The Parti Québécois government of Quebec deserves credit for accepting its status as a minority government and delivering a consensus budget, which relies on the private sector to deliver economic growth – though it’s a bit of hodge-podge, with some remnants from the PQ’s imprudent election platform.
Nicolas Marceau, the Minister of Finance, has wrought a remarkable metamorphosis, delivering a budget with a strong family resemblance to what the Liberals would have presented to the National Assembly if they had won the election. Enough Liberal MNAs will abstain to let the budget pass, and their party could hardly have fought to the death over rather small differences from their own policies.
There is, to be sure, an element of activism in this budget, rather than fiscal neutrality. But the direction that Premier Pauline Marois, Mr. Marceau and their colleagues are trying to give to the economy of Quebec is noticeably favourable to business. Most strikingly, a 10-year tax holiday is offered to companies that invest $300-million or more in Quebec. Most of the firms large enough to take advantage of this are likely to come from abroad, or from elsewhere in Canada, so that Québécois economic nationalism seems to be on hold. For small and middle-sized businesses, an investment tax credit, which was to expire, will be extended to 2017. A proposed increase in mining royalties will be postponed for further study (metal prices have been weak lately), and a new Banque de développement économique du Québec will be set up to co-ordinate the government’s various supports for companies. The business community in Quebec is pleasantly surprised and relieved.
The freeze on university and college tuition, to which Ms. Marois and the PQ had so conspicuously committed themselves, will remain – leaving higher education in Quebec uncompetitive, and treating it like a social program. And there are still some tax increases for higher income earners, but these are less harsh than was threatened, and the retroactive effect is gone.
Mr. Marceau’s budget no doubt expresses the political caution of a government that wants to stay in power, but it may also a reflect a turning away from the distressing demagoguery in the September election, toward a welcome realism and public-spiritedness.