The story line coming out of this week\u2019s Quebec and Ontario budgets is likely to be that, in a reversal of longstanding form, Quebec has become a paragon of fiscal management while Ontario has taken to spending like the proverbial drunken naval forces person.<\/p>\n
The new relative reevaluation of the two provinces\u2019 fiscal policies does ring true so far as the bottom-line numbers go. Tuesday\u2019s Quebec budget anticipates a surplus of $2.8 billion for 2018-19, which is appropriate at the top of an economic cycle, while Ontario, having tried surpluses for one year in a row, has decided it prefers deficits. Quebec does call for $1.9 billion of net fiscal requirements, once its capital projects are taken into account, so it hasn\u2019t completely given up borrowing. But Philippe Couillard\u2019s Liberal government came in saying it would get the budget to balance, it has and it intends to stay there, unless the economy goes south.<\/p>\n
In part, however, it has used supposedly prodigal Ontario as a benchmark. At one point in Quebec\u2019s 598-page economic plan \u2014 and any plan that\u2019s 598 pages long is too much \u2014 it justifies what the public sector unions will regard as spending control by comparing Quebec\u2019s faster growth of spending with Ontario\u2019s (though the comparison is before this week\u2019s Ontario splurge). Likewise, in a discussion of the Quebec liquor board\u2019s contribution to the consolidated fund, the government notes how wine prices have been reduced to try to match Ontario\u2019s and how some prices are now even \u201cbetter\u201d than Ontario\u2019s. By \u201cbetter\u201d it means \u201clower.\u201d Whenever a government identifies with consumers it\u2019s always a victory.<\/p>\n
However, let\u2019s not confuse macro and micro. The macro numbers do indicate a measure of fiscal responsibility. But, scroll through the economic plan and you come away numbed by the comprehensive interventionism. The government even rearranges geography. For the purposes of incentives to mining, the North has been extended southward to encompass mines not formerly eligible, while the Magdalen Islands, far down the Gulf of St. Lawrence, close by Cape Breton, are now counted as North for the purpose of tax credits for those living in isolated areas. The Islands, home to just 13,000 people, have their own seat in the provincial legislature. It is currently held, you will not be surprised to learn, by the governing party.<\/p>\n
In the real North, the government is going to support dozens of not-for-profit greenhouses \u2014 if they\u2019re in the North, you can be sure they won\u2019t be profitable \u2014 and, for $5 million, at least one experimental commercial greenhouse, to be fuelled by the burning of \u201cresidual materials,\u201d i.e., garbage. This is both to reduce the high cost of food flown into the North and to harvest the energy otherwise wasted in garbage burning. The government does concede there are natural obstacles to northern greenhouses, i.e. \u201cthe harshness of the climate, which makes it expensive to maintain an adequate greenhouse temperature for commercial production.\u201d Even so, garbage in, cucumbers out.<\/p>\n
There are other cases where cost is downplayed \u2014 which, of course, violate rudimentary economics. The government has a program to encourage business investment by subsidizing electricity costs. Cheap, abundant hydro-electricity is one of this province\u2019s big selling points, but we\u2019re also willing to go beyond comparative advantage to attract industry. It\u2019s like the Saudis discounting oil \u2014 crazy. We should want exactly the amount of industry our low electricity prices attract on their own and not a dollar more.<\/p>\n
But if cost is no object, neither is demand. We read in the economic plan that \u201cQuebecers are passionate about distilled beverages made by local producers that showcase Quebec products,\u201d so much so that the sale of spirits in Quebec through the state liquor board has grown by close to 30 per cent per year over the last five years. That\u2019s from a very low base \u2014just $8 million in 2010-11 \u2014 but my goodness, 30 per cent per year. So what do you do in the face of 30 per cent growth? You subsidize, of course. If an industry is having trouble in Quebec \u2014 think forestry \u2014 you subsidize it. But if it\u2019s doing well, you subsidize it, too.<\/p>\n
The budget also introduces new tax measures, $277-million worth, in furtherance of the government\u2019s goal of making Quebec an \u201cexecutive-driven economy\u201d in which, as U.S. President Donald Trump might put it, \u201cQuebec businesses are the predators \u2026 not the prey.\u201d Suggesting CEOs should be in charge of anything is delightfully incorrect these days. But the trouble with CEOs is that if there\u2019s a problem in their organization, they want to dive in and get their hands dirty. That\u2019s fine for firms. But an economy doesn\u2019t benefit \u2014 just the opposite \u2014 when government CEOs devise a policy for everything anyone at all says is a problem.<\/p>\n","protected":false},"excerpt":{"rendered":"
An economy doesn’t benefit — just the opposite — when government CEOs devise a policy for everything anyone at all says is a problem<\/p>\n","protected":false},"author":578,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[],"tags":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2743"}],"collection":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/users\/578"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/comments?post=2743"}],"version-history":[{"count":1,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2743\/revisions"}],"predecessor-version":[{"id":2744,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/posts\/2743\/revisions\/2744"}],"wp:attachment":[{"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/media?parent=2743"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/categories?post=2743"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.lifeinsurance-orleans.ca\/index.php\/wp-json\/wp\/v2\/tags?post=2743"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}