Quebec’s 'optimization' plan won't involve massive job cuts: Girard

Efficiencies of $2.9 billion will be generated in other ways, the finance minister said Monday.

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Finance Minister Eric Girard insisted Monday that Quebec’s plan to “optimize” operations and generate efficiencies of $2.9 billion over five years won’t involve massive job cuts in areas such as education and health care.

Productivity gains from initiatives such as the creation of a digital health records system will deliver some of the expected savings, Girard said at an event hosted by the Chamber of Commerce of Metropolitan Montreal. Quebec could also choose to slow government hiring during the period and not replace all retiring employees, he added.

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“Optimization will not come through waves of job reductions,” Girard said. “It makes no sense. Anyway, it wouldn’t work. It’s just not a good idea.”

Quebecers may not agree with all of the government’s decisions, the minister acknowledged.

“We are preparing the population,” he said. “We are warning the population that things are going to be difficult and that real actions are going to be required.”

Girard unveiled the savings drive last Tuesday as he tabled a 2024-25 budget that projects a record $11 billion deficit for the province. He also said the government would spend the next year reviewing all expenditure programs in a bid to return to budget balance by the end of the decade.

Cuts to business tax credits will be the single biggest contributor to the efficiency effort, generating $1.04 billion over five years, Girard said last week. Hydro-Québec, Loto-Québec and other state-owned companies will also be asked to come up with $1 billion — combined — through unspecified “optimization efforts,” while tougher tax audit and collection measures bring in $563 million and higher tobacco levies yield another $300 million.

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“I take no pleasure in pretending that we’re going to cut jobs,” Girard, a former National Bank of Canada treasurer, said Monday during a discussion with Chamber of Commerce president Michel Leblanc.

“When I was at National Bank, I don’t know how many times I walked into a meeting and someone suggested that we cut personnel. Eventually we realized that when you’re in a difficult situation, the solution comes from the people who are in place. Who is going to improve our education system? It’s the people who are there now. There’s no way we’re going to do personnel reductions in education.”

Quebec’s budget for the year that starts April 1 projects government spending of $157.6 billion. Employee wages make up about 50 per cent of the total, Girard said.

“It’s obvious that we’re going to look at this, but not in service delivery,” he said. “We need more teachers. I hope that no consultant is going to tell me that we need to cut teaching positions only for us to have to rehire these people 12 months for now. You need to be coherent.”

Added Girard: “Digitalization is extremely important. It’s undeniable that there are productivity gains to achieve in health care.”

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Quebec plans to announce results of the spending review a year from now, when the Legault government releases its fiscal 2025-26 budget along with a plan to restore fiscal balance.

“One of the reasons we’re going to table the return to balance plan next year is that we want to have better economic conditions when we do it,” the finance minister said Monday.

Girard said he will personally pore over the province’s 277 tax measures, which cost the government a combined $49 billion. The amount includes $40 billion in personal tax measures and $9 billion in corporate tax credits.

“All 277 measures will be looked at,” he said.

Government revenue is projected to increase 3.3 per cent a year over the next five years while spending climbs 2.9 per cent per annum — a gap of 0.4 percentage points. For Quebec to balance its budget, the spread between revenue and spending will need to increase to 1 percentage point, Girard said.

Much of Quebec’s long-term balanced-budget ambitions depend on a gradual drop in interest rates, which would fuel economic growth and boost government revenue. Many private-sector economists predict that the Bank of Canada will start cutting rates in the second half of 2024, by as many as 100 basis points.

Girard’s 2024-25 budget assumes economic growth of 0.6 per cent this year and 1.6 per cent in 2025. First-half growth in 2024 will probably be nil, the minister said Monday.

“This 0.6 per cent (growth) for 2024 is really 0.0 per cent in the first six months, and, we hope, interest rate cuts that allow us to get nearer to normal growth in the second half,” he said. “It’s going to take a spark to restart the economy. Everybody knows what the spark is. It’s going to take interest rate cuts.”

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