Quebec’s ‘pandemic budget’ projects $12.3-billion deficit for 2021-22, delays decisions on spending cuts, tax hikes

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The Quebec government’s pandemic budget increased spending on health, education and infrastructure on Thursday but avoided any major new plans either to generate new revenue through taxes or to spend it.

Finance Minister Eric Girard and his opposition critics shared one assessment of the budget, each in turn describing it as conservative and cautious, despite a projected deficit of $12.3-billion for 2021-22 on top of the $15-billion deficit for the fiscal year almost complete. Overall spending is projected to increase 5.9 per cent.

Mr. Girard said he has a four-step plan to balance the province’s books in seven years: first, to get to the end of the pandemic in 2022, then to regain full employment that year. Getting the economy up to full speed will take precedence before the final step of balancing public finances, he said.

“If there’s one theme for this budget, it’s this: everything in its time,” Mr. Girard said. “It’s a pandemic budget. It’s not over. We would all like it to be over, but it’s not.”

The plan has the political benefit for the government of delaying any difficult decisions to cut spending or raise taxes to reach a balanced budget until after the next election, scheduled for the fall of 2022. The province suspended its balanced budget law to allow it to take longer than five years to get back to balance.

Mr. Girard projects the pandemic will cost Quebec about $30-billion, including $17-billion in lost revenue from the economic shock and $13-billion in costs such as business subsidies, hiring 10,000 new care workers in nursing homes, buying equipment and running the COVID-19 vaccination campaign. Some portions of the pandemic spending, such as the $570-million on the new care workers, will continue while the $400-million for vaccinations is only for this year and next.

Once the effects of the pandemic are over, the province will be left with a structural deficit of $6.5-billion built into the budget. Mr. Girard said he hopes the results of negotiations with the federal government for health and child care transfers will help fill that deficit, along with economic growth and spending restraint. But he’s not counting on the feds to fill the entire gap.

“From the signals we’ve received, I would be surprised if the federal budget has $6-billion in it for us” to deal with the structural deficit, Mr. Girard said.

The Quebec budget has no major tax increases or decreases. “Quebeckers already pay enough taxes,” the Finance Minister said.

Opposition critics said the budget missed an opportunity for bold measures to move Quebec into a new era after Premier François Legault promised it would prepare the province for a future economy.

While the budget concentrates new spending in health and education, Quebec Liberal finance critic André Fortin pointed out its ambitions for economic development concentrate on bricks, mortar and wires.

The budget offered little for the environment or for getting women, who were hit hard by the slowdown in service industries, back to work. The budget contained few measures for improving the province’s public child-care system.

“All we see in here are traditional areas of relaunch. Construction, infrastructure, IT, all areas where men traditionally work, when everyone knows the pandemic had the greatest impact on women,” Mr. Fortin said.

“This really wasn’t the time to be parsimonious, to pinch pennies,” he added.

Manon Massé, the co-spokesperson of the left-wing Québec Solidaire party, said the financial plan’s concentration on infrastructure reads like a budget from another era. The budget failed to deliver significant sums to combat violence against women, which has increased during the pandemic, she said.

“After the year we’ve had, and the suffering Quebeckers have lived, they should have expected something more ambitious than this,” she said.

After a 5.2-per-cent contraction of the economy in 2020, the budget projects 4.2-per-cent growth in 2021 and 4 per cent in 2022 – projections below economist private-sector forecasts.

Quebec’s net debt will reach $213-billion this year, or 45.5 per cent of gross domestic product. Heavily indebted Ontario will reach 47.1 per cent of GDP.

The budget and last year’s unexpected pandemic deficit marked the end of five consecutive budgets with either a balance or surplus in Quebec.

Budget highlights:

Health: Quebec will spend $2.9-billion in the 2021-22 budget year to extend measures to deal with the pandemic. Another $7-billion will be spent over five years to improve medical care and seniors’ care. Health spending will increase 5.8 per cent overall in 2021-22.

Seniors: The province will spend $400-million a year extra on elder care, including amounts for home care and improving standards of care in private retirement homes.

Education: The province will increase spending on primary and secondary education by 4.7 per cent. The biggest chunk is $110-million for helping children catch up for missed classes with tutoring, homework assistance, psychological help and social worker support.

Infrastructure: Quebec will add $4.5-billion to its 10-year infrastructure spending plan, bringing the plan to $135-billion to be spent on projects including transit and roads through 2031.

Economy: The government is committing $4-billion over five years on growth projects, including $1.3-billion over the two years to bring high-speed internet to rural areas.

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