Some present the new PQ government’s first budget as a necessary first step before truly plunging into more liberal measures. In fact, it was out of obligation, they say, that the new Finance Minister, Nicolas Marceau, presented a budget so unexciting, in keeping with its PLQ predecessors. And yet, one must be particularly inventive to see in the Finance Minister’s presentation any words that would have shown him to be apologetic. In contrast, the Minister was proud of himself, quite proud actually.
Proud of zero deficit
It required a few somersaults, notably in shutting down the Gentilly nuclear power plant, but Nicolas Marceau did manage to jump through the hoop: he balanced the state’s budget. Of course, the Parti québécois’s electoral platform did not include the following remark next to the proposal to return to zero deficit: “This promise is the most important and could therefore bring us to cancel all others.” But it’s just as if it had. In fact, when we see those words, we must know that none other actually bears any weight.
In fact, in the years to come, if a weak growth were to threaten budgetary balance, you’ll see that what little was announced will also be dropped. The Minister said so: we must be proud of reaching zero deficit before everybody else. The Parti québécois is the zero-deficit party: pride comes first.
Companies first, yes indeed
To have zero deficit, budgetary cuts must not only be more drastic than those announced in election promises (only a 2.4% increase in spending), they must be greater than those that the Liberals were proposing (they targeted 2%). Hence, spending will only increase by 1.8%. To manage that, the government must cut $10M in the Ministry of Transport whilst everybody agrees that it requires more expertise to break the vicious circle of corruption. Indexing social assistance, halting growing household debt, taking care of the housing crises in the resource regions of Côte-Nord and Abitibi, eating and finding decent housing: all that can wait until the post-zero-deficit era.
However, you know what’s urgent? To offer tax credits to businesses. Yes, of course, business incomes have steadily increased since the 2009 crisis, reaching their 10-year peak this year at nearly $30G. Yes, of course, the effective tax rate on investment will hit a historic low: 15.9% in Québec and 18.3% in Canada. The average amongst OECD countries is 20.4%. And yet, despite all that, we feel obliged to give them even more gifts because they’re still not investing on Main Street. They prefer accumulating foreign exchange to eventually gamble in the stock markets on Wall Street. The abundance of “liquid assets” held by big businesses has come to represent more than 28% of Canada’s GDP, even though these same businesses’ non-financial investments represent no more than 11% of the GDP. For the last 10 years we’ve been offering them more and more gifts and it hasn’t increased investments. Doesn’t matter: let’s keep going!
Destination: the North, always the North
What’s the difference between how the PLQ was planning to exploit the North and how the PQ just announced it would? Companies will be asked to contribute in building the infrastructure. Maybe mining companies will be asked to pay more, but certainly not now and certainly less than had been promised. Voila, that’s all.
The environment, greenhouse gas emissions, and pollution, there’s no need to put any money into that, don’t worry, everything’s gonna be fine. Anyway, we need to develop our oil resources too, and if we can have a pipeline crossing the province to refine some Albertan oil, well, why not?
This Marceau budget was the only one possible, not because bankers were holding the Minister’s pen, but simply because he adheres to the ideas which form its fundamental structure, like Finance Ministers Raymond Bachand, Monique Jérôme-Forget, Yves Séguin, Pauline Marois, and Bernard Landry before him.
This article was written by Simon Tremblay-Pepin and Philippe Hurteau, two researchers with IRIS—a Montreal-based progressive think tank.