Finance Minister Carlos Leitao did his best Thursday to present his budget, Quebec’s first without a deficit in seven years, as a burst of sunshine.
He announced plans to cut taxes for individuals and companies, although they will not begin until 2017 and will not be fully felt until 2019. New money was budgeted to develop ports and associated industry, build highways, train workers, install sprinklers in seniors residences and combat religious radicalization.
It was left to his cabinet colleague, Treasury Board president Martin Coiteux, to point out that the silver lining of Leitao’s budget encircled a dark storm cloud.
The spending cuts seen since the Liberals were elected last April, which have led to escalating street protests, were a taste of what is in store.
The forecast for the fiscal year beginning April 1 is zero deficit on $100.1 billion in revenue. Nearly 20% of that revenue will come from federal transfers, including $9.5 billion under the equalization program that redistributes wealth from richer to poorer provinces. On the expenditure side, Quebec continues to pay $10.5 billion a year servicing its debt, the largest in Canada.
Coiteux said the 1.2% increase in program spending in 2015-16, less than inflation, is the lowest in recent memory. The Education Department’s budget is essentially frozen, with an increase of just 0.2% that will do nothing to appease the 50,000 university and college students who walked out of their classes this week to protest government austerity. The Health Department, which accounts for nearly half of total program spending, will see its budget rise just 1.4%, a sharp decline from increases seen over the past decade.
Leitao congratulated Quebecers for tightening their belts. Already they have seen increased daycare fees, reductions in municipal-sector pension plans, cuts in tax credits for union and professional dues and an end to full coverage of in-vitro fertilization treatments. Physicians agreed to postpone a negotiated pay hike.
