Ottawa is recreating a fiscal imbalance that is imposing a heavy financial burden on the provinces and it needs to be addressed in Thursday’s budget, Quebec’s Finance Minister says.
The provinces, Nicolas Marceau said, are being placed in the impossible situation of having to deliver costly social services such as health care while the federal government proposes to limit transfer payments to the level of the gross national product. And since spending is increasing more rapidly than the GNP, the provinces will be left footing the bill, Mr. Marceau said.
“The federal government is a government that transfers. It transfers to the provinces, to individuals. It comes under no pressure to deliver services,” the Finance Minister said. “The provinces however deliver services to the population and come under a lot of pressure because it is difficult to curb public demand. It is difficult for provinces to restrict spending … that’s why we can say that the fiscal imbalance is back.”
The Harper government addressed the so-called fiscal imbalance when it was elected in 2006, increasing funding for health-care services. But program costs have continued to increase at a rate Ottawa no longer wants to match.
Mr. Marceau also called on Ottawa to renew the $116-million a year job skills training program, which Quebec controls under a federal-provincial agreement. The government’s demand was backed by a motion adopted unanimously by the National Assembly.
The province also wants the federal government to transfer all new funding for infrastructure projects, insisting that it involves spending in areas of provincial jurisdiction such as roads, schools and hospitals.
Both the skills training and infrastructure programs will be up for renewal in 2014.
“Ottawa justifies tighter controls by demanding greater accountability,” Mr. Marceau said. “I am convinced that the accountability of our spending [of these federal funds] is exemplary.”
The minister doesn’t expect the federal budget to have an impact on Quebec’s financial situation for the 2013-2014 fiscal year. But he was concerned that Ottawa’s austerity measures could impede the province’s ability to maintain a balanced budget the following fiscal year.
Another area of concern was the possibility of cuts in military spending, which would affect several contractors and cost jobs in Quebec.
The province will deliver a financial update this spring detailing the impact of the federal budgetary measures on the province’s own projections.