to the aerospace and multimedia sectors, to name just two. Despite cement-industry protests, however, the government will likely maintain the province's previous commitment toward the new McInnis Cement project in the Gaspé Peninsula, a $1-billion investment for which Quebec contributed $350-million. (Jacques Daoust, the Economy Minister who had publicly questioned the province's aid in recent days, called a press conference at the plant's location on Monday.)

Taxation

The Liberals have no intention of increasing the overall burden of taxpayers to tackle the province's deficit. But they hope to review the province's taxation system to ensure it is simpler, fairer and encourages Quebeckers to work harder. To do so, they will set up a committee whose work will frame the next budget. There will be no tax relief until Quebec balances its books.

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About the Author
Chief Quebec correspondent

Sophie Cousineau is The Globe and Mail’s chief Quebec correspondent. She has been working as a journalist for more than 20 years, and was La Presse’s business columnist prior to joining the Globe in 2012. Ms. Cousineau earned a master’s degree in journalism from the University of Illinois and a bachelor’s degree in economics and political science from McGill University. More

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