Quebec families are the big winners in CAQ mini-budget – Montreal Gazette

Quebec families are the big winners in CAQ mini-budget - Montreal Gazette
Quebec presents $4-billion surplus for 2019-20 amid booming economy
Revealing that Quebec is sitting on a fat surplus, Finance Minister Eric Girard announces an increase in family allowance payments and the return of a flat daycare rate.

The CAQ government is eliminating the sliding scale imposed by the Liberals on public daycare rates, Finance Minister Eric Girard announced Thursday as he presented an economic update. Jacques Boissinot / THE CANADIAN PRESS

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QUEBEC — The province’s economic picture is so rosy that the Legault government is opening the spending tap, rolling out an increase in family allowance payments and the return of a flat daycare rate, which will be $8.25 a day.

Finance Minister Éric Girard announced $857 million in new expenditures for the current fiscal year — $525 million of which will be put toward new spending and $332 million of which will go back into the pockets of Quebecers.

In a mini-budget tabled by Finance Minister Eric Girard on Thursday, Quebec also reveals it is sitting on a fat surplus: $8.2 billion for 2018-2019 and $4 billion for 2019-2020.

"The economy is performing remarkably well, and this increases our revenues, allows us to give money back to Quebecers and still have responsible fiscal management," Girard said at a news conference Thursday.

Even with a contribution of $2.7 billion to Quebec’s debt-reduction Generations Fund, the surplus for the year 2019-2020 is projected to be $1.4 billion.

Flush with surplus revenue, the Coalition Avenir Québec government is making good on its promise to eliminate the sliding-scale system for daycare fees and boosting the child allowance earlier than expected.  

Swimming in cash, Girard says that money will come in handy to step up Quebec’s climate change fight and cope with an economic slowdown he acknowledges is coming down the track.

“The economy is performing remarkably well,” Girard said in making the document public. “This increases our revenues and allows us to give money back to Quebecers and still act fiscally responsible.”

That's after Girard transferred more than $2.5 billion in surplus cash into the Generations Fund, which is dedicated to paying down the province's gross debt.

Les mesures annoncées aujourdhui permettront de retourner 3,3 milliards de dollars de plus dans les poches des Québécois dici 5 ans! Jen suis très fier! 😁 #PolQc pic.twitter.com/rp1BlgFggj

Carlos Leitão, a former finance minister and now critic for the Opposition Liberals, said the economic update was a boon for some, but left others behind. 

Families are the big winners, with Girard rolling out the full Coalition Avenir Québec election promise to increase family allowances, two years earlier than expected.

That means the system of lower payments for the second and third child the CAQ inherited from the Liberals is being abolished. Each child now will count for a maximum allowance of $2,515 per year starting in 2020, regardless of rank, and a minimum of $1,000.

The allowance, a non-taxable benefit, is nevertheless pegged to income. Parents of two children who have a combined income of $49,842 or less will get $1,250 more per child than last year, for a total allowance of $5,030.

He also noted the government plans on tying Hydro-Québec rates to the yearly inflation figure, meaning higher electricity bills.

The same couple earning a total of $140,000 get $642 more, moving from an allowance of $1,358 a year to $2,000.

Quebec's labour federation (FTQ), meanwhile, said more money should have been put toward public services.

The government is also eliminating the sliding scale imposed by the Liberals on the subsidized public daycare system. The now-famous Line 434 on the income tax form, which determined how much more parents would have to pay for daycare based on their income, will not be there in 2019.

Finance Minister Eric Girard offered an economic update Thursday afternoon, presenting a mini-budget that shows the CAQs plan to give $8 billion back to Quebecers by 2023-2024, which is $3.3 billion more than planned. "Quebecs economy is doing remarkably well," Girard said on Thursday. "When you look at the last four years, the (total) surpluses have been in the order of $12 billion, and all that was put towards reducing Quebecs debt burden."

And the government is acting on widespread complaints about astronomical parking fees charged at Quebec health care institutions.

Starting next spring, the first two hours of parking will be free and the maximum rate will vary between $7 and $10 a day, depending on the region. The specifics of the plan will be announced later by Health and Social Services Minister Danielle McCann, but the promise has been pegged at $120 million.

There is also more money for parents receiving a supplement because they are caring for a child with disabilities. Quebec is giving them $652 more a month. About 3,000 families will benefit.

In 2020, all families who qualify will receive the same family allowance for each child, regardless of how many children they have. It will total a maximum of $2,515 per child each year for families making under $49,842 and $36,256 for single parents. Family will receive a minimum of $1,000 per child per year, an amount given two years earlier than expected.

The one CAQ promise Girard didn’t throw more money at, for now, is the creation of a flat-rate school tax.

The CAQ is projecting another surplus of $1.4 billion for 2019-2020, fuelled by a 2.4 per cent increase in GDP in 2019 and a projected 1.8 per cent increase in 2020. The CAQ intends to use that money to fight climate change, deal with a potential economic slowdown and reduce the debt.

At a news conference held in the historic Gérard D. Levesque building in Quebec’s old city (the same building where Alfred Hitchcock filmed the movie I Confess in 1952), Girard said Quebec’s solid economic growth is the secret to his success.

As of this spring, the first two hours of parking at Quebec hospitals, health and social services outlets (CLSCs), long-term care facilities (CHSLDs) will be free, and daily rates will be set at $7-$10 depending on the region. That program is expected to cost the government:

Unlike some struggling provinces, real GDP growth in Quebec is forecast to hit 2.4 per cent in 2019, which is more than Girard projected in his last budget (1.8 per cent), but it will then slip back to 1.8 per cent in 2020.

It estimates it will reduce the debt to 45 per cent of the gross domestic product six years ahead of schedule. The total additional spending this fiscal year, above what was budgeted last spring, is $857 million. Liberals react: Budget only helps young families

“For the next six months it is clear that we anticipate a slowdown of the worldwide economy,” Girard said.

But making hay while the sun shines, Girard trotted out a total of $857 million in fresh spending over last March’s budget.

The focus on families and taxpayers reflects a commitment made by Premier François Legault in August, when he said he wants to give Quebecs massive surpluses to taxpayers, not public sector unions angling for raises after years of Liberal austerity.

Legault’s view is reflected in the budget. While Quebec’s 500,000 public sector workers are clamouring for big wage increases, Girard said his mini-budget only includes money for an increase based on inflation.

“The minister is trying to lower expectations and manage the upcoming cycle of collective bargaining,” Liberal finance critic Carlos Leitão told reporters later.

"The government is giving people higher allowances, but making everyone pay more in electricity costs," he said.

“The government is in a spending mode and it is relatively well targeted,” he added, noting while Girard is helping parents with children, he has neglected others without children, plus seniors.

– With files from CTV Montreals Kelly Greig in Quebec City and Giuseppe Valiante of The Canadian Press

Québec solidaire finance critic Vincent Marissal said he was disappointed that the government’s commitment to fight climate change seems linked to there being surplus money in the kitty, which means it’s a pretty conditional promise.

Parti Québécois finance critic Martin Ouellet complained that the CAQ, like the Liberals before, are hiding surpluses and could in reality afford to do a lot more to help Quebecers.

But Girard is breaking all contemporary records on the spending side of the balance sheet. In 2019-2020 he increased spending on education by 6.5 per cent ($24.6 billion) and health by 6.8 per cent ($45.4 billion).

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Premier François Legaults government presented an economic update Thursday featuring a $4-billion surplus for 2019-20 on top of a revised surplus of $8.3-billion for 2018-19.

Quebec is set to post massive back-to-back surpluses boosted by a strong economy, and is increasing spending as public finances tighten elsewhere in Canada.

Premier François Legaults government presented an economic update Thursday featuring a $4-billion surplus for 2019-20 on top of a revised surplus of $8.3-billion for 2018-19. Finance Minister Éric Girard announced that he will boost spending by $857-million and put $6.2-billion from the surpluses into a debt-repayment fund.

The financial results contrast with the grim picture in other provinces. In October, Alberta cut $1.3-billion in spending on its way to an $8.7-billion deficit after five years of economic malaise driven by low oil prices. Ontario also cut spending in its budget last spring. In its latest economic update Wednesday, Ontario projected a deficit of $9-billion for this budget year.

Quebecs economy, meanwhile, is expected to grow by 2.4 per cent in 2019, up from the 1.8 per cent projected last spring, the third consecutive year of strong economic growth. The national average for projected 2019 economic growth is 1.6 per cent.

The Quebec economy is performing remarkably well, even as the global economy is slowing down, Mr. Girard said. This allows us to move up on several of our promises and still manage public finances responsibly.

The good news allowed Mr. Legaults government to send $857-million back to taxpayers. Mr. Girard announced two key measures to boost child allowances and to return the provinces subsidized public daycare system to a single flat rate immediately, amounting to about $2,000-a-year in savings for the average family. The government promised the family policies in the 2018 election, but accelerated implementation because of the surpluses.

Quebecs public daycare system will return to a flat fee of $8.25 a day – a rate that makes the system the envy of parents in the rest of Canada. In 2015, a previous Liberal government introduced a surcharge of up to $15 a day, based on parents income, that was collected at tax time.

The government will also cap parking fees at hospitals at $10 a day – less than half the current rate at many urban hospitals – a measure that will cost about $120-million next year.

Quebec has not had such large surpluses in its modern accounting history. The province has posted surpluses of up to $2.6-billion since 2015-16, and much smaller amounts in the late 1990s and early 2000s. Before 1998, the province experienced chronic deficits going back into the 1960s.

However, the news isnt all sunny on the horizon for Quebecs public finances. The provinces population is still aging more rapidly than those in other provinces, outside the Atlantic. Unemployment is low but a shrinking work force is partly responsible for the tight labour market and rising wages. Despite the solid economy and strong public finances, Quebec still stubbornly lags behind Ontario in productivity growth and standard of living.

Economists and bank analysts say the government may not be doing enough to plan for Quebecs economy joining the global slowdown. In a report earlier this year, economists Luc Godbout and Julie St-Cerny-Gosselin wrote that Quebec will fall into deficit quickly when the economy returns to normal levels of growth.

Matthieu Arseneau of National Bank Financial said the provinces economy may be overheating and should be running even bigger surpluses in preparation for rainy days instead of taking on new, recurring expenses.

Mr. Arseneau said Quebec avoided the contagion of low energy prices that struck Alberta, and is instead benefiting economically from low fuel prices and interest rates, which are keeping the Canadian dollar weak and benefiting Quebec exports.

Carlos Leitao, a former bank economist and the Liberal finance minister from 2014 to 2018 who balanced Quebecs books after decades of deficit, said the update was disappointing. The economy is slowing down, exports are decelerating, private investment is slowing down, said Mr. Leitao, who is now opposition finance critic. These are things that Mr. Legault described as his primary mission.

Mr. Leitao added that while the government is in spending mode, at the same time, its spending is relatively well targeted.

Mr. Girard, the Finance Minister, said the governments plan leaves enough surplus in place to counter any economic headwinds. Were only spending 33 per cent of the surplus. Were being reasonable and responsible, he said, adding that the money the government returned to Quebec parents will be good for economic growth.

Mr. Legault was buoyant as he arrived at the National Assembly, saying the economic update was the cherry on the sundae for his government.

Mr. Legault aims to get Quebec off federal equalization payments one day but, as long as the province lags behind in productivity and standard of living, that day remains beyond the horizon. The province will receive $13.1-billion in equalization this year, a figure expected to remain stable into 2022.

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