Anyone hoping for a Christmas present from the Finance Minister will be disappointed. Eric Girard was less optimistic than expected for 2024, unveiling targeted and prudent investments on Tuesday, particularly for access to housing.
“We are not in a recession, but certainly in an excessively difficult period that could be described as stagnation,” Minister Girard noted at a press conference.
Given the war in Ukraine and between Israel and Hamas, “there is a lot of uncertainty in the economy,” Girard said. “The next six months will be very difficult,” he warned.
Downside forecasts
The continued rise in interest rates and inflation therefore led Minister Girard to revise his economic growth forecasts for 2024 downwards from 1.4% to 0.7%.
Nevertheless, the Finance Minister is sticking to the goal of returning to a balanced budget in 2027-2028.
To finance the new targeted measures, the country will need to draw $1 billion from its contingency reserve. The projected deficit remains at $4 billion for 2023-2024.
In total, the additional investments planned in the economic update amount to $4.3 billion.
For the average Quebecer, the indexation of the income tax system to 5.08% from January 1 means $282 more for the whole of 2024. For a family with two small children and an annual income of $100,000, we are talking about $667 -dollars more.
Including the indexation of social assistance benefits at the same level, this measure, which is automatically provided based on inflation, amounts to a total of $2 billion.
Specifically, the maximum amount for family allowance increases by $141 and that for the solidarity tax credit by $59. For basic social assistance, this amounts to a supplement of $37 per month.
Real estate crisis
As previously announced, Quebec will complement federal spending ($900 million) to improve access to housing, ensuring a total of $1.8 billion to build 8,000 new social and affordable housing units over five years be invested, including 500 for the homeless.
Food banks that urgently requested $24 million will ultimately receive $20.8 million to get through the year.
Failing to send a new check to the poorest, as the prime minister promised earlier this fall, when they file their next income tax return, all Quebecers will benefit from the effects of the tax cut that just started appearing on their paychecks last July . In other words, many Quebecers are entitled to a larger tax refund to compensate for the tax breaks they did not benefit from in the first six months of 2023.
Far from the demand of cities
If we analyze the breakdown of the $1.8 billion announced by Minister Girard for climate change adaptation over five years, we see that the planned investments are still far from the $2 billion requested by municipalities are.
In fact, only $260.6 million in new money is planned “to support initiatives” in this area. To arrive at the $1.8 billion figure, Mr. Girard takes into account $696 million related to the wildfires, $400 million of which has already been spent following the summer fires.
Last June, Prime Minister François Legault and his local government minister Andrée Laforest indicated that municipalities had scope to invest in adapting to climate change. Mr. Legault particularly pointed to the remuneration of municipal officials, which is 35% higher than that of Quebec federal officials.
“We have to make decisions,” said Mr. Girard, recalling that the demands placed on him from all sides are greater than the resources at his disposal.
Nothing that can calm the dissatisfaction of the unions, the same logic applies to civil servants, to whom the President of the Ministry of Finance, Sonia LeBel, has presented a new total offer of 14.8% over five years.
“That’s what’s in the financial framework (…) which is tight,” said Mr. Girard.
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