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Quebec Finance Minister Eric Girard shakes elbow with Quebec Treasury Board president Christian Dube before delivering his budget speech, March 10, 2020 at the Quebec legislature.Jacques Boissinot/The Canadian Press

For most of his first 18 months as Finance Minister, Eric Girard has toiled out of the limelight as the Coalition Avenir Québec government led by Premier François Legault focused on key campaign promises such as cutting immigration and banning religious symbols among some public employees.

Now, with a coronavirus-induced downturn facing the global economy, Mr. Girard’s public profile is about to increase dramatically as he becomes the neophyte CAQ government’s point-person for guiding the province through an economic slowdown.

Tuesday’s provincial budget should, hence, be viewed as more of a rough draft for the coming months. Major adjustments will be required if the economy takes a hit from COVID-19 and any decline in consumption that accompanies the outbreak. The budget’s projections for gross domestic product growth of 2 per cent in 2020 would not materialize if Quebec sees exports stagnate and consumers hibernate. Nor would Mr. Girard’s estimate of a 3-per-cent increase in Quebec’s “own-source” revenue to $95.6-billion. The figure excludes federal transfer payments of more than $25-billion.

How Quebec’s public finances stand up during a crisis could have a profound impact on the fate of the Legault government. It came to office promising sound fiscal management and robust economic growth. But a shrinking working-age population and lower immigration levels were already hampering its plans before the threat of a recession emerged.

As a former treasurer at National Bank of Canada, Mr. Girard knows a thing or two about managing liquidity. He knows a downturn that results in lower tax revenue and higher spending would interfere with his grand plan to close the wealth gap with Ontario. And it would test the very foundations of Quebec’s newfound fiscal health.

Quebec has made remarkable fiscal progress in recent years, going from provincial laggard to the front of the class in cleaning up its public finances. Its net debt-to-GDP ratio has fallen to 37.3 per cent from more than 50 per cent only five years ago.

Budget surpluses totalling more than $14-billion that accumulated under the former Liberal government and during the CAQ’s first year in office could evaporate as the province tackles a downturn, sending the debt-to-GDP ratio higher again.

Under the provincial budget law, the past surpluses are nominally held in a “stabilization fund” that Mr. Girard could draw on to reduce the deficit during a recession. The fund, however, exists only for accounting purposes, since past surpluses have been applied to pay down debt.

Hence, it would not take much for Quebec to return to the bad old days when it borrowed to pay for the groceries. Over the past five years, the province has depended on steadily increasing federal transfer payments to stay in the black.

Indeed, Quebec’s accumulated budget surpluses have remained far inferior to the more than $50-billion the province has received in equalization payments over the past five years. And, as the Parliamentary Budget Officer said in a Feb. 27 report, the sustainability of Quebec’s public finances remains conditional on a steady increase in federal transfer payments in coming years.

In 2019-20 alone, overall federal cash transfers jumped 8.6 per cent to $25.1-billion, including $13.1-billion in equalization. Tuesday’s budget forecasts $25.6-billion in federal transfers, an increase of only 2.4 per cent, with equalization growing by only 1 per cent to $13.25-billion.

Mr. Legault has made reducing Quebec’s dependence on equalization payments a key long-term goal. As a result, Mr. Girard has spent much of the past year crafting a plan to shrink his province’s economic gap with Ontario. The plan, which the Finance Minister first described in his November update, involves outpacing Ontario in productivity growth, boosting education levels, and encouraging Quebeckers over 60 to remain in the work force by offering a tax credit of up to $1,650.

Quebec’s employment rate among those 15 to 59 has maxed out. By cutting immigration levels, the province faces severe labour shortages in some sectors. Hence, Quebec’s rosy unemployment rate of 4.5 per cent in February obscures deeper labour market challenges that have become obstacles to economic growth.

Mr. Girard has been counting on massive automation by businesses to ease the labour crunch. The budget projects an increase of 3.6 per cent in business spending on plants and machinery in 2020. A recession, however, would likely lead to a decline in business investment. Tuesday’s budget includes $1-billion over five years for measures “to improve the productivity and competitiveness” of Quebec businesses, but only $107-million of that sum is slated to be spent in 2020-21.

On Tuesday, Mr. Girard chose to strike an optimistic tone despite the proliferation of negative economic signals globally. But his budget’s best-before date may already have passed before he even tabled it.