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 Quebec 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.”
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.”
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.
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.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
