Quebec Finance Minister Eric Girard has a one-word explanation for why his province consistently trails Ontario in terms of wealth creation: Montreal.
Toronto is about 25 per cent richer than Montreal when per-capita gross domestic product is taken into account, Girard said Friday in a speech to the Montreal Council on Foreign Relations. Company and government productivity is the main reason for the difference in wealth levels, he said.
Since his election in 2018, Premier François Legault has repeatedly talked about his desire to cut the wealth gap with Ontario. Government data show that the difference shrank to about 13.5 per cent from 16.1 per cent during the Coalition Avenir Québec’s first term, which ended last year. The Legault government wants to cut it further to 10 per cent by 2026 and eliminate it completely by 2036, according to the finance minister.
Girard said the 25-per-cent figure comes from a public consultation he conducted with National Bank of Canada chief economist and strategist Stéfane Marion. Before he entered politics to run in the 2018 election, Girard worked with Marion at Montreal-based National Bank.
“With my friend Stéfane Marion at National Bank, we did a public consultation on the factors behind the wealth gap,” Girard said in his address. “Stéfane said: ‘The wealth gap with Ontario isn’t really a wealth gap with Ontario, it’s Montreal that’s lagging Toronto.’ The regions of Quebec are doing rather well compared with the regions of Ontario.”
When Toronto and Montreal are excluded from the calculations, the gap between Ontario and Quebec drops to six per cent, National Bank data show.
Having a poorer economy means that Quebec can’t always count on the same quality of public infrastructure as Ontario, the finance minister added.
“The problem is that the express train between (Toronto’s) Union Station and Pearson Airport will be ready 10 years before the Réseau Express Métropolitain goes to Trudeau airport,” Girard said. “The problem is that in the global ranking of universities, the University of Toronto is now ranked ahead of McGill. It wasn’t like that before. And of course, the foundation for Toronto’s Hospital for Sick Children raises more money than the Ste-Justine Hospital foundation. So eliminating the wealth gap with Ontario is a huge challenge. We need our companies to make a difference.”
Added Girard: “Things are going well in Montreal, but we can do better.”
To create wealth, Legault and his ministers are working to increase Quebec’s economic potential — in part by attracting additional foreign investment. While Quebec’s economy has historically grown at an average annual rate of 1.3 per cent, Girard said his government wants to boost annual GDP growth to two per cent.
“We have great ambitions for Quebec,” he said.
Quebec is poised to post the weakest economic performance of all Canadian provinces this year and next, according to a report issued earlier this month by Deloitte Canada. Quebec’s GDP will expand by 0.5 per cent this year and 0.4 per cent next year, compared with gains of one per cent and 0.9 per cent for all of Canada in 2023 and 2024, Deloitte predicts.
Girard’s 2023-24 budget assumes growth of 0.6 per cent in the current fiscal year, which will end in March.
Although economic growth has slowed significantly in recent months, the minister is continuing to rule out a recession this year. He’s less certain about 2024, however.
“We are exactly where we thought we would be,” he told reporters after his speech. “Growth is much weaker than in 2022, it’s slightly positive, but we are so close to zero per cent that we have positive and negative quarters.”
“We are not forecasting a recession. For 2024, it will depend on the evolution of inflation and interest rates. If the economy slows down a lot, inflation will drop faster and we will have interest-rate cuts, which will allow growth to rebound. There is a lot of uncertainty, but our forecast for 0.6 per cent growth in 2023 still stands.”
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