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Quebec Finance Minister Nicolas Marceau presents his budget speech, Thursday, February 20, 2014 at the legislature in Quebec City. Premier Pauline Marois, right, looks on.Jacques Boissinot/The Canadian Press

With an election looming, the Parti Québécois minority government is prepared to lock horns with doctors and civil servants over salaries as part of a provincial budget that includes higher daycare rates and fewer school boards.

Finance Minister Nicolas Marceau was eager to project an image of a fiscally responsible government, reaching out to the more conservative-minded middle-class suburban voters who may be the key to forming a PQ majority government. "This is the budget of a government in action, capable of acting differently and in a coherent way," Mr. Marceau argued in a news conference on Thursday.

The government was on target to eliminate the current $2.5-billion deficit within two years, he said. Daycare rates will increase from $7 a day to $8 in September, 2014, and $9 a day a year later, with rates in following years tied to the cost of living. The budget also includes a 5.8-per-cent increase in hydro rates.

Coalition Avenir Québec Leader François Legault estimated the daycare and hydro increases alone will cost a family of one child $500 a year. "The big losers here are the Quebec families," Mr. Legault said.

Low-income parents and some subsidized daycares gave a thumbs-down to the budget's proposed hike to Quebec's popular $7-a-day daycare. Quebec's program, which was launched at $5 a day by Premier Pauline Marois when she was education minister in 1997, is credited with helping women gain access to the labour market.

The group representing government-subsidized daycares in Quebec says after a 10-year freeze on fees for parents, the PQ's proposed hike amounts to a "shock." Hélène Gosselin, president of Association québécoise de CPE, said a sudden hike in a short time frame is unfair, that fees should have been indexed to the cost of living and allowed to rise gradually.

"It's a brutal and sudden increase that previous parents didn't have for 10 years," said Ms. Gosselin, whose group represents 675 publically-subsidized daycares, known through their acronym, CPE.

Sylvie Lévesque, director of the Quebec federation of single-parent families, says the hike will hurt low-income parents. "Mrs. Marois is the mother of subsidized daycare. This is very disappointing," Ms. Lévesque said. "For someone earning $20,000 or $25,000 a year, the increase is enormous. Poor families are going to pay the price," she said.

The director of a subsidized daycare in a low-income, heavily immigrant neighbourhood in Montreal's Côte-des-Neiges district says the fee hike will cause a "crisis" for many parents. Many of them earn minimum wage and have more than one child in daycare. "Their children need affordable daycare," said Rousanna Sarkissian, director of CPE Les Amis de Promis. "I'm disappointed to see this from Mrs. Marois. She started the program and now we're moving backwards."

Ms. Sarkissian worries that some working parents could consider staying home and relying on social assistance if daycare costs rise too much.

The cash-strapped government seemed to be prodding its civil servants and doctors by announcing its intention to keep a tight control on future salaries. According to budget figures for the current fiscal year, government payroll costs are evaluated at $37.3-billion, or 59 per cent of total government spending. The province's 18,000 physicians who receive $6.1-billion in total salaries are being targeted with a proposal to reopen the current agreement.

"The government would like to spread the planned increases for the next two years over a longer period in the long-term agreement," the budget document stated.

At the same time the PQ appeared to reach-out to Quebeckers' nationalist pride. It took the Liberal slogan "masters in our own house" from the Quiet Revolution when it compared the recently announced plan to invest in the province's shale-oil industry to the 1960's nationalization of hydro-electricity.

Then the PQ borrowed from the conservative CAQ election platform, by proposing to reduce the number of school boards, which would help the province recover more than $125-million a year. "I think we can save even more than that," Mr. Marceau said during a news conference.

Other cuts in services may also result as part of a major review of all government services which Mr. Marceau promised to undertake over the next five years.

The government also announced it would proceed with patient-based funding, which involves paying hospitals based on the number of patients they treat. Financial incentives will also be paid out based on results of patient treatment.

Some Montreal hospitals condemned the move, saying the government was forcing them to refuse patients living outside the city and have them turn to less costly hospitals closer to home for treatment. Critics have said the change could undermine the funding of Montreal's university hospitals, which invest heavily in medical research. But patients' rights advocate Paul Brunet, head of the Conseil pour la protection des malades, said health-care funding in which "the money follows the patient" is sound policy, ensuring patients can seek medical care where their needs require. Still, patient volumes shouldn't climb so high that the quality of care suffers, he added.

"We're not talking about producing cardboard boxes here, we're talking about health care," said Mr. Brunet, head of the Conseil pour la protection des malades.

For Liberal Leader Philippe Couillard, the budget was nothing more than a pre-election ploy that failed to tell the truth about the real state of Quebec finances. "What we have just witnessed here is the launching of the election campaign," he said. "It hides the truth. …We know how flimsy the government's forecast on spending really is."

Mr. Marceau said while health and education would continue to receive the bulk of new government spending, changes are needed if expenditures were to be held to 2 per cent a year. Health and education would continue to receive the bulk of new government spending, he said.

But in a report Wednesday, provincial Auditor-General Marcel Samson said the 2-per-cent target was "ambitious," meaning it would be unreasonable to achieve without important rate increases or cuts in services.The provincial auditor also concluded that the government was underestimating the deficit by more $600-million. Mr. Marceau insisted that the targets set in the budget will be reached. Yet the government declined to release the spending estimates that would have outlined the cutbacks and increases in various programs.

The Minister also acknowledged that the $1-billion in promises made by his government in recent weeks will be partly covered by projected hikes in federal transfer payments which will increase by $613-million in 2014-2015 and $532-million in 2015-2016.

Mr. Marceau noted that while the economy remained fragile, it was improving gradually, allowing the government to forecast higher revenues than previously projected. This allowed for an additional investment of $270-million to build 3,250 new housing units for low-income families. The government was maintaining the infrastructure program with a projected $90.8-billion investment over the next ten years.

At the same time, the PQ was seeking other ways to cut costs and generate more revenues. Foreign students will be asked to pay more for tuition fees and services. The government is also stepping-up the fight against tax evasion which could rake-in an additional $60-million a year.

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