Wednesday, April 7, 2010

Quebec Budget Ignores Reality

Reaction to the Quebec government's latest budget by experts and commentators has been generally positive and has been hailed by most economists as a step in the right direction, especially in the levying of new user fees taxes in relation to health care.

The budget pushes taxes to the highest level ever and extends the lead Quebec maintains as the most over-taxed jurisdiction in North America. How that can be labelled as innovative, progressive or realistic is news to me. Had the finance minister tabled any such monstrosity in the United States, he'd have been lynched.

Quebec's problem is not on the revenue side, the problem is clearly wasteful overspending. You can't remedy wasteful spending by taxing more.

To ask Quebeckers to pay more to cover a budgetary shortfall is like an addict demanding more money from his parents to support a drug habit. Clearly the problem isn't about the price of cocaine...

Without getting into a lot of boring numbers, the Quebec government will raise $56 billion this year (with all these new taxes included) and spend $69 billion. Hmmm....

The federal government kicks in another $8.5 billion in equalization payments, money taken from other provinces, in a program based Robin Hood's example of stealing from the rich, to pay the poor.

Even so, Quebec's budget still remains short about $5 billion and consequently the Province must go to the bank and increase its overdraft, just like you or me.

That overdraft now stands at over $220 billion and will grow with the addition of this year's deficit.
The interest payments on this debt keeps growing as we keep piling on more debt. Its a vicious circle that everyone who has fallen behind on credit card debt understands, the more the interest payments rise, the less chance you have to pay off the debt. 

Now anybody facing a similar situation in their personal life would be advised to seriously cut expenses, so how did the Quebec government react? By spending more!

With a straight face, the Finance Minister told Quebeckers that the government would tighten their belt and would limit this year's budget increase to just under 3%.
An increase!!!!!!!!  INSANE!!!

By demanding that taxpayers continue to pony up ever larger and larger amounts of money, the government is making Quebeckers willing or unwilling enablers.

It's time to cut up the credit cards.

The province's  ability to pay for this spending orgy is drawing to a close. Taxes can't be raised much more and the banks soon won't lend us more. Ask Greece.

Unfortunately, like all spending addicts, the Quebec government spends the money unwisely and always gets poor value.

Quebec spends 26% more than Ontario when identical public services are compared. That's because we have too many civil servants and para-public employees who don't work as hard as our neighbours and who are paid larger salaries and benefits. Our government owned corporations like Hydro-Quebec teeter on incompetence and produce half the revenue they should. Money is spent on programs that other richer provinces cannot afford.
"You and your parents are spending a bunch of money to help Quebec, and they’re paying half the tuition you are. Not only do Quebecers pay less tuition, they also pay far less for electricity, drugs and daycare. Quebec offers a more generous parental leave program than elsewhere, and higher corporate subsidies."        -Ted Morton, Alberta’s finance minister who vowed to visit university campuses and deliver a message to students.   Link
In Ontario, public employees were told that their salaries would be frozen for several years. In Quebec the civil servants have already been promised 7% increase over three years. As outrageous as it sounds, those employees are threatening a strike to get more.

Just like a true addict, our Finance Minister pleaded that he could mend his ways. He brought along evidence that he could spend less and was serious about paring down the size government. To prove his point, he produced a list of 28 government agencies that he was abolishing.
The truth is somewhat different, because he wasn't exactly abolishing them, just their independent status, most were rolled into other Ministries.
One of those agencies,"le regroupement du Fonds relatif à la tempête de verglas" is an organization whose job it is to distribute compensation to those affected by the famous Ice Storm in 1998, twelve years ago. I'm not kidding!
"This restructuring will have a direct impact on existing staff. I want to reassure employees potentially affected. They will be treated with respect, in accordance with collective agreements in force," said the Minister.
Sounds like people are going to be fired, right?
Not a chance!
It isn't contractually possible to fire a civil servant whose job has been eliminated, they have job security for life!  FOR LIFE!
Now go back and read the Minister's statement in light of that fact...... Just a tad misleading, don't you think?

Anyone who believes that this new 'realistic' budget will deliver the province financial stability is delusional.
Nothing has changed at all.
It's funny, the Greek government has the same attitude.


  1. Nothing will change unless there is a will to make substantial cutbacks and we Quebeckers realize that the cupboard is bare. It's ok to increase taxes as long as someone else pays and it's ok to cut spending as long as it only affects someone else - as long as I have my $7 a day daycare and in-vitro fertilization paid by the state, who cares?

  2. In Quebec, you have 2 expenses you will virtually never have in other provinces: Language expenses and cultural subsidies.



  3. Three things that should have been cut big time that weren't: welfare, corporate welfare and cultural welfare.

    Now people will contemplate a possibility in Québec: sell your car, move to the Plateau, get on welfare and play tam tam and the guitar in order to become an artist...

  4. I wonder how much of this is explained by Francophone culture. As Peter Brimelow has noted, since the quiet revolution, the Quebec state with its huge and all-powerful bureacracy has replaced the Catholic church as the main symbol and source of Francophone identity and authority. France itself also has an enormous state-government. One must question WHY the rest of Canada should give Quebec 8.5 billion dollars every year. These "equalization" programs tend to cement unequal economic outcomes and inhibit labour mobility. Canada might be better off without Quebec.

  5. And you know what? If, God forbids, Quebec economy collapses, they will look to the contemptuous, discriminative, arrogant Canada to bail them up. Hey, it must be Canada's responsibility right? Quebec would never have the deficit should it was not part of Canada.

  6. I was born in Quebec and have moved south of the border: Quebec taxes, filthy hospitals, inefficient education system and poor treatment of anglos and immigrants as well as the constant threat of separation...have forced us out. My biggest regret is that I didn't leave right after university like the rest of my classmates. The average quebecois does not even realize that the rest of Canada is feeding him. Time to draw the purse strings shut and que sera, sera. If quebecers aimed for mediocrity it would be a vast improvement.