Last week, we made public the Government of Quebec’s financial statements for the period ending March 31, 2016. This date marked the end of the 2015-2016 fiscal year, during which we had forecast a return to a balanced budget. The record shows that Quebec in fact achieved a significant budgetary surplus, of an amount yet to be clarified. This result remains preliminary, because many important consolidations have not yet occurred. However, this result, if confirmed, is good news, even very good news, for all Quebecers, and I wished to share it with you and discuss it.
It is not surprising that some people have made a clumsy attempt to mischaracterize this news. In doing so, they have lost the necessary perspective that separates partisanship from bad faith. None of these people can see these sound financial practices for what they are – an accomplishment that they could not achieve themselves, since they were forced twice to delay the deadline for returning to a balanced budget, admitting at the time that they were “not very good (fiscal managers) and made a lot of mistakes”. This brought about the lowering of Quebec’s credit rating. Others still believe that spending more than we take in as revenues is a winning formula, and that attaining a balanced budget (the very thing which they seek) is magical thinking or only achievable by spending our children’s inheritance.
To what do we owe this good result?
It was obtained because we took the right steps at the right time.
Spending is now growing at a reasonable – and sustainable – rate, and our primary consideration has always been to protect the most vulnerable members of our society.
When we take care to analyse the factors that have contributed to this result, we note, first of all, a significant growth in revenues, which is due to economic growth. As a result of the stability of our economy, and the trust foreign investors have shown us, and thanks to the steps we have taken as a government to revive our economy, companies are growing faster than before, and they are creating good jobs and hiring more workers (it should be noted, by the way, that almost 100,000 full-time jobs have been created since the beginning of our term in office), which has increased consumer confidence and incited individuals to stimulate the economy. Companies that are growing and individuals who have good jobs – those are the drivers of economic growth which allowed our government to take in more revenues.
These results were also achieved as a result of respecting spending limits. That is an important factor to consider. Government spending is growing – responsible growth, which respects taxpayers’ ability to pay; growth which has allowed us to end the vicious cycle of deficits and increased debt.
Finally, several coincidental elements helped to get the job done – notably, lower payments on our debt, due to interest rates remaining low.
This work seems easy, but if we keep in mind that Quebec has had only eight balanced budgets or budgetary surpluses in the last 30 years, no one can deny that a balanced budget is difficult to achieve and that many sacrifices were required to make this one happen. Those sacrifices were worth the effort.
What happens now?
The hard work is not over. Quebec faces many important challenges, but we have demonstrated that we are able to overcome those obstacles and to keep our promises. Quebec has an aging population, and health care is one matter where there are enormous challenges. Education and training to help Quebecers obtain the jobs of the future must be an absolute priority. The challenges are great, but with our debt under control, and having regained our room to manoeuvre, we are now in a much better position to overcome them.
Returning to a balanced budget was supposed to allow us to reduce the size of our debt and the burden borne by taxpayers. We have already begun to do so in the last few budgets, by depositing money in the Generations Fund, and by taking steps (recently announced or already in effect) to reduce the taxpayer burden of individuals and small-and-medium-sized businesses with a view to creating even more jobs everywhere in Quebec. More than $4 billion dollars in fiscal adjustments, primarily intended for middle-class families, have already been announced. In particular, the health tax, already reduced earlier this year, will be completely eliminated as of 2017, which will represent a recurring fiscal adjustment of almost $800 million for more than 4.7 million taxpayers. As a result of our efforts to strengthen our public finances, we will be able to continue on this path and keep our promises, while maintaining our focus on key priorities: education, health care and the economy.
We will continue to work together to define our shared priorities and meet Quebecers’ needs and expectations, so that everyone can benefit from the positive consequences of this good news, which is the fruit of our collective labour.
Criticism comes easy for those who have failed, or for those who prefer theory to practical experience, claiming that they could have done better. We are the ones who have put our fiscal house in order. From now on, Quebec will have an enviable financial situation and a strong economy. I am not the one saying it; the credit rating agencies are saying it, and they are unanimous on that point. In fact, two of them have raised Quebec’s credit rating! Standard & Poor’s, in particular, noted that, “The ratings reflect our view of Quebec’s strong budgetary performance, strong financial management, and very strong economy.”.
Quebec is doing better. Quebec is doing well. Nevertheless, we are ambitious – we want to do even better, and we will do even better. We have just given ourselves the tools to make that happen.
Carlos J. Leitao
Member for Robert-Baldwin, Minister of Finance, Minister responsible for Government Administration and Ongoing Program Review and Chair of the Conseil du trésor