On November 29th, Minister of Finance Eric Girard was at the podium for a conference organized by the Chamber of Commerce of Metropolitan Montreal to discuss the recent economic update.
Before 300 guests assembled at the Hotel Bonaventure, Minister Girard went over the government’s $2 billion minibudget released on November 25. Here is a look back at his speech in four major points.
A positive economic situation
The province’s economic signals are very positive. With GDP growth at 6.5% in November 2021, the province’s momentum exceeded forecasts, despite uncertainty from COVID-19 waves.
“Québec saw incredible growth this year: 6.5%. We did better than the Canadian average, better than the U.S. This is thanks to the efforts of entrepreneurs, a positive business climate, and government aid.” – Eric Girard
According to the Minister’s projections, the output gap is quickly being reduced and should reach its forecast level in 2025. This will allow the government to strengthen its position on the environment.
“The economy is doing well, so we need to do more for the environment. We have a five-year plan for a green economy. It is a good basis, but it won’t be enough. We are committed to reviewing the plan every year.”
Fighting a rising cost of living
Inflation has continued to grow for several months. Minister Girard pointed out that this falls under the jurisdiction of the Bank of Canada and not the province. But he pointed to measures that will be implemented to help those hit hardest.
“We will launch an exceptional cost of living benefit, increasing the amount of support to seniors and helping households access affordable housing. We need to support consumption to protect Québec’s economic momentum.”
Dealing with the labour shortage
The labour shortage is a major challenge for the country’s economy. Already significant, it could worsen in the coming years because of Québec’s demographic trends, a risk the Minister is aware of.
“There are currently over 200,000 vacant positions in Québec. The labour shortage could become a widespread loss. It has a tremendous economic impact.”
Among the business community’s favoured solutions, immigration is key to supporting growth in the province’s businesses. Eric Girard reminded the audience of recent promises on this option and pointed to major upcoming investments to fight the labour shortage.
“We already receive 50,000 immigrants per year and will receive an additional 20,000 people in 2022 to make up the gap that occurred during the pandemic. We will also invest $2.9 billion over five years to fight this shortage, with $1.7 billion allocated to incentive scholarships.”
The objective of these investments is to create 170,000 jobs in six strategic sectors: health and social services, education, educational childcare services, engineering and information technology, and construction.
Supporting communities through sound financial management
Minister Girard spoke about the government’s public finances and the importance of pursuing the objective of reducing public debt.
“The figures released in the minibudget are better than expected for 2021. We have to continue reduction efforts; it’s a priority for the government.”
For the Minister, this sound budgetary position enables the government to present ambitious measures to support communities, particularly on issues such as preventing domestic violence and the fight against gun violence.
What are the medium- and long-term objectives for the Québec economy?
In the medium term, the government’s objective is to catch up to Ontario economically. In 2021, the projected gap in real per capita GDP is $16,200. At the current rate of growth of the two provinces, Québec could catch up to the Ontario level by 2036. However, Minister Girard is more ambitious.
“We want to close the wealth gap with Ontario. We want it to be -10% in five years. In 15 years, we want it to be closed completely.”
This progression should be accompanied by considerations of reducing the tax burden. Asked about this, the Minister of Finance confirmed that this was a government objective, a promise he made the last time he spoke before the Chamber. The Minister positioned this effort as part of the general optimism about Québec’s economic situation for the coming years.
“Before the pandemic, Québec was doing very well. We think that by 2025, we will have completely resumed Québec’s economic trajectory.”