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 – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
