Watching Jean Charest resign after 28 years in politics, Quebeckers were struck when his voice choked with emotion. As premier, no one could recall him being so overwhelmed while speaking of his family.
Yet that was not the most poignant moment of his farewell. It was when he pleaded – almost desperately – with premier-designate Pauline Marois to press on with his ambitious plan to harness the province’s resources north of the 49th parallel. “The next government must absolutely pursue the Plan Nord’s development for the future generation of Quebeckers,” he said.
It is remarkable that Mr. Charest, who often appeared aloof as premier, became so passionate about the “construction site of a generation.” What started as a search for a project to win a majority government in the 2008 elections became what he now views as his political legacy. This 25-year plan to access the abundant resources of Quebec’s far north was unveiled in May of 2011. But its figures are still dizzying: $80-billion in investments that will create 20,000 jobs a year and bring in $14-billion in the government’s coffers.
Or so the original plan goes. It now lies in the hands of a skeptical Parti Québécois government, which will unveil its cabinet Wednesday.
Everybody expects economist Nicolas Marceau will become the next finance minister.
But who will land the Natural Resource portfolio? “Their caucus is rich in ecologists and poor in business people,” lamented Lucien Bouchard, the former PQ premier, who presides over the Petroleum & Gas Association of Quebec.
“If they continue to do politics on the back of the Plan Nord to please the radicals, they will kill it. But I am hopeful that when the time comes, their good sense will prevail.”
No one believes Ms. Marois wants to sabotage the Plan Nord altogether; she wants to foster Quebec’s growth. But as her government seeks to put its own imprint on Quebec’s resource policy, it may miss out on the end of the commodities boom. Already,businesses are taking a wait-and-see attitude.
One question mark is the use of government funds to build infrastructure that will essentially serve private companies – despite the Liberal Party’s claim that Quebeckers would also benefit from it as tourists, who will go outback camping in the North.
Quebec spent $331-million to build a 243-kilometre road through the Otish mountains to reach the Renard project, which could become the province’s first diamond mine. Quebeckers accepted this eyebrow-raising expense because the province’s investment arm took a 37 per cent stake in its promoter, Stornoway Diamond Corp.
But that will not always be the case. François Legault, head of the Coalition Avenir Québec, which holds the balance of power in the Marois minority government, has also expressed concerns over the province’s generosity toward mining companies.
Another question is the fiscal environment. Inspired by the Australian model, whose virtues have attained mythical proportions in Quebec, the PQ campaigned to change the province’s mining regime, which is based on a 16 per cent royalty on each mine’s profits. They would replace it with a 5 per cent royalty on the gross value of production, coupled with a 30 per cent supertax on profits above an 8 per cent return on capital. These changes would bring in an extra $338-million in revenue to the government over five years.
“The mining companies are very concerned, because since no detail was given out, they can’t evaluate the financial impact of these proposals,” says Nochane Rousseau, partner and leader for the mining sector at PricewaterhouseCoopers. For instance, Australians can use the production-based royalty as a tax credit to be applied to the supertax on profits. Quebec producers don’t know if they will enjoy the same treatment.
Has the mining industry reached its limit, as the industry and the Liberals contend? Or can the government extract more income from Quebec’s natural resources without jeopardizing the Plan Nord? That is the billion-dollar question.
One thing is certain: The added uncertainty comes at a bad time, as producers are grappling with a global slowdown and depressed commodities, notably ore prices. Already, Labrador Iron Mines is cutting its capital spending, as its shipments to China from Sept-Îles, Que., are delayed by high inventories.
Despite this setback, Sept-Îles, a northeastern city of 26,000 people that has become a Plan Nord hub, is bursting at the seams. With the huge influx of workers, the rental vacancy rate hovers around 0.3 per cent, there is no unemployment to speak of, and the minimum wage is a fading memory. The local McDonald’s was so desperate it had to bring in seven workers from the Philippines. Sept-Îles will press on.
But whether the Plan Nord will survive the PQ regime and truly resuscitate places like Schefferville, a 5,000-person mining town at the border of Labrador whose closing in 1982 was made famous by a heartbreaking Michel Rivard song – well, that is another story.