Finance Minister Raymond Bachand has made a half-hearted effort to keep the government of Quebec from sinking under the weight of its free-spending ways. His budget speech yesterday identified the gaping wounds in Quebec's finances, and started toward solutions to some of them.
But only started. Like an alcoholic insisting he has no drinking problem, Bachand blandly told the National Assembly that the government has decided to "maintain the services offered to the public." Yet he also acknowledged the stark reality presented by his own advisory committee just last December: Quebec, with 14 per cent less economic output per capita than Ontario, gives itself 26 per cent more public-service spending.
This is not sustainable. As long as we keep denying ourselves nothing, revenue will never catch up with spending. Just this month Quebec announced $80 million in funding for in-vitro fertilization. This might seem a lovely idea but who believes we can afford it? ("Shpending problem? We don't have no shpending prolb ... prom ... problem! We're perfectly shober!")
In theory this budget brings revenue and spending back into balance by 2013-14. Speaking frequently of the medium term, Bachand imposed a range of increases in "contributions" - don't call them taxes - but staggered them over the next few years. So the QST goes up one point in 2012, on top of the previously-scheduled increase in 2011. Every adult will pay a "health contribution" of $25 for this year, rising to $100 and then $200 by 2012. The gasoline tax goes up by a penny a litre for each of the next four years. Mining levies will go up by 33 per cent but over three years. Many user fees will be indexed to inflation, eventually. "Heritage pool" (bargain) Hydro power will cost more, but only in 2014. University tuition will go up in or after 2012, by an amount to be decided later. Bachand also expresses a lively interest in some kind of deductible or user fee for health-care services, promising to "study the advisability" of that idea. (The 2013-14 health-finance forecast includes a $500 million item called "other contributions to be identified.")
We'll see how all these measures look as we get closer to the election likely in late 2012.
Offsetting all these new revenue measures is a "very generous" so-called solidarity credit, assuring that low-income people will remain largely exempt. There's no prize for realizing that the burden will fall on ordinary middle-income wage-earners.
It's too much tax.That advisory committee noted that Quebecers are taxed more than the people of Ontario, the rest of Canada, and the U.S., and more than the average of G7 or OECD countries - and that was before all these measures.
On the spending side of the ledger, things are less detailed. Freezing the total civil-service payroll is a bold promise, and one unlikely to sweeten the current civil-service contract talks, since it would mean raises would have to be offset by staff cuts. Payroll accounts for fully 54 per cent of all Quebec's program spending, so freezing payroll will go a long way toward holding total program spending down. But there's general acceptance that nurses and general-practice doctors, at least, need more money, and so staff cuts in other departments threaten to be fierce - or else the target won't be met.
Even if the payroll freeze does hold, the promise to restrain program spending increases to 2.9 per cent for the fiscal year starting tomorrow, and then 2.2 per cent a year for the next three years, will we fear, prove to be pure science fiction. Bachand spoke boldly about "a stronger culture of spending control" but we don't see much evidence of it. If we're controlling spending so well, how is it that Quebec's total debt will increase by $10.5 billion in the new fiscal year, to $170 billion? It increases again, by almost $10 billion, in the following year, although "stimulus" spending will be over. In 2010-11 we'll be paying almost $7 billion in interest on all that debt, 13 per cent more than in 2009-10.
The failure to make any effort on the spending side is particularly disappointing after Premier Jean Charest's recent pledges that his government would look first to spending in the effort to get back to the happy state of budget balance.
This budget is, as Bachand said, all about maintaining services - the polite term for spending - and about revenue.
Could it be that he and Charest tried to control their spending, for a while, but that the habit was just stronger than they were? That they were powerless before their addiction? It would have taken real courage for Bachand and Charest to have reined in the second half of the government's two-year, $15-billion "action plan" of spending for so-called economic stimulus. We believe that such spending often digs us deeper - sometimes literally - into the deficit hole, for little reward. On the other hand it is true that Quebec highways and bridges need plenty more work. Still, considering the pace of economic recovery, we believe that a substantial chunk could have been hacked away from this year's $8.2 billion in stimulus.
But the real money goes, as the minister's advisory committee noted, on family services - notably our $7 daycare - and on social services generally, followed by transportation (road-building rather than public transit) and then on "economic development" subsidies, farm subsidies, and so on.
There are plenty of places where we could cut spending. But first we'd have to admit that we have a problem.