The shortfall has been described as 'structural' a word that strikes fear into the hearts of finance ministers, because it means that the state has no way to balance its budget in 'normal' times.
Governments usually go into debt during a recession, trying to spend their way out as did all western governments in the great depression caused by Wall Street's collapse in 2008.
The theory is that in good times, governments make up the deficit by piling up surpluses.
That is what finance minister Jim Flaherty is promising for next year, a budgetary surplus of about $6 billion, which is a start at eating away at the federal government's $600 billion debt.
But for Quebec there is really no light at the end of the tunnel, with a projected provincial deficit of about $3 billion last year and again projected for next year, with promises of a balanced budget past that, an impossibility under Quebec's circumstances.
The two economic studies were pooh-poohed by the finance minister but when Jacques Parizeau came out with an opinion piece that backed the theory that Quebec is in economic trouble, the PQ realized that it had to act, lest the debate about the deficit become the topic du jour in the upcoming election.
"It's the first time in 30 years that I'm so concerned about Quebec's economic future," Parizeau wrote in an opinion piece that appeared in Monday's Le Journal de Montreal.The other provinces as well as Ottawa (which pay into Quebec to the tune of about $15 billion a year) lately have been carping that the only way out for Quebec to become a 'have' province is to exploit its natural resources .
He points to a study done by HEC, the Montreal business school. The former economist called the study "tough, but fair." He wrote that "what hits the hardest is the slow and persistent deterioration of the province's economic outlook over the last 10 to 12 years." Link
Denis Lebel, the Conservative cabinet minister, summed up Ottawa' position rather succinctly
"The time has come, he said, to take steps to create wealth in Quebec. One of these ways is to exploit the rich natural wealth embodied in the province.This past year has seen mining investment fall by 30%, with companies scared off by by the PQs promise of higher tariffs and the imposition of more expensive regulation and so wealth development through resource exploitation seems to be going in the opposite direction.
"What should we do to keep a strong Quebec? I am a proponent of a strong Quebec within a united Canada. Quebec has vast natural resources. I am in favour of a sustainable and responsible development to create wealth, "commented Mr. Lebel." Link{fr}
As for oil, Quebec has placed exploration of the St. Lawrence valley off limits because the area which is rich in shale oil, is also densely populated, making fracking an impossibiliy in current Quebec society.
That leaves two options, the Old Harry deposit in the middle of the Gulf of St. Lawrence, already under fierce environmental attack and Anticosti Island, a vast uninhabited island, isolated in the middle of nowhere about the size of Crete. Unlike Crete, which has a population of over 600,000 people, Anticosti is practically uninhabited and isolated, a perfect venue for resource development, yet in Quebec, there are still those that believe that all resource development is bad.
Feeling the pressure to produce wealth through resource development, Pauline and the PQ have opted for a magicians trick, going through the motions of resource exploitation, in order to keep the fiscal wolves at bay, giving the illusion that Quebec is not loafing and can somehow tame the deficit demon.
The oil industry has long looked at Anticosti's potential and universally passed on the project, deeming the risk to reward, quite unattractive.
Yet Pauline is going full-speed ahead, not really for fiscal gain, but rather for political gain, taking all the risk, while giving private enterprise a shot at the eventual prize, on the slim chance that the gamble will pay off like a desperate Hail Mary pass.
Mr. Durand has been a fierce critic of the Anticosti project for a long time and points out that reputable companies from 'Big Oil' wouldn't touch the project with the proverbial ten foot pole. And so the partners that Quebec has teamed up with are dubious players at best. The Journal de Montreal ran a story detailing the past of the two principle players."A plan launched by the Quebec government to help fund oil exploration on a remote Gulf of St. Lawrence island is raising concerns the province is taking too big a risk with taxpayer cash.
Premier Pauline Marois announced Thursday her government would finance up to $115 million in joint ventures with several oil companies to drill on Anticosti Island, an endeavour she says could bring $45 billion in benefits to Quebecers over the next 30 years.
Marois unveiled the project at a time when her minority Parti Quebecois government is facing attacks over its economic record. It also came amid the expectation she will call an election in the coming weeks.
But one critic of the project says the amount of recoverable unconventional oil locked underneath Anticosti has been exaggerated, insisting no more than 1.5 per cent of its estimated 30-billion-plus barrels can actually be extracted.
Marc Durand, a retired geological engineer, says the government's plan has the potential to bring in around $40 billion.
Jean François Hénin But he added it would cost roughly three times that amount — $120 billion — to employ the technology needed to get it out of the ground and to market.
Jean François Hénin
Durand urged the PQ to exercise more caution when it comes to the taxpayer's dime.
"We are so far from any possible profitability in Anticosti that investing public money is like saying, 'I will fix my budgetary problems by buying a lottery ticket,' " Durand, a former professor at Universite du Quebec in Montreal, said Friday.
"There's much less than a one-in-1,000 chance of recouping this investment and these are public funds." Read the rest of the story
Jean François Hénin of the French company Maurel & Prom
a partner in the project was convicted in 2006 in the United States having lied to the U.S. Federal Reserve. In addition to a fine of one million dollars, he was forbidden to enter the U.S. for five years.Maurel & Prom is a company specializing in the extraction of oil and natural gas. It deals mainly in the Congo and Colombia, on sites where the oil giants refuse to set foot.
Loïk Le Floch-Prigent, nicknamed "Le Moutin Noir" ("The Black Sheep") by former French President Francois Mitterrand, is the former CEO of the the French oil company Elf-Aquitaine, involved in a vast corruption scandal in the 90s.
In 2003, his role in the scandal earned him a sentence of five years in prison and €375,000 fine for misuse of corporate assets, concealment and breach of trust.
More recently, in September 2012, he was arrested in the Ivory Coast and imprisoned in Togo where he was facing charges of fraud. He was finally released a little less than six months after his arrest for health reasons. Link{fr}
When this whole thing eventually blows up à la Gaspésia, (a failed PQ pulp and paper project that cost taxpayers $300 million) the PQ will have long benefited from the short lived electoral bump.
Quebec taxpayers deserve what they get when they close their eyes to reality and accept on faith ridiculous projects like electric wind-farms and co-generation boondoggles.
Anticosti will actually be nothing more than a $100 million waste of time and money, but well worth the expense to the PQ if it sells the idea to Quebecers that the separatists are serious about creating wealth through resource development.
An expert illusionist, Pauline Marois, craftily exploits self-delusional separatists, willing to believe any fantasy as long it holds the faint promise of independence.
And so it seems that it we are living through another Groundhog Day in Quebec, where waking up to the same failed plans of yesterday is repeated over and over again.
I only wish we can cope as well as Bill Murray.
