Couillard promises $1.3 billion in spending cuts over 2 years.
Liberals suggest measures for growing revenues
BÉCANCOUR — A Liberal government would cut spending by $1.3 billion in the first two years of its mandate, balance the budget within two years and reduce the tax burden on the middle class, Liberal Leader Philippe Couillard said in Bécancour Tuesday.
Outlining the fiscal framework for his electoral promises, Couillard said his government will not raise taxes, will wrestle down the debt and start generating budget surpluses by 2015-16.
Half of those budget surpluses would go to tax reduction and the other half to reducing the long-term debt, he said.
A Liberal government would increase spending on health and education by 4 and 3.5 per cent per year respectively, but would freeze spending in all other departments for five years, Couillard said.
One program the Liberals would not squeeze is the popular $7-a-day subsidized daycare program. The Parti Québécois has said it plans to raise the cost to parents of that program to $8 a day next year, and $9 a day the next, and then index it to the cost of living.
Couillard’s plan is to index the daycare fees starting in January 2015, which would see fees go to about $7.14 a day next year. Depending on the cost of living, the fees would probably not reach $8 a day within the next five years.
Couillard also promised to eliminate the unpopular health tax gradually over four years starting in 2016.
“The health tax in my view was never such a good idea. It increases the tax burden on citizen’s shoulders ... and it’s not efficient,” he told journalists at a news conference in Bécancour. “After a couple of years, you stop seeing the beneficial effects of the tax, it is rolled into the recurrent base of the ministry. Nobody can point to a service they have because of the tax, but everybody knows that each year they have to pay the tax.”
According to the numbers Couillard’s camp released Tuesday, a Liberal government would freeze spending at $83.6 billion over the next two years, then increase it to $92 billion by 2018-19. Revenues, not including transfer payments from the federal government, would go from $74.5 billion this year to $88.2 billion in 2018-19.
When transfer payments and other factors affecting revenues and expenses are taken into account, the budget would be in a surplus position, by 2015-16, with projected revenues of $100.4 billion and expenses of $98.5 billion.
Couillard said there is a need for a cultural change in Quebec when it comes to public spending.
“We are facing a structural challenge. We are 23 per cent of our country’s population, but we generate only 20 per cent of Canada’s wealth and we represent 27 per cent of provincial expenses in Canada. That’s why we are adopting many structural changes in the culture, how we deal with the public sector, how we finance new programs ... Each time somebody comes with a bright idea of a new program we want to put in place, it will have to be compensated by savings of the same amount in other parts of government.”
Couillard challenged PQ Leader Pauline Marois to a face-to-face debate on the economy and public finances. He said that although Liberals have not been perfect on hitting their budget targets in the past, Marois’s government has been “an economic disaster.”
Couillard said a Liberal government would improve investor confidence and stimulate the economy by relaunching the plan to develop the north and developing a strategy for Quebec’s maritime ports. He promised 250,000 jobs would be created over the next five years. In the short term, the Liberals would stimulate economic activity through introduction of a tax credit for renovation and by restoring $15 billion in spending for infrastructure improvement programs, which the PQ cut.
Couillard acknowledged that spending on infrastructure will incur debt, but he qualified this spending as “good debt.”
“If I invest to build a bridge or the Turcot (interchange) in Montreal, that’s good debt, because it creates economic activity and we need that. If we don’t do it now, we will have to do it later at a higher cost and the next generation will have to pay it.”
Both the PQ and the CAQ immediately dismissed Couillard’s economic plan as unrealistic, noting spending under former Liberal governments has consistently overshot targets.
“What costs a lot in an economy is corruption,” PQ candidate Pierre Karl Péladeau said Tuesday. “Instead of fantasizing by inventing exaggerated economic growth, the Parti Québécois will create real wealth, generated by our own entrepreneurs from here.”
CAQ public finance critic Christian Dubé said the Liberals will not be able to reduce the debt while increasing infrastructure spending. He noted the CAQ would eliminate the health tax over the next two years, not by 2020, as the Liberals promise.