François Legault wants to solve Quebecs productivity problem

François Legault wants to solve Quebec\s productivity problem
Quebec will help francophones in the rest of Canada, Legault says
Still, he conceded there are limits on what Quebec can do without appearing to meddle in the affairs of another province.

Quebec Premier Francois Legault speaks to media following his meeting with Ontario Premier Doug Ford Nov. 19, 2018. Chris Young / THE CANADIAN PRESS

QUEBEC — Premier François Legault says Quebec is willing to do more to help francophone communities living outside the province obtain better services in French.

But he conceded there are limits on what Quebec can do without appearing to meddle in the affairs of another province.

“We cannot force the government of another province to do something, but we can help francophone groups in other provinces fighting to get more services,” Legault said, arriving for a meeting of the Quebec cabinet.

Legault said he has asked his minister for Canadian francophone relations, Sonia LeBel, to improve contacts with the various lobby groups pushing for services in French.

“I asked Sonia to get closer to them,” Legault told reporters. “I am open to meeting them and see how can we help these groups in other provinces fighting to have more services in French.”

Legault’s comments Wednesday follow his direct intervention Monday with Ontario Premier Doug Ford during a one-on-one visit.

Legault specifically asked Ford to reconsider his decision to cancel the creation of a French-language university in Ontario and eliminate the office of the French Language Services Commissioner.

Legault, however, dismissed the idea of a potential backlash in Quebec from groups, saying the English-speaking minority here is too well treated compared with francophone minorities.

“I think we have to show the example,” Legault said. “That’s what I will continue to do.”

Earlier, LeBel said she is up to the task and has been in contact with the Ontario minister responsible for the francophone community, Caroline Mulroney, who made herself scarce after the Ford announcements.

“She was eager to assure me franco-Ontarians had a place and she was quite concerned,” LeBel told reporters. “I choose to trust her.”

She she has spoken to federation of Ontario francophones and assured them of her support and is waiting for them to propose some avenues for actions to help.

Meanwhile, mayors representing cities and municipal associations in Quebec, Ontario and New Brunswick on Wednesday published a statement in which they call for the recognition and protection of francophone rights across Canada.

Montreal Mayor Valérie Plante and Quebec City Mayor Régis Labeaume are among those calling for those rights to be fully protected and denouncing any political action that would see them infringed.

The mayors say that any attempt to curb those rights is unacceptable in Canada — an officially bilingual country renowned internationally for its linguistic duality.

The statement cites a decision by Ontario Premier Doug Ford to abolish the post of commissioner of French-language services in Ontario and cancel a planned French-language university. It also notes the election in New Brunswick of provincial MLAs openly calling for a reduction in language rights enjoyed by that province’s francophones.

Other signatories to the statement include the president of the Union des municipalités du Québec; the president of the Association française des municipalités de l’Ontario as well as the Association des municipalités francophones du Nouveau-Brunswick.

When Quebec Premier François Legault says he wants to wean his province off the massive equalization payments it receives from Ottawa, his goal is about more than simply getting the province off its fiscal reliance on the federal dole. Its about climbing out of the daunting productivity hole that Quebec has been mired in for decades.

When you take the GDP per capita, were about 20 per cent lower than the rest of Canada, Mr. Legault said in Toronto this week when he and I sat down to discuss his newly elected governments economic strategy. With Ontario, the difference is 17 per cent. Its a lot of money.

This relative lack of economic capacity is at the crux of Quebecs have-not status among Canadian provinces in the federal equalization program. Indeed, Quebec is, by far, equalizations biggest beneficiary: It will receive $11.7-billion in the 2018-19 budget year, more than 60 per cent of the programs total payments. Those funds make up nearly 11 per cent of Quebecs budget revenues.

Mr. Legault isnt proposing to simply hand that money back. Rather, his plan is to close the per-capita GDP gap between Quebec and the rest of the country so that its economy is no longer a chronic have-not qualifying for equalization handouts, and will no longer need the funds to make its budgetary ends meet.

We need to reduce the difference in wealth between Quebec and the rest of Canada. Right now, were too dependent on equalization payments, he said.

If we did 1 per cent better growth than the rest of Canada, it would take 20 years to completely erase this difference, he said. We wont do that in four years of a mandate. But we have to start somewhere.

Previous governments have already made a start that will make Mr. Legaults job a little easier. First, he inherited a balanced budget. Second, the province successfully closed a sizable gap in the share of its adult population participating in the labour force, thanks chiefly to its funding of a groundbreaking low-cost child-care program that has encouraged many more women to work.

But Stéfane Marion, chief economist at Montreal-based National Bank of Canada, noted the closing of this important labour gap has done nothing to reduce the per-capita GDP gap, which has persisted for decades. Quebec now has just as much of its population committed to producing its goods and services, yet it is still producing 20 per cent less than the rest of the country.

Essentially, Quebec is unable to produce the same amount of goods and services with the same amount of labour as other parts of the country. Last year, Quebecs labour productivity was 13 per cent below the national average, as measured by GDP for each hour worked, the most commonly used productivity gauge.

The key factor in this underperformance, Mr. Marion believes, is a shortage of business investment. While Quebec accounts for nearly one-quarter of Canadas population, it saw only 13 per cent of the countrys spending on business structures, machinery and equipment last year.

For a long time, Quebecs political climate hasnt done it any favours in attracting and retaining investment, especially from outside the province. Mr. Legault argues Quebec lost 50 years fighting about the sovereignty of Quebec instead of fighting attracting private investment and creating well-paid jobs.

But even when uncertainty about the provinces future wasnt looming over investment decisions by businesses, successive provincial governments have resisted outsiders taking ownership of prominent Quebec businesses. While the provinces cultural and economic history more than explains its reluctance to allow key companies to end up under non-Quebec control, this position has nevertheless created a long-standing sense in the global investment community that Quebec is not entirely open for business.

One consequence of this may be that Quebecs business community is made up of a much larger proportion of small businesses than neighbouring Ontario – another factor that restrains productivity, due to lower economies of scale. Mr. Marion also noted Quebec has a lower rate of new business formation than Ontario and the rest of Canada.

Mr. Legault sounds determined to change that. Hes talking about improving incentives to businesses to set up shop in Quebec, increasing export opportunities for Quebec companies, reducing red tape to make it easier to operate in the provinces. This week he said he would match a proposed Ontario cut to the corporate tax rate.

I want to make sure that if companies have to decide where they will put their next plant, that the best place will be Quebec, he said.

A noble goal. Yet Mr. Legault has also said he wants to protect and nurture Quebec ownership of head offices in the province. Hes defined the problem, but whether he can overcome Quebecs political realities and truly open the province for investment may be easier said than done.