Quebec must not fall back into its old spending habits

MONTREAL, Oct. 24, 2016 /CNW Telbec/ - On the eve of the provincial budget update, the MEI is reminding the government of Philippe Couillard that it must not yield to the numerous interest groups that covet its budget surpluses, and that it must respect its electoral promise.

Specifically, the Liberal Party had promised during the election campaign that 50% of anticipated budget surpluses as of 2015-2016 would be used to reduce taxes, and the other 50% would be used to reduce the size of the debt.

"This is a commitment that would have beneficial effects on the economy and on the wallets of taxpayers, who have contributed more than their fair share to the return to a zero deficit," points out Youri Chassin, Research Director at the MEI.

As for the public debt, it has just passed the $280-billion threshold. This is an increase of nearly $60 billion in just seven years, during a period when Quebec was not in a recession.

The Liberal Party also promised to set up a "break" on public spending, by which any new spending not planned for in the fiscal framework must be financed by savings in program spending. "If the government decides that it really needs to spend on certain priorities, then other expenditures are consequently less of a priority, and it can always reallocate funds," adds Mr. Chassin.

According to reports, the budget surplus will be a little over $2 billion. The government intends to spend a portion on health care, education, and "economic development." The health tax will also be abolished for all taxpayers one year earlier than planned, namely in 2017.

"The health tax was already slated to be eliminated, so it does not count as an additional reduction for taxpayers. In contrast, the new spending will in all likelihood be recurring," explains Youri Chassin.

"The surpluses should be returned to taxpayers and dedicated to debt reduction, as promised," concludes Michel Kelly-Gagnon, President and CEO of the MEI. "The government has always had a problem controlling its spending. We finally have a chance to break this vicious cycle, and Quebec must stay the course instead of falling back into its old bad habits."

The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its studies and its conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

SOURCE Montreal Economic Institute

Interview requests: Pascale Déry, Senior Advisor, Communications, Current Affairs, MEI / Tel.: [phone] ext. 2233 / Cell.: 514-502-6757 / email : [email protected]