QUÉBEC, June 4, 2014 /CNW Telbec/ - Minister of Finance Carlos Leitão, tabled Québec's budget for 2014-2015 today, a budget for economic recovery and to restore sound public finances.
"We want Québec to create more wealth and our economy to support more jobs. At the same time, we want to end the structural imbalance in public finances that puts us deeper into debt each year and increasingly limits our freedom of action. With Budget 2014-2015, the government is taking the first step on the critical path we must travel to finally restore fiscal balance. It defines the objective set and puts in place the means to achieve it. The edifice we want to build will be supported by two strong pillars―a prosperous economy and public finances that will finally be sound," the Minister said.
Action according to five thrusts to boost economic recovery
The Minister explained that, to boost economic recovery, the government will act according to five thrusts. The first will be in the form of new support for private investment, with a focus on SMEs, particularly manufacturing SMEs. The second will be the implementation of the maritime strategy, a plan to responsibly develop Québec's maritime potential while acquiring a unique environmental expertise. The third will be recognition of the economic, social and environmental components of the Plan Nord. The fourth will be development of the natural resources present throughout Québec. And finally, the fifth will be continued investment in infrastructure, while controlling the debt and staying within Quebecers' ability to pay.
A return to a balanced budget for 2015-2016
Minister Leitão confirmed that the government will adhere to the planned timeline for balancing the budget. However, the deficit targets will be reviewed to take into account downward revenue adjustments and anticipated program spending overruns. In that regard, the Minister noted that the situational factors having contributed to the weak economic performance of 2013 should gradually disappear. Québec's economic growth will pick up, posting a rate of 1.8% in 2014 and 2.0% in 2015.
The Minister announced that the deficit will be $3.1 billion in 2013-2014 and $2.35 billion in 2014-2015. The return to a balanced budget is planned for 2015-2016.
"The budget deficit for 2013-2014 is $600 million more than the figure forecast by the previous government barely three months ago. For 2014-2015 and 2015-2016, if nothing were done, Québec would be faced with deficits of $5.9 billion and $7.6 billion respectively. This situation, confirmed by the Auditor General, is unacceptable. Spending continues to grow faster than revenue, which is the very definition of a structural deficit. The time has come to finally tackle this problem, before others force us to do so," he said.
The Minister explained that the government is committing itself to managing spending responsibly and optimizing government reporting at large. All departments and public bodies, as well as government enterprises, will contribute. The return to a balanced budget will be achieved without increasing taxes, apart from measures with which a large majority of Quebecers should agree, and by complying with the collective agreements of public and parapublic sector employees and protecting essential services, that is, primarily health services, education services and services to vulnerable individuals.
Actions to be taken to balance the budget
The Minister stated that, given the adjustments to the financial framework, substantial effort will be required to return to a balanced budget.
"Until the budget has been balanced, consolidated expenditure growth will be set below the revenue growth rate. Accordingly, for 2014-2015, it will be 1.9%, whereas the rate for revenue will be 2.9%," the Minister announced.
Moreover, he reiterated that, to balance public finances for the long term, a review of existing programs and taxation is necessary. To that end, two committees will be created:
- the Ongoing Program Review Committee, which will enable a repositioning and implementation of an ongoing review process aimed at redirecting government action to priority programs, where the needs are greatest;
- the Québec Taxation Review Committee, chaired by Luc Godbout, which will be mandated to prepare a report on the tax situation in Québec and propose the answers necessary so that the tax system adequately funds public services while fostering economic growth.
"Budget 2015-2016 will set forth additional measures for restoring fiscal balance, in particular by acting on the work of the two committees," the Minister indicated.
Maintaining debt reduction objectives
The Minister emphasized that reducing the debt load is a priority for the government. In that regard, Budget 2014-2015 confirms the maintenance of the objectives for 2025-2026 at 45% of GDP for the gross debt and at 17% of GDP for the debt representing accumulated deficits.
"Once the budget has been balanced, half the government's budget surpluses will be allocated to debt reduction through additional deposits in the Generations Fund. The other half will be allocated to tax cuts, giving preference to gradual elimination of the health contribution," announced the Minister.
A transparent government
The Minister concluded by saying that the tabling of the budget and the discussion of the measures to be implemented will be marked by respect and a willingness to listen. "Dialogue will give all citizens and all groups an opportunity to learn about the measures and react to the initiatives announced. We will be transparent in our actions and in the use of public funds," he said.
"In the country where I was born, we say a esperança sempre entra quando deixamos a porta aberta, which means 'hope always comes through an open door.' This budget opens doors to a better future for Québec," the Minister concluded.
The public can find out about Québec's budget for 2014-2015 right away by visiting www.budget.finances.gouv.qc.ca/2014-2015.
To react to the budget, Quebecers can go to decouvrezlebudget.gouv.qc.ca.
SOURCE: Cabinet du ministre des Finances
For further information:
Press Relations Officer
Office of the Minister of Finance