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Quebec Finance Minister Carlos Leitao presented his final budget before the province’s next election Oct. 1. The balanced spending plan includes no new major individual tax cuts but a large spending increase that includes billions for health and education, family services and transport.

Some highlights:

Trends in population age groups

Ages 15-64

Ages 65+

80%

69.2%

70

65.9%

59.4%

60

50

40

30

25.0%

18.5%

20

15.3%

10

0

2010

2015

2020

2025

‘30

THE GLOBE AND MAIL, SOURCE: QUEBEC BUDGET 2018

Trends in population age groups

Ages 15-64

Ages 65+

80%

69.2%

70

65.9%

59.4%

60

50

40

30

25.0%

18.5%

20

15.3%

10

0

2010

2015

2020

2025

‘30

THE GLOBE AND MAIL, SOURCE: QUEBEC BUDGET 2018

Trends in population age groups

Ages 15-64

Ages 65+

80%

69.2%

70

65.9%

59.4%

60

50

40

30

25.0%

18.5%

20

15.3%

10

0

2010

2015

2020

2025

‘30

THE GLOBE AND MAIL, SOURCE: QUEBEC BUDGET 2018

Big programs

Quebec will increase spending on education by 5 per cent and health by 4.6 per cent. The Liberal government has faced harsh criticism over problems in the health system despite years of promises by Premier Philippe Couillard and Health Minister Gaétan Barrette – two physicians by profession who have been accused of spending more money on improving doctor pay than on improving services.

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Big tickets

Mr. Leitao said $13.5-billion will be spent to get three major public-transit projects under way: A Montreal commuter and airport train known as the REM, the long-awaited extension of the Blue Line of the city’s Metro system and a nascent project to build a tram in Quebec City. Another $500-million will be spent over five years to modernize the justice system and reduce court delays.

Small goodies

Taxi drivers have $250-million earmarked to compensate them for the loss of value of taxi permits in the Uber era. About $173-million is set aside over five years for subsidies to air travel in remote regions. About $24-million over five years will go to support Quebec’s English-speaking community. There’s money for culture, including a $5-million program to allow every museum in Quebec to offer one free-admission Sunday a month.

Media, old and new

Quebec will spend $1-billion next year to boost digital transition in the public and private sector. About one-third of the money will go toward digital initiatives in schools and on campuses. The budget also sets aside $116-million for tax credits to support digital transformation in the newspaper, television and film industries. Mr. Leitao maintains he will collect sales tax on online services such as Netflix and is planning to introduce a new law this spring. He’s projecting $154-million in new revenue over five years starting next year.

Taxes

Mr. Leitao announced only small tax cuts for individual citizens. He pledged small amounts to help families with child-care costs, assistance for informal caregivers and the extension of a program to subsidize green renovations. The measures add up to $800-million over five years. The tax burden of individual Quebeckers will continue to gradually decline, however, thanks to previous cuts.

Balance and debt

The provincial economy grew by 3 per cent in 2017, more than double the rate of 2016, providing much of Mr. Leitao’s room to spend. While Quebec’s budget for program spending is balanced, it continues to borrow money for infrastructure and other capital spending. Quebec’s total gross debt is projected to grow by a billion dollars to $204.5-billion at the end of 2018. Net debt – loans and pension liability minus the value of land and other capital assets the government owns – will remain steady at $181.1-billion, thanks largely to the $2-billion per year it will take over five years from the Generations debt repayment investment fund that will offset new infrastructure loans. The government prefers to emphasize “debt control” rather than debt repayment and points out the ratio of gross debt to the size of the economy is set to shrink to 49.6 per cent, a drop of 1.9 percentage points.

Business

Under the broad heading of “economic development,” the government plans to use $2.2-billion in measures for small and medium-sized business, including subsidies in food, regional economic development and digital initiatives. The government will also gradually reduce income tax in the service and construction sectors from 8 to 4 per cent.

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