Towards a deficit well above the projected $2 billion

The financier of the Legault government, Finance Minister Eric Girard, has lost all the room for maneuver he had given himself in the 2023-2024 budget presented last March.

According to the report on the financial situation for the 2nd quarter just presented by the Minister, the “contingency reserves” of 1.5 billion provided for in the March 2023 budget have been completely used up.

According to Minister Girard’s “New Budget Estimates”, the CAQ government is heading for a deficit (before transferring money to the Generations Fund) of about $2 billion, even after the “provisions for contingencies” of $1.5 billion Billion US dollars have been fully utilized.

That doesn’t bode well…

However, there is a high risk that the Legault government will end this fiscal year with an even larger deficit.

Here’s why. In its budget forecasts from last November’s economic update, the increases for collective agreement renewals are based on a total offer of 14.8% over five years.

However, the current government offer has already been revised to 16.7% or 1.9 percentage points more. This offer was rejected and denied by union representatives of the state’s 600,000 employees.

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To end the gigantic conflict with public and parapublic service workers, it is clear that François Legault, together with the minister in charge of the negotiations, Sonia LeBel, and the financier Eric Girard, must grant a higher salary increase.

We’re probably talking hundreds of millions of dollars for each of the next five years of the collective bargaining agreement, starting with the fiscal year that began April 1. The old collective agreement ended on March 31st. So we are in the first year of the new convention, which the two parties are busy negotiating.

Declining government business

When presenting the budget last March, Minister Girard expected $6.8 billion in revenue from government companies, including Hydro-Québec, SAQ, Loto-Québec and Investissement Québec. As the months went by, he was forced to sharply revise “his” income from state-owned enterprises.

He now plans to end the current fiscal year with $1.2 billion less than originally planned and reduce revenue from $6.8 billion to $5.6 billion. These are Hydro’s revenue projections, which are literally down by at least 850 million.

Another hard hit on the revenue side: Personal income tax revenue will fall by $449 million compared to initial forecasts and corporate tax revenue will fall by $929 million.

  • Listen to Michel Girard’s economic discussion on the microphone from

    Alexandre Dube

    , every day on the airwaves of

    QUB radio


Federal transfers on the rise

Fortunately, the decline in revenue from state corporations and taxes was largely offset by a $1.76 billion increase in revenue paid by the federal government, which will total $31.5 billion this year.

Increase in expenses

Although the CAQ government plans to spend 567 million less in the Education (-$273 million), Higher Education (-$146 million) and Transport (-$146 million) portfolios, it plans to spend the current fiscal year with additional spending of $2 billion to complete its original forecasts from March last year.

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