SHERBROOKE | The improved offer to public sector unions will have a significant impact on the Quebec government's financial framework, warns Minister Eric Girard, who no longer dares to push for a return to a balanced budget in 2027.
“Well, it’s math. At that point the deficits will be greater,” the finance minister summarized during a press scrum on the sidelines of the CAQ pre-election meeting in Sherbrooke.
According to the QMI agency earlier this year, the 17.4% salary increases included in the agreement in principle reached with unions at the end of December could represent an expense of $11 billion per year over five years. or $2 billion more than the previous offering.
However, we will have to wait until the next budget in early spring to see the full impact of the fundamental agreements that union members have not yet voted on.
“It is certain that the amounts granted are higher than the amounts earmarked for the update [en novembre dernier]», acknowledged Minister Girard.
Effects of strikes
This additional spending also comes at an “extremely difficult” time for the economy, which has “virtually come to a standstill.” Growth has also been affected by the strikes, he stressed, while in December 2023 we heard FIQ union members demonstrating outside the hotel where elected CAQ officials were gathering.
“I’ll give you the facts. I told you that the fact that the economy is stagnating is putting pressure on revenues, that negotiations in the public sector are putting significant pressure on spending and that this will certainly have an impact,” explained Mr Girard.
“I didn’t talk about budgetary efforts,” he clarified. I tell you that spending will increase especially in the sectors where there are the most workers [la] Health, [l’]Education.”
interest rate
However, the major financier of the state of Quebec seems optimistic about interest rates, which the central bank decided on Wednesday to keep at 5%.
“What we confirmed yesterday is that the economy is slowing, inflation is falling and, as a result, interest rate hikes are over,” believes Mr Girard. The question now is when are we going to have interest rate cuts?”
According to him, they should appear “in spring or early summer.”
“It is really how the economy performs in the first six months of the year that will determine the timing and extent of rate cuts,” the economist explained.
Minister Girard took the opportunity to announce that those who have not yet filed their 2021 income tax returns and had until June 30, 2023 to be eligible for the one-time assistance of $400 to $200 announced in 2022 to have one more year to continue with the tax return. This extension, which already represents an estimated cost of $38 million, will affect approximately 65,000 latecomers.
A “monumental failure,” says the PLQ
At a press conference at Thetford Mines, PLQ interim leader Marc Tanguay agreed that last autumn's strikes had “an economic slowing effect” but argued that it was “the government's duty” to ensure economic growth succeeded them to pay state employees “appropriately.”
Mr Tanguay also believes that the possible postponement of achieving a balanced budget is a sign of the “monumental failure” of the Legault government. “It is a bad government that has lost control of public finances,” he said.
– With Gabriel Côté, QMI Agency