The 2009-2010 budget that Minister of Finance Monique Jérôme-Forget tabled in the National Assembly on March 19 continues the deployment of the government’s action plan to promote job growth and lay the groundwork for economic recovery. Combined with other efforts that have been launched over the past few months, the measures contained in the budget mean that an addition $15 billion in cash revenues, equivalent to 4.9% of GDP, will be injected into Québec’s economy in 2009 and 2010 in order to stimulate growth. Although Québec has been less affected by the global recession than its neighbours, these initiatives to support the economy exceed the target set by the International Monetary Fund (2% of GDP) and the amount earmarked by the federal government (4.1% of GDP), and are comparable with the U.S. plan to spend 4.8% of GDP to kick-start the economy.
The three components of the 2009-2010 budget are aimed at tackling the recession and preparing for economic recovery, ensuring Québec’s social development and maintaining sound public finances.
Tackling the recession and preparing for economic recovery
The first component features a number of measures to help businesses and support employment: tax breaks, funding for businesses, manpower training, etc. The budget also taps into Québec’s strengths in order to make the province a global leader in the areas of clean energy and the environment, while stimulating growth.
The government has thus assigned Hydro-Québec the responsibility of deploying projects that will generate an additional 3,500 megawatts of electricity, including 700 from renewable energy sources other than hydroelectricity, such as wind power. When these new projects are combined with the other power projects recently commissioned or slated for commissioning in the short to medium term, an additional 14,000 megawatts will be generated by 2035 in order to meet growing domestic and export-market demand. Québec also intends to develop its hydrocarbon resources by stimulating natural gas exploration. In order for Québec to consolidate its leadership in environmental protection and green technologies, the budget provides for a $500 million capital expenditure program for the installation of bioenergy production equipment and a $5 million R&D program for new technologies. The government also announced the adoption of stricter energy efficiency standards for public buildings and a refundable tax credit to encourage people to rent or buy low-fuel-consumption vehicles.
The deployment of the Northern Plan is also part of the government’s strategy for stimulating the economy. In a sustainable development perspective, the Northern Plan is aimed at developing Québec’s impressive energy and mining potential north of the 49th parallel. It also includes the development of northern recreational and tourism resources, transportation and communities.
Ensuring Québec’s social development
The government is continuing to invest in its core missions, namely health and education, by increasing the respective budgets for these sectors by 5.7% ($1.5 billion) and 3.5% ($490 million). Among other things, this enhanced funding will enable Québec to meet needs related to the greying of the population and step up its efforts to curb the school drop-out phenomenon. In the culture sector, the addition of $3 million in credits will allow creators and performers to showcase their talent and shine on the world stage.
Maintaining sound public finances
The anticipated $3.9 billion deficit in 2009-2010 may be explained in part by much lower than expected growth forecasts and funding for measures to support the economy.
The tabling of the 2009-2010 budget is the first step in the deployment of a plan for returning to a balanced budget within five years. Over the coming year, the government plans to limit the annual growth in its expenditures to 3.2%. Payments to the Generations Fund, dedicated exclusively to reducing the public debt, will also be maintained. Among other measures, the government has announced the implementation of a new policy for funding and ensuring the sustainability of public services. This policy includes the indexation of most fees currently paid for public services.
2009-2010 Québec budget