Quebec Finance Minister Eric Girard is betting that big spending increases in the budget he tabled Tuesday will stimulate the provincial economy enough to ward off any economic damage resulting from the novel coronavirus.
The Coalition Avenir Québec government’s second budget projects a $2.7-billion surplus, increases program spending by 5.1 per cent over the previous fiscal year and includes billions more in borrowed funds to finance big-ticket infrastructure projects such as new public transit.
Girard told reporters government “has a role to play to stimulate the economy” amid disruptions in global supply chains and weakening private demand for products and services due to the global spread of COVID-19.
“It’s possible the virus has an impact on consumer and business confidence,” he said. But, he added, the spending increases are “coming at the right time.”
Girard acknowledged that the effects of the virus on the global economy are evolving quickly. As of Saturday, he said, his department estimated the virus could cause global economic growth to fall by half a percentage point this year.
“When we look at the sensitivity of the Quebec economy to the world economy, it could correspond to about half, so 0.25 per cent,” he said. “All this is manageable.”
Moreover, the 2020-21 budget provides a surplus of $2.7 billion that could be used to cushion any unforeseen blows from the virus, Girard said.
Liberal finance critic Carlos Leitao called the lack of specific funding to address the effects of the coronavirus “hazardous.” He said it’s been clear since the beginning of the year that the global, Canadian and Quebec economies are slowing.
On Monday, he had called for a contingency fund of roughly $1 billion to deal with economic shocks caused by the virus. “There is zero,” Leitao said. “Absolutely nothing, no provision for eventualities. I think it’s extremely hazardous to make a budget like that in this economic climate.”
Girard, however, said, “We are ready.”
2:16 Quebec finance minister tables his second budget
Health and education program spending will grow significantly in 2020-21, by 5.3 per cent and 4.5 per cent respectively. Girard said if the Health Department needs more money for coronavirus-related spending, “we have the capacity to deliver.”
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The budget also includes an increase of $15.1 billion in infrastructure spending over the next 10 years, bringing the total to $130.5 billion.
That money, which will be borrowed primarily through the sale of government bonds, is earmarked to fund new schools, senior centres and major public transit projects. The budget projects the province borrowing about $14 billion for capital spending in 2020-21 and about $27 billion a year after that, until 2024-25.
Girard said another factor giving him confidence Quebec can weather the expected storm is the fact the province’s economic fundamentals are so strong.
“It’s important to understand where we are starting from,” he said before tabling his budget in the legislature. “The foundations of the Quebec economy are extremely solid and the performance of the Quebec economy is really in a good position.”
GDP grew by 2.8 per cent in 2019, up a full percentage point from what Girard had forecast this time last year. He estimates GDP growth in 2020 will be 2.0 per cent.
Quebec projects its revenues will grow 2.8 per cent in fiscal 2020-21, to roughly $121.3 billion, and its expenditures will be $118.6 billion during the same period, leaving a $2.7 billion surplus that will be deposited into a special fund created to pay down debt.
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And while the province says its gross GDP-to-debt ratio has declined to 43 per cent, the government is still significantly in debt, by close to $197.7 billion. The province’s projected debt servicing costs for 2020-21 are $8.3 billion.
Despite higher revenues and stronger GDP, the government budgeted only modest tax cuts in the form of school tax reductions. The measure amounts to roughly $180 million in 2020-21.
With a stylized tree on the cover of the budget’s printed version, the government framed it as focused on the environment, and it budgeted $6.2 billion over six years to reduce greenhouse gas emissions. Most of that money is projected to come from revenues collected by businesses from the carbon market in which it participates with California. The new government money equals $2.1 billion over the same period.
Just like their government, Quebecers are making more money and spending more, the budget shows. Girard projects the province will collect 5.8 per cent more in income taxes this fiscal year and 3.8 per cent more in consumption taxes.
The budget says 77,700 jobs were created in 2019, and the unemployment rate was 5.1 per cent.
1:56 Quebec’s finance minister to table second budget on Tuesday
Quebec’s finance minister to table second budget on Tuesday
OTTAWA – Statistics Canada says retail sales rose 0.4 per cent to $66.6 billion in August, helped by higher new car sales.
The agency says sales were up in four of nine subsectors as sales at motor vehicle and parts dealers rose 3.5 per cent, boosted by a 4.3 per cent increase at new car dealers and a 2.1 per cent gain at used car dealers.
Core retail sales — which exclude gasoline stations and fuel vendors and motor vehicle and parts dealers — fell 0.4 per cent in August.
Sales at food and beverage retailers dropped 1.5 per cent, while furniture, home furnishings, electronics and appliances retailers fell 1.4 per cent.
In volume terms, retail sales increased 0.7 per cent in August.
Looking ahead, Statistics Canada says its advance estimate of retail sales for September points to a gain of 0.4 per cent for the month, though it cautioned the figure would be revised.
This report by The Canadian Press was first published Oct. 25, 2024.
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
