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One of the most pressing issues facing Quebec’s incoming premier Philippe Couillard is jump-starting the province’s economy. (JACQUES BOISSINOT/THE CANADIAN PRESS)
One of the most pressing issues facing Quebec’s incoming premier Philippe Couillard is jump-starting the province’s economy. (JACQUES BOISSINOT/THE CANADIAN PRESS)

ECONOMY

For Couillard, a big win and a bigger challenge in Quebec Add to ...

It was an awkward scene to watch. On a stage late Monday night, a large gang of Liberals bobbed to the music in a stiff, almost unco-ordinated way.

It may have been that those newly elected MNAs were still bewildered by the red wave that just swept through Quebec – not a soul predicted that even Parti Québécois Leader Pauline Marois would lose her Charlevoix riding.

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It may be that the Liberals don’t know how to party – and in a sense, that would be a blessing. Given the economic challenges facing Quebec, any Liberal celebration will be short-lived.

One of the most pressing issues facing Philippe Couillard as incoming Premier is jump-starting the province’s economy, now in a drawn-out funk. Growth in the province as measured by real gross domestic product has slowed to a crawl.

Over the past three years, growth fell to 1.1 per cent in 2013 from 1.5 per cent in 2012 and 1.8 per cent in 2011, according to the Institut de la statistique du Québec. Worse, the gap with Canada has widened.

Mr. Couillard plans to put Quebec on steroids, by offering home renovation tax credits and by speeding up investments in public infrastructure that were put on hold by the Parti Québécois. Those public investments will increase the province’s already staggering debt, however. As of March 31, Quebec’s gross debt reached 54.3 per cent of the province’s GDP, the highest percentage in the country.

The Liberals are also banking on a more friendly business climate to attract investors who were presumably scared off by the PQ, even though a number of its diluted, minority-government policies turned out to less harmful than expected. Perception is reality when investments are concerned, however. And under the PQ, that perception was downright ugly.

In its latest survey of energy executives, the Fraser Institute ranked Quebec among the worst places to conduct business, in the company of war-torn Syria and Libya. High taxation, heavy regulatory costs and changing environmental policies discouraged investments in Quebec, the think tank asserted.

But an image makeover might not be sufficient to boost the province’s economy beyond the 1.9-per-cent growth that private sector economists are forecasting for Quebec in 2014. For instance, the revival of the Plan Nord that Mr. Couillard promised is more tied to world commodity prices than to the rebranding of former premier Jean Charest’s signature policy aimed at developing the province’s untapped natural resources.

Without additional growth, the Liberals will be hard-pressed to balance the books by 2015-2016, no matter what surprises they may unearth in the province’s finances – and when governments change, such nasty surprises are as predictable as spring floods.

The Liberals were already short on details as to where they would cut $1.4-billion in government spending in health and education. That was the Coalition Avenir Québec’s hobby horse in this campaign.

The change in image won’t be complete unless Mr. Couillard also cleans up the province’s procurement processes. Those were possibly as distorted by corruption as they were at the municipal level.

In fact, it is remarkable that the Liberals were re-elected after only a short, 18-month PQ stint, given how deeply Quebeckers distrusted the Liberal party at the end of Mr. Charest’s nine-year reign.

“I promise to lead a transparent, upright and responsible government,” Mr. Couillard said in his victory speech.

But the new Premier might be dragged right back into that mess as the Charbonneau inquiry resumes its public hearings, which were halted during the campaign. The inquiry that is investigating how the construction industry and organized crime have influenced the awarding of public works contracts is just starting to look into the Quebec government’s practices. And any new revelations could distract and possibly impair Mr. Couillard’s term.

Before tackling those issues, though, Mr. Couillard will first have to choose his finance minister and the rest of his cabinet, which he promises to do within two weeks. The Liberal leader, a neurosurgeon by trade, is lucky, however. He can count on seasoned economists and business executives within his team.

Carlos Leitao, the former Laurentian Bank of Canada chief economist whom Bloomberg ranked as the world’s best economic forecaster in 2008, could inherit the finance portfolio. Martin Coiteux, a former economics professor at HEC Montreal who worked briefly for the Bank of Canada before becoming a candidate, could also be a contender. Unless Mr. Couillard opts for a candidate with more hands-on experience, such as Jacques Daoust, a former National Bank of Canada and Laurentian Bank top executive who headed the province’s investment arm, Investissement Québec.

No matter who ends up where, the Liberals will have their work cut out for them.

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