Too many Quebecers, and not just the students protesting the provincial government’s proposed tuition fees, appear to have a blindly misguided faith in the so-called Quebec model of the welfare state.
This mindset, which cantankerously resists every government attempt to bring about a more rational balance between public services and the state’s capacity to pay for them, has resulted in a situation that could in the not-too-distant future result in a crunch that will make the present crisis seem tame in comparison.
One of the fantasies entertained by the students and those who have sided with their rejection of a reasonable increase in university tuition is that the Liberal government under Jean Charest is perverting the sacrosanct social-democratic Quebec model into a neo-liberal, free-market, private-enterprise-driven regime that is progressively whittling away the social benefits accrued since the heyday of the Quiet Revolution.
This is magical thinking rampant, according to economist Martin Coiteux among others. He notes that after a brief and abortive effort to re-engineer the Quebec model, the Charest government has by and large done all it reasonably can to maintain it. As it is, program spending constituted just shy of 20 per cent of provincial GDP when the Liberals took office in 2003, and has now risen to 25 per cent of GDP. Despite much talk about downsizing government operations, the proportion of Quebec’s workforce employed by the public and para-public sectors has remained steady at 24 per cent.
This has been accomplished not so much by any dramatic increase in Quebec’s economic productivity, but more by piling on debt, to the point where Quebec’s per-capita debt is now the highest in the country and fifth-highest in the developed world. At one point this week the province’s combined public-sector debt (comprising gross government debt and debt accumulated by health and social services, education networks, municipalities and other public corporations) stood at $250.8 billion-and-change. But that figure is even now outdated since, by the Montreal Economic Institute’s running debt clock, the amount is increasing at a rate of $28 million every hour. Serving that debt currently costs roughly $10 billion a year, a cost that will increase proportionally as the debt increases.
There are signs of an impending crunch on the near horizon. One indicator was Tuesday’s census report that showed Quebec’s working-age population, at 68.2 per cent of the province’s total population, has fallen below the national average for the first time. Our population aged 65 and over, meanwhile, rose 15.9 per cent from the 2006 census to the most recent one in 2011. This cohort will continue to grow in proportional size as the province’s substantial baby-boom population enters its senior years and places increased demands on the health-care system, which is already financially strained even as it consumes nearly half the government’s budget.
Another date to keep in mind is 2014. This is when the provinces and the federal government will sit down to renegotiate the federal equalization program, whereby Quebec benefits to the tune of $7.4 billion this year, by far the most of any “have-not” province. Equalization payments are critical in the financing of Quebec’s generous social programs, such as low university tuition, $7-a-day daycare, and generous below-market electricity rates.
Provinces that are currently contributing to the equalization fund do not have comparable benefits, and will no doubt balk at continuing to help Quebec live high off the hog on their money at the present rate, and demand cutbacks in the current level of payments.
It is possible that by then a Parti Québécois government will be in power and would seize on any cut in federal transfers to mount a secession bid. It would probably campaign, as did Lucien Bouchard in the last referendum campaign, on the promise that throwing off the federal yoke would be akin to waving a magic wand that would resolve all Quebec’s problems and result in enduring social-democratic prosperity. The protesting students and those banging pots and pans at night these days would probably be highly susceptible to such suggestion.
And yet that government upon election would be faced with the same financial constraints as the current one. And should it succeed in pulling Quebec out of Canada, it would be cut off from all federal transfers and have Quebec’s share of the federal debt piled on top of the provincial debt, and would have to service both. It would inevitably have to cut social benefits and raise fees and taxes far more than anything envisaged by the present Liberal administration. How then would the Quebec street respond, given the precedent it has set this spring?
Former premier Jacques Parizeau recently weighed in on the student protest, saying that the ferment reminds him of the discontent that led to the Quiet Revolution. He seems to have forgotten that he once said that Quebec’s road to independence is paved with sound finances.
If Quebec is by any chance on the road to independence, that road is currently being paved with magical thinking.