During Quebec’s electoral campaign, Pauline Marois criticized the Plan Nord, intimately associated with her Liberal predecessor Jean Charest, for its generosity towards private companies. But now that the Parti Québécois Premier is courting French investors in Paris, helping out mining companies no longer looks like such a bad idea.
The PQ government is thinking of introducing new tax credits to attract mining projects to the Plan Nord territory, which encompasses all of Quebec north of the 49th parallel. “This is an avenue we could choose,” Ms. Marois said during the news conference that ended her three-day mission in France.
But there is a catch. To be eligible for these tax credits, companies would have to transform the metals and minerals extracted locally. “It is an exchange of friendly services,” said Ms. Marois, who wishes to put the PQ’s imprint on the Liberal program.
“But we are pressing on with the North’s development,” she said
The new tax credits would be similar to the ones that Quebec used to create a multimedia and video game hub in Montreal, Ms. Marois explained. They translated into a fixed amount of money per employee hired on an annual basis.
These tax credits bear the signature of Bernard Landry, a former PQ premier who was finance minister at the time. And his current successor, Nicolas Marceau, has long said he considers them an astute way of creating skilled jobs and boosting the economy.
Introduced by Mr. Charest in 2011 as a grand social and economic plan for the province’s North and harness its abundant resources, the Plan Nord forecasts $80-billion in private and public investments over the next 25 years. These investments would create or maintain 20,000 jobs per year, according to government estimates.
But the election of Ms. Marois cast some doubts on the deployment of these investments. During the electoral campaign, the PQ promised to change the mining regime, making royalties more onerous to companies. The PQ also wants to make public investments in roads or other infrastructure needed for industrial projects contingent on Quebec obtaining some form of equity in return.
Ms. Marois, who has gone out of her way not to say “Plan Nord” since she got elected, used the politically coloured name twice in front of journalists in Paris. But she downplayed the change in vocabulary. “It never was taboo,” she said.
Nonetheless, the Plan Nord, as well as the free trade deal between Canada and Europe and Quebec’s fiscal environment, were hot topics when Ms. Marois delivered a speech to French multinational executives at the headquarters of the Mouvement des Entreprises de France, the most important business lobby in the country. The meeting, which was attended by 20 business leaders from French giants active in Quebec (Alstom SA, EADS NV, Lafarge SA, Thales Group, Total SA, Ubisoft Entertainment SA, among others), was closed to the media.
“These executives all have a fairly good knowledge of Quebec, but they wanted to get a better handle on the economic orientations of the new government. Many of them hope to land public works and infrastructure contracts in the province,” said Pierre Dufour, senior executive vice-president of Air Liquide Group, who was in attendance.
“They came out greatly reassured,” Mr. Dufour added.
The fiscal reforms which have stirred so much controversy in Quebec were also discussed, said Jean-François Lisée, Quebec’s International Relations and External Trade Minister. “The talks were frank, direct and pragmatic,” he said.
While the PQ has moved to increase taxes for the province’ highest income earners, it has not signalled it an increase the burden imposed on businesses since Ms. Marois was sworn in a month ago. “Our taxation remains advantageous for businesses,” she said.
However, a new study released yesterday by the HEC Montréal Centre for Productivity and Prosperity (CPP) concludes otherwise.
The fiscal costs for Quebec companies amount to 5.1 per cent of their gross production. This compares to fiscal costs averaging 4.1 per cent in Canada and 2.9 per cent in the United States. Ontario, a close competitor of Quebec, has the second-highest fiscal costs at 4 per cent of gross production.
For CPP director Robert Gagné, Quebec’s high payroll taxes are to blame for the province having the dubious honour of the most voracious jurisdiction in North America, Mexico excluded. And Quebec’s aid to companies, while extremely generous, is insufficient to change the province’s poor ranking.
Ms. Marois flew back to Montreal Wednesday. It will be Quebec’s turn to welcome French Prime Minister Jean-Marc Ayrault in February and Economy and Finance Minister Pierre Moscovici in May.