It was a start. It is important that Premier Couillard and Finance Minister Leitao took the first steps. No tax increases. Hiring freezes in the civil service. At least some symbolic cuts to state engineering agencies like the OQLF that are now eating up about a fifth of our expenditures. Tax cuts for small businesses. Mr. Leitao called this an interim budget pointing out that there are only six months left in the calendar year. It is generally expected that more progress will come in next March’s full budget. Here is what we need to see.
Quebec is at an existential point of its history. If we do not have radical progress next year, the bond markets will raise Quebec’s borrowing rates thereby necessitating tax increases that Quebecers cannot afford. As the highest-taxes jurisdiction in North America, the cupboard is bare. And Canada must care because a nation cannot have a political jurisdiction within it where one-third of its population lives at or below the poverty line and almost 30% of its working men and women can be classified as working-poor having little to their name. Even many union economists blame high taxes for this tragedy.
The tax problem lies not in the social security safety net. As we have written before, this is capitalism’s insurance as FDR called it. The money for pensions, welfare and EI come straight out of our pockets. It is as if we bought insurance in the private sector. But those funds have, for two generations and regardless of party, been used to fund Quebec Inc. That incestuous model of state partnership meant to create a Quebec based economic uberclass. It has failed miserably.
The first priority of the next budget must be to stop the use of public trust monies for private sector investment in the hope of getting more people working thereby generating more tax revenues. It hasn’t worked and it won’t. What it will result in is an aging population nearly have of whom will end their lives living at subsistence level pensions. There is no reason why public funds totaling $400 million, for example, are going to members of the Bombardier Beaudoin family to build a cement plant in the Gaspé.
Quebec has gone from being among Canada’s richest province to a have-not. All in less than forty years. Yet the sources of our past wealth are still here. Our resources. Instead of using public trust monies, the government must encourage foreign investment, fresh money, to come here and develop our resource sectors. Particularly oil and gas. That creates real new jobs with other people’s money. We must stop the mortgaging of our futures. It also means that foreign executives coming here must be freed from the yoke of Bill 101 and know that they can send their children to whatever schools they like and that their companies can communicate internally in whatever language they choose.
We have as much natural gas on the south shore as the Bakken shale in Montana and the Dakotas where unemployment is below five per cent. It’s time to start. And fracking fears are no excuse. Alberta and BC have been using fracking for over fifty years without a single incident. Under Anticosti Island we have major reserves of oil. We should not be paying two small Quebec-based companies to exploit the reserves, as the PQ government did. Instead, we should be auctioning the rights to oil majors and taking in 300-500 million dollars instead of paying out 150 million just to continue Quebec Inc. Hydro-Quebec must also be monetized. That doesn’t mean selling it to private interests. It does mean using the French model when that country placed Électricité de France on stock markets and actually lowered rates for French citizens.
The hardest task for Mr. Couillard and Mr. Leitao will be taking on the bureaucracy. Quebec is not sustainable with a bureaucracy four times the size of California`s – which has a population equal to Canada`s – while Quebec`s population is a fifth of that. And the most important place to start is healthcare which is some 40% of our budget. We have enough money to make our system work. But not if we continue with a labor force where some half of all those employed in our healthcare system have nothing to do with the delivery or maintenance of our hospitals, research centres or medical training facilities. They are bureaucrats. To cite France as an example again, that country has managed to cut its healthcare bureaucracy down to 36% of those employed in the health system and is generally considered to have the second best healthcare system in the West after Israel`s.
Finally,it is time to end the state engineering agencies that eat up so much of our budgets and concentrate on growth and securing our vulnerable. It will not be easy. But this government can do it. Rarely have we seen an economic team as talented as Leitao, Treasury Board President Martin Coiteaux and Economy and Innovation Minister Jacques Daoust. These are all self-made men of independent means. As is Mr. Couillard. They don`t have to do politics by running between the raindrops on the way to state pensions. They can afford to take «les beaux risques». The great risks for the public good. This government has a supramajority and a five year mandate. It can afford to confront the public sector unions, open up our economy, take some tough knocks in the first couple of years and then run the next election on the benefits these decisions will produce in the last three years of its mandate. Quebec had a “Quiet Revolution” instituted by «l’équipe de tonnerre.» The team of thunder. Today we need an economic «risque de tonnerre» more than ever. We must hope our leaders have the courage to do what must be done before history beings down its deadly two-word verdict of “too late.