Fiscal crunch? Oh hum

Canada, especially Quebec, faces fiscal crunch in coming decades: study

The Canadian Press, November 18, 2010

By Ross Marowits

MONTREAL - Canada faces a fiscal crisis and the first province to hit the wall will be Quebec, a new report warned Thursday.

The province's heavy debt burden, weak demographic growth and high health-care spending put pressure on it to be the first to make difficult decisions, says the Conference Board of Canada report.

Quebec's fiscal pressures are so severe that, within 20 years, sales taxes there would need to double if the province tried to balance the budget that way alone, the report notes.

The province's debt already equals 47 per cent of its economic output. Combined with its share of the federal debt, that number rises to a debilitating 80 per cent.

Glen Hodgson, the board's chief economist, says that puts Quebec around the same worrisome category as the United States, which, although still far better off than Greece's 110 per cent level, could see debt seriously limit its public spending options.

The report says current trends point to the provincial deficit ballooning to $45 billion by 2030, as health-care spending more than triples to $90 billion over the next two decades.

Health care's claim on overall Quebec government revenues would grow, from 43.1 per cent in 2009-2010, to 63.4 per cent in 2030-2031.

"(Quebec) really is the poster child, unfortunately, for the kind of changes that are going to have to happen," Hodgson said.

Although its report focuses exclusively on Quebec, the conference board announced it will create a new body to track health spending in various provinces.

"We think that health care is one of those issues that has been asleep for the last few years," Hodgson said.

"It is now time to wake it up again and have an honest national dialogue about the sustainability of our health-care systems."

Quebec Finance Minister Raymond Bachand downplayed the report, calling it incomplete.

"In fact, this report does not take into account all the courageous choices made by the government in the last budget," he said in a statement.

Program spending growth will be capped at 2.9 per cent this year and 2.2 per cent thereafter.

"Our plan to restore fiscal balance includes all measures necessary to restore fiscal balance in 2013-2014. Unfortunately, the study did not take all those into consideration."

Bachand said the province will also reduce the debt by setting higher electricity rates as of 2014 which, he claimed, the study does not take into account.

The conference board is creating a new group called the Canadian Alliance for Sustainable Health Care to conduct analyses of other provinces.

It warns that Quebec isn't alone but may be more ready for the debate than many provinces because it put in place a tough budget last spring and made hard decisions including raising the sales tax by two percentage points by January 2012.

While Hodgson doesn't believe the government will succeed in balancing the budget in four years, it was a starting point.

Said Hodgson, the Ontario government, by comparison, "punted" the tough choices until after next year's provincial election.

In the report titled, "Quebec's Fiscal Situation: The Alarm Bells Have Sounded," the conference board said Quebec's revenue growth will be limited to four per cent a year and its population will grow by 0.7 per cent.

Meanwhile, spending is forecast to grow 5.1 per cent per year and Quebec's real economic growth should be 1.6 per cent per year through 2030-2031.

If Quebec's taxation rates and historical trends in actual per-capita program spending are maintained, the budget becomes unsustainable, warned Mario Lefebvre, the board's director of Quebec affairs.

"The status quo is no longer an option. There are difficult choices to make," he told a news conference.

The Conference Board didn't prescribe any specific solutions but said the room to manoeuvre will lessen if painful decisions are put off for several years.

Lefebvre said Quebec's population has to decide how it wants to close the financial gap.

"If we want to maintain universal health care, it's a totally justifiable and honourable choice, but you just have to know that there is a cost."

Politicians would need to raise the provincial sales tax to 19.5 per cent to balance the budget in 20 years, assuming the current rate of growth in federal transfers and the projected growth in health spending.

While the report's authors said they weren't pointing fingers at specific government decisions, Parti Quebecois finance critic Nicolas Marceau said the Conference Board doesn't believe the government can control its spending.

He said it's time for the finance minister "tells the truth to Quebecers" about the real state of public finances.

Bachand plans to present his economic update before the end of November.

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winnipegfreepress.com/breakingnews/conference-board-of-canada-says-fiscal-health-of-quebec-is-at-risk-without-reform-108961254.html

Quebec nationalism still at war – with itself

Mr. Separatist Hero couldn’t turn on the lights in his party’s office without the generosity of Joe and Jane Canadian.

National Post, editorial, November 2, 2010

If it is possible, Quebec nationalism is becoming even more intellectually inconsistent. It has always attempted to sell its followers on its ability to achieve two diametrically opposed outcomes at the same time - insisting that it can win Quebec freedom from Ottawa's control, while at the same time maintaining Quebec's transfers and other subsidies from Canadian taxpayers. That, in a nutshell, is what "sovereignty association" has always been about.

Monday, 50 young Parti Quebecois (PQ) members published an open letter in the separatist-leaning Montreal newspaper, Le Devoir, calling on party leader Pauline Marois to push harder and faster for separation at a time when fewer Quebecers favour breaking away from Canada than at any time in the past generation.

In the background of this current PQ schism is an implicit threat: Cater to the aspirations of the party's hardcore nationalists or they will entice Bloc Quebecois Leader Gilles Duceppe to leave federal politics and come back to Quebec to replace Ms. Marois, who, by the way, does not want to give up her post.

Mr. Duceppe is the most popular active political leader in the province -- federal or provincial -- and sovereigntists cling to the hope that he could revive momentum for their movement, which since its narrow loss in the 1995 referendum has never come as close again to fulfilling its dream of an independent Quebec.

The irony is that Mr. Duceppe and his federal BQ party are at one and the same time the most disloyal party in Ottawa and the party most dependent on federal taxpayers.

The BQ have time and again made it clear they are ready and willing to tear Canada apart. Mr. Duceppe is a sovereigntist folk hero because he has never wavered from his belief that "Canadian federalism can never be changed to accommodate Quebec," unlike Ms. Marois who has, since becoming PQ leader in 2007, toned down her separatist rhetoric. She now proposes shelving a third referendum while seeking new powers from Ottawa.

Duceppe's stated commitment to separation was always why the proposed 2008 coalition between the Liberals and NDP was such a dangerous idea. It would have had to be held in place by a man and a party determined to exploit the first opportunity to ruin the nation.

While the Tories rely for about 40% of their funding on taxpayer subsidies, the NDP 60% and the Liberals 70%, the Bloc does almost no independent fundraising. Its annual political budget derives over 90% of its revenues from the $2-per-vote grant registered parties receive from taxpaying Canadians. 

Mr. Separatist Hero would be unable to turn on the lights in his party's offices were it not for the generosity of Joe and Jane Canadian.

The philosophic confusion among sovereigntists is also apparent in their revulsion for Ms. Marois's go-slow approach. It is nothing more or less than Lucien Bouchard's "winning conditions" strategy. Mr. Bouchard remains the most popular figure in Quebec, even among sovereigntists. Yet during his tenure as premier -- when momentum for sovereignty remained high -- he was never able to arrange another vote on separation because he could never find a time when the stars lined up for a win. Ms. Marois is merely confronting the same reality faced by the lauded Mr. Bouchard. Yet, the knives are out for her.

Still, none of this is new for sovereigntists. Their inconsistency is their most consistent trait.

When Brian Mulroney was prime minister, for instance, the Quebec wing of his caucus dictated that half of all defence spending had to occur in Quebec. During the Canada Round of constitutional negotiations in the early 1990s, there were demands from Quebec that part of the National Archives and other national museums be given to Quebec, should it decide to leave. Nationalists insisted all of Air Canada and any other federal asset residing in the province would belong to an independent Quebec, but not part of Canada's national debt.

Jacques Parizeau even had some unusual calculations during the 1995 referendum about how Quebec was bleeding money every year to the rest of Canada, despite being by far the largest recipient of transfers and equalization.

The current PQ troubles are nothing new. Quebec nationalism has been an idea at war with itself for 40 years.

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Read more: nationalpost.com/todays-paper/Quebec+nationalism+still+with+itself/3761650/story.html#ixzz14AH9i1F8