The results of Quebec’s election leave it with a minority government. This will be interesting for Quebec’s provincial politics. The
Parti Québécois won a minority government with 54 seats, the Liberals earned 50 seats, the Coalition Avenir Québec 19 seats, and
Québec Solidaire two seats. Despite all the troubles the Liberals faced going into the election, the PQ had its fair share of obstacles,
including a number of high profile gaffes by PQ leader Marois such as telling conservative sovereigntists to find another party, claiming
French as a citizenship requirement, and citizen initiated referendum. Now that the PQ are in charge, there is plenty to do.
One problem for the government is how to deal with the student protests and strikes. The PQ spoke in favour of the students,
but whether or not this was sincere or an election ploy remains to be seen. Marois’ plans to freeze tuition for 100 days for a public
forum on the issue are solid enough to be a promise, but vague enough to allow the government to make the final decision. The
guarantee to index any further tuition hikes on the cost of living implies hikes will come, but perhaps not as large as originally intended by the Liberal government. That being said, annual tuition in Quebec was an average of $1,968 from 2009-2010, and the Liberal
plan will have only raised it to $3,793 by 2016-17. This is $1,724 below the Canadian average, and though this does not include
other costs of post-secondary education, tuition would grow large as a percentage, but Quebec students still have the best deal in the
country.
Quebec’s students however, are in better financial shape than their province. Estimates of Quebec’s debt from different sources
run from $184 billion on the low end and $250 billion on the high end. The 2012-13 budget was $70.1 billion, $7 billion of which was
equalization payments, with a deficit of 3.3 billion. The Liberals had a plan that would eliminate the deficit by 2013-14, with a 200 million dollar surplus in that year. That is highly optimistic, and how closely the incoming PQ will hold to that plan will be seen. Their
plan to increase funds by further taxing Quebec’s large natural resources revenues could help. Still, with an average healthcare cost
growth of 5 per cent per year, which is Quebec’s highest budget item at roughly $30 billion, or 48 per cent of the budget, it will be
a rough future.
The severity of the debt problem is not simply an issue for Quebec, but Quebec serves as a fine example. Let us assume that their budget plan works, they break even every year, and there are no cost increases or revenue loses while ignoring factors such as the 5 per cent average annual healthcare cost increase. We will also peg the debt at $200 billion. The Bank of Canada is keeping the interest rate at 1 per cent for now. Paying the interest on the debt costs 2 billion in the first year alone. Quebec spends roughly $8 billion a year servicing its debt. That is 25 years of debt servicing. With all of our assumptions above, roughly one tenth of Quebec’s budget each year does not go to the operation of government or its services, but to the debt. In that same timeframe, with 200 million
dollar surpluses, Quebec only has $5 billion in reserve cash. Given Quebec’s recent spending habits, that 25 years of saving would last
two years of deficits. Accumulating debt is a gamble on an uncertain future; it is best to avoid it.
