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The Quebec Diaries: Why daycare trumps the economy

La Presse editor-in-chief André Pratte, left, and Globe and Mail columnist John Ibbitson

Throughout the Quebec election, Globe and Mail columnist John Ibbitson and La Presse editor-in-chief André Pratte will engage in an online discussion on the issues arising in the campaign. Today, they discuss how daycare could trump the economy.

John: Hello André. With the Quebec election under way, I'm wondering how much appetite there is for a truly honest debate about the state of the province's economy. It seems to me that Quebec is on the brink of a financial emergency, as its debt climbs above 55 per cent of GDP and growth is so low that the province could slip back into recession. Yet what's the news right now? That the Charest Liberals would move to block the sale of RONA, the hardware-store chain, to an American bidder, because it's a matter of provincial pride that the company stay Quebec-owned.. This can only further entrench the notion that the province is hostile to business investment. What's your take on the economy as an election issue?

André: Hi John. You're right that the economy should be, but won't be, a major issue in this campaign. The main reason for that is that Quebeckers have had it quite good in recent years. The province suffered a less severe recession in 2009 than most regions of North America and today the unemployment rate is still below 8 per cent, which is historically low for us.

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As we have seen in Europe, public debt is any population's last concern until creditors push them to the edge of the precipice.

As for Rona, I'm usually not on the protectionist side, but this time I may be. We could discuss this at length, but Rona will not be an election issue either.

The first controversy of the campaign may come from alleged plans of the Liberal government to increase the daily rates charged by the subsidized daycare centres, a very popular, even sacred program here.

These rates have been frozen at $7 a day for years and any party who dares propose to change that will be in trouble, even though such a policy would simply be common sense. Now that, like the crisis over the increase in university tuition fees, is an example of how many Quebeckers (but not all!) have become unrealistic about their government's means.

John: In the rest of Canada there certainly is a lot of envy for Quebec's daycare program, which is a huge boon to young families. Daycare can be a crippling expense for parents with young children in other provinces. Just as with university tuition, the hikes that Quebeckers may see still pale in comparison to what other Canadians pay for these programs.

But I have to admit, André, I'm surprised about the Rona story. It's one thing for the federal government to carefully review the bid by CNOOC, a Chinese state-owned oil company, to purchase Nexen, a Canadian petroleum firm with key assets in the oil sands. After all, the oil sands are a major natural resource and vital strategic asset. It's another thing to protect a hardware store. Hardware?! If we lose the hardware sector we lose everything? I'm baffled.

André: That's interesting: I actually think Ottawa should not hesitate to approve the CNOOC-Nexen deal: Nexen is a relatively minor player in the Canadian energy sector. Besides, don't we want to sell our oil to the Chinese? Strengthen our economic partnership with them?

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As for Rona, the company is a very big buyer of Canadian manufactured goods (84 per cent of the products it sells come from Canada; 43 per cent from Quebec companies). If Lowe's buys Rona, it will certainly concentrate its purchases in the U.S., meaning a huge loss for Canadian manufacturers.

Now, it all depends how the government of Quebec proceeds. It should not become owner of Rona, of course. But Quebec can buy a limited amount of shares so that it is in a position to have influence – which is what la Caisse did yesterday at a modest cost of some $35-million. And the government can encourage Quebec and other Canadian business people to get involved if need be.

I'm not for state protectionism. But I'm in favour of creating and promoting Canadian economic champions in all fields, not only natural resources. That includes the ever more important service industry.

Oh, by the way, the campaign started Wednesday morning. You know what? Not a word about Rona. Or the debt...

John: And therein lies the gulf, André. The government nationalizing a hardware store boggles my mind. And that's also why we should keep talking. Thanks for this, and let's do it again next week.

André: That's why I said I'm not (and neither is anyone in Quebec) talking about nationalizing. With 14 per cent of the shares, la Caisse is in a position to block any hostile takeover, but will not manage the shop.

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The pleasure is all mine.

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