Jacques Parizeau is a former premier of Quebec and provincial finance minister. This articile was originally published in Le Devoir.
Quebec’s public finances, we are told, are in such a bad state and the debt at such a level that if we don’t correct things, Quebec is threatened with the fate of Greece or Spain. This kind of observation is often expressed in the media. Now it is coming from government sources. Billions may have been promised for tomorrow, but a sort of gloom is spreading through public opinion today: As the expression goes, the coffers are empty.
The following text is designed to show that we are wrong to get excited, that the situation is not at all that which the authorities have presented to us. The data I’ll use are taken from the budgetary plan published each year by the Ministry of Finance to accompany the budget speech. Some of this data is so astonishing, so little like the image generally presented to the Quebec public, that I’ll indicate the exact references in parentheses. So, for example, (BP 12-13, p. C 10) means Page 10, of Section C of the 2012-13 budgetary plan. For 2013-14, the data from the budgetary plan published with the budget speech of November, 2012, were updated in the March, 2013, Economic and Fiscal Update and are designated, for example as (FIscal Update 13-14, p. B 8.)
I apologize for rendering the reading a bit laborious by proceeding this way, but a reader who has difficulty believing some of these statements will be able to check them easily without getting lost in documents which, depending on the year, can be three or four centimetres thick.
One last observation: In the last 15 years, accounting conventions have been modified several times, and this is continuing. These changes often have a significant impact on debt levels as well as on those of expenditures and revenue. Most frequently they come from requests by auditors-general, or have their approval. As justified as they may be for accounting purposes, they render comprehension of reality so arduous that one has to wonder if those who have to make the decisions have a clear picture. We will start with the public debt, then we’ll examine revenues and expenditures.
On March 31, 2012, we are told, Quebec government debt approached $200-billion – exactly $183-billion, or 53 per cent of gross domestic product. And it is exploding. It would augment by $10-billion by March 31, 2013 (Update 13-14, p. C 3). But public sector debt also includes that of Hydro-Québec, of other government agencies and of municipalities and universities, totalling $246-billion or 71 per cent of GDP (Update 13-14, p. C 19). If we add to this Quebec’s portion of the federal debt, say 19 per cent, calculated the same way, we add 46 per cent of GDP and arrive at a total debt of 117 per cent! That is extremely high and frightfully worrying, dangerous for any country with its own currency – and thus able to print more – but critical for a country without its own. Such a level of debt justifies radical and swift action to reduce deficits and, if not paying the debt down, at least stabilizing them. As to wanting to make a country out of a province, forget it. Austerity becomes the only choice.
It is this fiscal framework that dominates the budgetary policy followed by several finance ministers, ever since one of them remarked, a decade ago, that the “bailiffs are at the door.”
Hence the great confusion. All the amounts I’ve mentioned so far are based on the gross debt, that is to say, not taking assets into account. That’s about as smart as someone going to to his bank to establish his balance sheet, and declaring his credit-card debt and his mortgage but not the amount of his bank deposits or the value of his house.
No Canadian government, federal or provincial, apart from Quebec, uses this concept of gross debt. The proof is that several don’t even mention the amounts in their financial reports, and Quebec’s Finance Department had to calculate them for the purposes of comparison. (Update 13-14, p. C 21).