QUÉBEC, Nov. 26, 2015 /CNW Telbec/ – Minister of Finance Carlos Leitão today presented an update of the Québec Economic Plan confirming that the government is on track to attain its objectives of returning to sound, balanced public finances and establishing conditions favourable to economic growth and job creation.
“Following six consecutive years of deficit, we will balance the budget in 2015-2016, as promised. Our economic plan, which relies in particular on disciplined management of public finances, will give new impetus to the Québec economy that will benefit all Quebecers, as well as businesses,” the Minister said.
A smaller deficit than forecast for 2014-2015
Public Accounts 2014-2015, tabled today, shows a smaller-than-anticipated budget deficit. The $2.35-billion deficit forecast in the budget of June 2014 and the Québec Economic Plan of March 2015 was reduced to $1.1 billion. This objective was attained due in large part to a decline of $362 million in program spending and a decline of $884 million in the other consolidated expenditures, primarily those of special funds and government bodies.
Economic growth is continuing
Driven mainly by household consumption and strong export performance, economic growth is continuing in Québec. It is expected to stand at 1.5% in 2015, the same rate as in 2014, and accelerate in 2016, reaching 1.7%. Even more significant, this growth is occurring in the midst of a slowdown in most of the provinces, in Canada and elsewhere in the world. “Next year, job creation will continue to drive household consumption. In addition, growth in exports will be fuelled by the strengthening U.S. economy and the favourable exchange rate. Business investment is also expected to make a greater contribution to economic expansion,” Mr. Leitão indicated.
A balanced budget in 2015-2016: objective maintained
Our economic forecasts have very little impact on the financial framework, compared to the March 2015 budget. The slight downward revenue adjustments are offset mainly by lower-than-anticipated debt service due to low interest rates, leaving the budgetary balance unchanged.
Government revenue should rise by 4.1% in 2015‑2016. Government efforts since June 2014 should hold spending growth at a level slightly below that of revenue. Consolidated spending will grow by 2.7% for 2015‑2016.
‟The update shows that we are able to keep revenue growth at a level above that of spending. We intend to maintain that trend, which will ensure the budget is balanced in the years to come and the debt burden, reduced. Simply put, we are spending less than we earn, which is a good thing,” emphasized the Minister.
Additional investment in education
Considering the good results obtained by reining in spending, the government is announcing an additional investment of $80 million a year in education, beginning in 2016-2017. As of 2015-2016, an additional $20 million will be invested. These amounts will be put toward academic success and will enable an increase in teaching staff and professional and technical resources particularly in underprivileged and devitalized communities.
Reduction of the debt burden: a priority
The government is maintaining its debt reduction objectives and continuing efforts in that regard by making deposits in the Generations Fund, which will stand at $1.5 billion in 2015‑2016.
‟The return to a balanced budget and the deposits in the Generations Fund will enable the gross debt burden, which will be 55% of GDP as at March 31, 2016, to be reduced to 45% of GDP within ten years, in accordance with the objective set in the Act,” Mr. Leitão indicated.
A competitive tax environment for our SMBs
The government has implemented a number of initiatives to improve the competitiveness of the tax system with regard to SMBs. They will see a reduction in their tax burden of $140 million as of 2015-2016. Taking into account the measures applicable as of 2017, roughly 200 000 businesses in all sectors and in all regions of Québec will receive tax relief.
A $2-billion reduction in the tax burden on Quebecers over the next four years
As planned, this update confirms the significant reduction in the tax burden on individuals, as of January 1, 2016, in particular through:
In addition, the gradual elimination of the health contribution as of January 1, 2017 will result in tax relief of $1.7 billion. In total, Quebecers will see a reduction of $2 billion in their tax burden over the next four years.
A high level of capital investment
To meet Québec’s significant needs for quality public infrastructure, the government will maintain a high level of public capital investment under the Québec Infrastructure Plan (QIP). Accordingly, the 2016-2026 QIP will stand at $88.4 billion, the same level as the 2015-2025 QIP.
“The high level of public investment planned for the coming years will provide powerful stimulus for economic activity and job creation in every region of Québec,” the Minister explained.
In addition, the Québec Economic Plan enabled a number of initiatives to be implemented in key sectors of the economy, including the Maritime Strategy, the Plan Nord, the Québec Aluminum Development Strategy and the government’s social economy action plan. Overall, the Québec Economic Plan of March 2015 provides for an injection of $3.4 billion into the economy over the next five years. These actions alone will support the creation of an average of 20 000 jobs a year by 2019‑2020.
‟In recent months, we had to take decisions that were sometimes difficult in order to put Québec back on track. We always did so with the objective that Quebecers be the biggest beneficiaries, and with the conviction that they would be. I want to express our gratitude to all Quebecers, who, through their efforts and commitment, helped to attain that objective. Thanks to that collective effort, we have regained our ability to make choices, so that our social, family, economic and environmental policies can be developed in keeping with Quebecers’ priorities and needs,” Mr. Leitão concluded.
