Today, Québec Finance Minister Carlos Leitao presented his third consecutive balanced budget. In what he called a ‘’sustainable and responsible budget,’’ the minister fulfilled some electoral promises in cutting the so-called “health contribution” and slightly lowering income taxes.In 2017-2018, government revenue will stand at $106.3 billion and consolidated revenue growth is forecast at 3.7% in 2017-2018 and 2.7% in 2018-2019. For the same years, consolidated expenditure growth is forecast at 3.6% and 2.5%, respectively.
In 2016, economic growth was stronger in Québec (1.7%) than in Canada (+1.4%) and the United States (+1.6%).
Over the next few years, program spending will increase by 4.1% in 2017-2018, and 3.3% in 2018-2019. Most of the new spending will be directed to Health Care and Education:
· Santé et Services sociaux portfolio will rise by 4.2% in 2017-2018 and 3.8% in 2018-2019;
· Éducation et Enseignement supérieur portfolio will increase by 4.2% in 2017-2018 and 3.8% in 2018-2019;
Health care
The Québec budget provided additional investments of $772 million in 2017-2018 and $182 million in 2018-2019. These investments will, in particular:
· Raise spending by health institutions to a level that enables them to improve care access and quality;
· Support the autonomy of seniors living at home and in residential and long-term care centres (CHSLDs);
· Support people with autism spectrum disorder and their families, as well as reduce waiting lists;
· Focus on health prevention.
Education
Education is another perceived winner of this budget with an increase of 4.2% for 2017-2018.
Québec will be investing:
· $130 million for educational success starting in early childhood;
· $1.8 billion to enhance support for students throughout their school path;
· $1.1 billion for higher education to enhance the quality of training and increase the higher education graduation rate;
· $363 million to better financially support students.
Also, starting in September 2017, nearly 1,500 additional staff who provide direct services to students will support them in their learning paths.
In the higher education sector, the investments will provide colleges and universities with sufficient funds to hire 500 staff to train and support students.
Provisions are also made for an additional $1.1 billion in investments in educational infrastructure to, among other things, enhance the overall state of assets, expand educational facilities and implement the digital strategy.
New Capital Investments
Just like the Federal government, the Québec government will maintain a high level of public capital investment under the 2017-2027 Québec Infrastructure Plan (QIP).
The government is announcing investments totalling $91.1 billion under the 2017-2027 QIP, an increase of $2.4 billion compared to the 2016-2026 QIP.
Tax reduction
For the first time in many years, the government has fiscal room to reduce the tax burden on individuals. Starting in 2017, the first $14,890 in individual income will not be taxed, thus raising the previous threshold of $11,635, which only represents savings of $55 per person.
Also, as promised during the last electoral campaign, the government is eliminating the health contribution.
Conclusion:
Leitao’s budget is what we can call a “safe budget”. With a $2.5B surplus, the government has chosen to invest in the sectors that were most affected during the so called ‘’austerity’’ period. It will also give the government plenty of room to present the population with a pre-electoral budget next Spring, which will most likely include a more significant tax reduction.
This budget also provides an insightful window into Québec’s current state of relations with Ottawa as no less than 33 pages were dedicated to outlining where the province believes the Government of Canada is falling short in its fiscal obligations, particularly in the area of health care funding.
As always, the Sussex team is happy to provide additional information and context as well as reach out to the Québec Government regarding its 2017 Budget on your behalf.
