QUEBEC – Presenting his budget update on Friday, Quebec Finance Minister Eric Girard said the province’s economy will shrink by 6.5 per cent this year, plunging the government $15 billion into the red for the year.
The government plans to return to balanced budgets in five years, Girard added, without raising taxes.
“Quebecers are already taxed enough,” he said.
Girard unveiled his 2020-2021 budget on March 10, one day before the World Health Organization declared the spread of COVID-19 a pandemic and two days before Quebec first declared a health emergency.
The minister defended his budget, which Liberal leader Dominique Anglade described as no longer making sense, saying it gives government departments a framework for decision making.
“The fact that we tabled a budget is very helpful,” Girard said.
Federal assistance have been helpful for people who were out of work and companies needing financial assistance during the pandemic, but he said he cannot assess the state of federal finances. Girard’s update document notes that the Ottawa’s Canada Emergency Response Benefit has injected $60 billion into the Canadian economy and the Canada Emergency Wage Subsidy has added $45 billion.
“It’s not up to me to comment on the fiscal capacity of the federal government,” he said.
Ottawa has yet to present its 2020-2021 budget, although federal Finance Minister Bill Morneau has promised to present an update on the state of federal finances on July 8.
Quebec has had balanced budgets since 2015 and in bringing down his March budget Girard foresaw a future string of surpluses and growth of 2 per cent this year.
He minimized then the impact of the coronavirus, predicting it might trim 0.25 per cent from his growth projection, telling reporters that was before the WHO declared a pandemic.
“It will be tight,” he allowed on Friday, adding, “All economic projections are subject to uncertainty.”
Saving the Quebec economy this year is an expected addition of $4 billion in federal transfers, Girard said, and an accounting provision called Quebec’s stabilization reserve, which stands at $14.94 billion.
The stabilization reserve is an amount allowed under Quebec’s Balanced Budget Act when there is a downturn, preceded by a string of budget surpluses. Girard said this would allow the province to have a balanced budget despite the slowdown, which he conceded could be a higher dent to the economy than 6.5 per cent, projecting unemployment for the year as a whole at 9.6 per cent.
The minister believes the Quebec economy will bounce back in 2021, with 6 per cent growth, erasing much of the 2020 shortfall, and 2.3 per cent growth in 2022.
Because the stabilization fund is borrowed money, Quebec gross debt, which stood at 43.4 per cent of gross domestic project this March 31, would rise to 50.4 per cent on March 31, 2021.
Unemployment rose in Quebec from 4.5 per cent in February to 17 per cent in April, when 820,500 jobs had been lost and 40 per cent of the provincial economy was locked down to reduce the spread of the COVID-19 virus.
Girard said Quebec is ready for a second wave of COVID-19 and has set aside another $4 billion if it is needed.
Quebec injected $6.7 billion for health care equipment, salaries and bonuses for the first round of the pandemic.
In total, Quebec has offered $28.3 billion in aid to individuals and businesses in the form of loans, subsidies, deferments, accelerated tax credits, with $8.9 billion of the total in deferral of tax payments until Sept. 1, offering businesses transitory liquidity.
Quebec and Ottawa are both contributing to rent subsidies for businesses.
The opposition Quebec Liberals called on Girard to announce a plan to invest directly in small- and medium-size businesses that have been hard hit by the recession. Girard said he has offered some direct aid but prefers indirect aid.
“We’re thinking more economic development rather than central planning,” he said.
Girard maintains he is confident the Quebec economy will bounce back, because the starting point going into the pandemic and the recession that’s followed was strong. In March, Quebec had a budget surplus and prospects seemed good.
Girard said when the Coalition Avenir Québec government came to power in 2018, Quebec’s growth rate was averaging 1.3 per cent.
He said the CAQ government has increased productivity and the projected growth rate now is 2 per cent, which he hopes to maintain through further productivity increases, investment in human capital, education and training.
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.
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales in August fell to their lowest level since January 2022 as sales in the primary metal and petroleum and coal product subsectors fell.
The agency says manufacturing sales fell 1.3 per cent to $69.4 billion in August, after rising 1.1 per cent in July.
The drop came as sales in the primary metal subsector dropped 6.4 per cent to $5.3 billion in August, on lower prices and lower volumes.
Sales in the petroleum and coal product subsector fell 3.7 per cent to $7.8 billion in August on lower prices.
Meanwhile, sales of aerospace products and parts rose 7.3 per cent to $2.7 billion in August and wood product sales increased 3.8 per cent to $3.1 billion.
Overall manufacturing sales in constant dollars fell 0.8 per cent in August.
This report by The Canadian Press was first published Oct. 16, 2024.
