Two months after being sworn in as Quebec Premier, Pauline Marois faces the most important challenge of her fledgling minority government. It has nothing to do with achieving sovereignty. The option is only a dream for now. Nor is it about fighting Ottawa for more powers. That may come at a later date.
The immediate challenge is to establish the Parti Québécois’s credibility with the business community at home and abroad through its budget on Tuesday. Ms. Marois is determined to prove that her government not only can wrestle the deficit to the ground, but, more importantly, that it has a realistic economic strategy to generate wealth for the future.
“There is a false assumption about the Parti Québécois that we don’t know anything about the economy. … Well that’s a myth,” Ms. Marois said in a prebudget interview with The Globe and Mail. “We will take back control of spending and we will maintain our objective of erasing the deficit in [fiscal year] 2013-2014. We will also announce certain strategies regarding private investments. … For me, it is important to send a message to all Quebeckers, but more particularly the business community.”
Ms. Marois herself helped prepare the budget, spending hours with Finance Minister Nicolas Marceau deciding fiscal and budgetary measures. She also met recently with leaders of 10 of the province’s major business sectors to help define her economic policies. The biggest concern that was raised was the need for more private investments and to reduce the province’s heavy debt load.
Ms. Marois said that while the budget will introduce cuts in program spending, services in health, education and culture will be maintained. The government will also announce cuts to infrastructure projects as part of an effort to bring the ratio of debt to gross domestic product below the current level of 55 per cent. A study sponsored by the PQ government released on Friday showed $5-billion in cost overruns on infrastructure projects worth $44-billion over the past five years. Overruns on some major projects had reached 78 per cent of the original estimate. The PQ plans to revise several of them.
The budget will also include a tax hike for wealthier income earners and fiscal measures to boost private investment. If necessary, Ms. Marois said, she will add amendments from the opposition parties to ensure the budget passes.
“I’m ready to listen. This isn’t a dogma we are presenting here,” she said.
Credit-rating agencies are closely monitoring how the province will reduce its debt. If the budget fails to meet their expectations for belt-tightening measures and a credible debt-reduction plan, Ms. Marois said she fears the consequences could be serious for the province.
“The credit-rating agencies didn’t threaten us. They didn’t send us any signals. They won’t give us any trouble if we stay on target. But if we can’t, they’ll be knocking on our door to see us. … They are waiting to see how we perform and for us that’s important,” she said.
Given the province’s precarious financial situation, opposition parties forced the PQ to back down on its most important election promise: elimination of the health tax. Ms. Marois said she never anticipated the kind of public outcry that greeted her proposal to increase taxes on dividends and capital gains retroactively to compensate for abolishing the health tax.
“Maybe we weren’t clear enough [in the campaign]. We never used the word ‘retroactive.’ We were criticized for that. And it’s true, we never used the word,” she acknowledged. But Ms. Marois has not abandoned the idea of keeping her promise to abolish the tax. “If we can, we will do it one day. But I don’t see any possibility for the next two or three years.”
For now, the focus remains on sending a clear signal to anxious investors that the PQ will control spending and introduce measures to attract private investment. Since winning the election, the government has imposed a moratorium on the development of the shale-gas industry, proposed changes to the former Liberal government’s northern development plan, eliminated tuition-fee hikes and offered improved daycare and health-care services.
“The message out there was that we were handing out candies, that we didn’t want to develop the North, that all we wanted were moratoriums and that we had no economic vision. It is very important to lay down our positions now,” the Premier said.
Next month, Ms. Marois will go to New York to promote Quebec’s investment opportunities. She said sovereignty will hardly be an issue, given that she has a minority government. Questions of corruption and integrity could be more challenging.
“Confidence in the economy is seriously undermined when you have corruption problems,” she noted. She said she will reassure U.S. investors that the inquiry into corruption in the construction industry and legislation aimed at addressing the issue of integrity will eradicate a problem for which she blamed the former Liberal regime.
She said testimony at the inquiry confirmed her worst fears, and is having a devastating impact on all of Quebec. “It’s as if we were more corrupt than we really are,” she said. “I find it catastrophic and unacceptable in all sorts of ways. If only the former government had acted earlier.”
The Premier expressed confidence that, when the commission begins examining the awarding of the Ministry of Transportation contracts, it will reveal close ties between the Quebec Liberal Party and organized crime.
“We will see the proximity between the Liberal Party and the mafia,” she said, referring to allegations that former Liberal cabinet ministers such as Line Beauchamp and Nathalie Normandeau associated with organized-crime figures and quit politics before the election was called.
“This could really hurt the Liberal Party. … I am not presuming they [the former ministers] are guilty of anything, but the fact remains that they got out of the kitchen when things heated up,” Ms. Marois said.
The Premier is hoping that Tuesday’s budget will help the PQ build an image as a sound economic manager on which to build in the next election campaign. Revelations at the inquiry – especially if they inflict fatal damage on the Liberal Party – could also help propel Ms. Marois toward her ambition of one day forming a majority government.