When Philippe Couillard stands up in the National Assembly on Wednesday to deliver the opening address for Quebec’s new parliamentary session, he will have to do the biggest selling job of his political career.
In his most important speech since becoming Premier, Mr. Couillard will need to convince Quebeckers that they can no longer enjoy the most generous social services in Canada and throw millions in incentives at companies while using a credit card whose bill is paid for by the next generations. That habit is so unconsciously ingrained in Quebeckers that changing it will make winning the election against the self-destructive Parti Québécois look like a stroll on Mount Royal.
Mr. Couillard has used every occasion since the April 7 election to assert that the time for cosmetic correctives is long past. “Now is the time for difficult decisions,” he says.
Superficially, most Quebeckers agree. Seven out of 10 think that reducing government spending is the best way to straighten up the province’s finances, according to an online Léger-Le Devoir poll conducted in early May. What’s more, 84 per cent of Quebeckers think the government should reduce its operating spending by 3 per cent, as the Liberals are advocating.
But ask them if they are willing to consider a modest hike in their cheap daycare and electricity rates, if the liquor chain Société des Alcools du Québec should be privatized, or if Quebec should no longer pay for expensive fertility treatments, and many will scream murder.
Contradictorily, but tellingly, even Mr. Couillard backed away from the PQ’s proposal to raise the daily daycare rate to $9 from $7, arguing it was too big of a hit for working families.
Quebeckers will get a foretaste of those difficult choices in the June budget that Finance Minister Carlos Leitao is preparing – the centrepiece of this short but intense parliamentary session. Mr. Leitao was born in Portugal and recently said in a Radio-Canada interview that if nothing is done to increase revenues and cut spending, Quebec will become another one of the PIGS, the indebted European countries whose political decisions are dictated by creditors.
The deficit for the current fiscal year, now pegged at $3.1-billion, is worse than expected. With the threat of a downgrade from credit rating agencies looming, Mr. Leitao must find $3.7-billion to ensure the province balances its books by 2015-16, as promised. So far, a hiring freeze and a drastic cut on travel and advertising has generated only $490-million in savings.
The Liberals also hope to increase the province’s revenues with a new renovation tax credit and incentives that will reward people who work harder. But those measures are limited in scope and won’t work overnight – hence the even harsher budget expected in 2015.
In that context, Ottawa’s surpluses are not going unnoticed. Mr. Leitao has recently asked the federal government for some help, a request he likely reiterated on Tuesday in a closed-door meeting with his federal counterpart, Joe Oliver. The demand is consistent with the requests by all the previous finance ministers from Quebec, which Maxime Bernier, federal Minister of State for Small Business, derided in a speech on Tuesday. “Even when Ottawa sends more money, the reaction in Quebec City is that it’s never enough,” he said.
Ottawa’s answer, in short: Tough luck.
Whatever help the Conservatives could send to a friendlier Quebec government they would also have to offer, in fairness, to other provinces such as Ontario. Moreover, they are keeping all of their ammunition for the next federal election.
More importantly, Quebec can no longer claim, as it credibly did in the 1990s, that Ottawa balanced its books by shovelling expenses into the province’s backyards. It didn’t. The province will receive $9.3-billion in equalization payments this year alone.
While the Conservatives saw their fiscal revenues increase, they also made unpopular layoffs and spending cuts to reduce their deficit.
All in all, the Quebec government hasn’t.
Now is the time, though. With its clear electoral win, Mr. Couillard’s government has a strong mandate to put Quebec in order. It is reaching out to unions and to the Coalition Avenir Québec party, which shares the same concerns over the province’s precarious financial situation. It also wants to get Quebeckers on board through a committee that would publicly review spending programs on a permanent basis.
It is still unclear if Mr. Couillard will reach the surprising social consensus around the zero-deficit target that former premier Lucien Bouchard achieved in 1996 during a far-reaching summit.
Besides, that famous summit on the economy and employment, which led to the early retirement of a wave of Quebec nurses, created unintended shortages in the health care system.
But letting things slide is a luxury Quebec can no longer afford.