"A budget for a resilient Quebec that is confident in its future"
Quebec's Minister of Finance, Eric Girard, presented his government's third budget on March 25, 2021. The budget includes numerous measures to help Quebecers cope with the ongoing impacts of the COVID-19 pandemic and details a series of economic initiatives to help relaunch the provincial economy over the next five years. Minister Girard explained that the province has faced "unprecedented health and economic challenges that have severely impacted its economic and financial situation."
The measures in this budget are intended to continue the government's support for those who have lost jobs and opportunities due to restriction measures. Minister Girard stated that the roll out of vaccines over the past month gives Quebecers cause to be cautiously optimistic; the provincial government can now begin turning its attention to the challenging path ahead: "This budget is for a resilient Quebec that is confident in its future!”
Budget measures implemented by the government, and the resilience of the Quebec economy, have limited the deterioration of public finances. Quebec’s deficit is expected to reach $12.3 billion in 2021-2022 and drop to $8.5 billion in 2022-2023. The government will maintain its deposits in the Generations Fund and budgetary deficit offsetting measures will not be implemented until Quebec’s rate of employment returns to its pre-pandemic level. Fiscal balance is expected to be restored in 2027-2028. Minister Girard mentioned that the plan to return to fiscal balance will be based on the following principles:
- The government’s commitment not to increase the tax burden
- Expenditure growth in line with revenue growth
- Acceleration of economic growth
- Increased federal contribution to health costs
The Minister is confident in a strong economic recovery and a return to pre-pandemic levels of economic activity by the end of 2021. The province's real GDP had slight increases in 2017 (2.9%), 2018 (2.9%), and 2019 (2.7%). The pandemic caused a drop of -5.2% in 2020, but Minister Girard is confident that it will face healthy increases of 4.2% in 2021 and 4.0% in 2022. Quebec’s unemployment rate was 4.5% in January 2020, spiked to 17.6% at the height of the first wave, and fell to 8.8% during the second wave in January 2021. The government forecasts that pre-pandemic levels will be achieved by 2025.
Quebec’s 2021-2022 budget provides nearly $15 billion in additional initiatives by 2025-2026, including $5.2 billion starting this year to:
- Strengthen the health care system
- Support educational success and youth
- Support Quebecers
- Accelerate economic growth and the transition to the new economy
Notable initiatives include $1.3 billion for all Quebecers to access high-speed internet along with $753 million in incentives for businesses to adopt new technologies to increase productivity, enhancing the investment and innovation tax credit (C3i), and reducing tax rates for small and medium sized businesses.
The government will also create wealth through innovation by investing $133 million in infrastructure and research centres, along with $56 million to support innovation in strategic sectors. To stimulate the economic development, regions will receive support to relaunch the tourism sector, to upgrade strategic regional infrastructure, to implement the local and regional economic development strategy, and to support airlines and regional carriers as well as intercity bus carriers.
The provincial government will also invest $404 million to support the requalification of workers to re-enter the labour market, including $246 million to facilitate the integration of immigrants into the labour market, $53 million to meet IT workforce needs, and $46 million to increase labour market participation. The provincial government will also invest $193 million to continue to support businesses affected by the pandemic. These measures will include maintaining the Concerted Temporary Action Program for Businesses (PACTE) and the Emergency Assistance Program for Small and Medium-Sized Businesses (PAUPME), as well as extending the provincial tax credit in respect of employer contributions to the Health Services Fund for employees on paid leave. An additional $137 million will be invested in environmental protection measures to improve water management and implement support for environmentally sustainable economic recovery.