Eric Girard wants to return to zero deficit “responsibly and progressively”

Photo: Jacques Boissinot The Canadian Press “We are asking people to respect their budgets,” Eric Girard said at a press briefing Thursday. “We are aware that it is difficult,” he added, speaking of a “paradigm shift.”

Marco Bélair-Cirino in Quebec City

Posted at 11:10 AM Updated at 12:07 PM

• Québec

Quebec will post a deficit of $11 billion at the end of the 2024-2025 fiscal year, Finance Minister Eric Girard confirmed, after drawing $750 million from its $1.5 billion contingency reserve.

The government will spend no less than $160.6 billion in 2024-2025, or 6% more than in 2023-2024 (3% in health and social services, 12.4% in education, 5.5% in higher education).

The CAQ government will allocate $62.8 billion to the health and social services portfolio alone, or $898 million more than planned in last March's budget. At the time, it underestimated the expenses attributable to independent workers in the network, from whom it intends to “wean itself” sooner or later.

“We are asking people to respect their budgets,” Mr. Girard recalled during a press briefing a few steps from the National Assembly on Thursday. “We know it’s tough,” he added, referring to a “paradigm shift” in government spending after the COVID-19 pandemic.

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Nevertheless, Mr. Girard expects to end the 2025-2026 fiscal year with a deficit of $9.2 billion, or $700 million more than expected.

“For the period from 2023-2024 to 2025-2026, we are dealing with a temporary deterioration in public finances, which can be explained in particular by the synchronized slowdown in the global economy combined with certain cyclical factors specific to Quebec,” he explains in Le point sur la situation économique et financière du Québec de l'automne 2024 that he presented on Thursday.

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The CAQ minister says he is “determined to return to a balanced budget in a responsible and progressive manner” by tightening both budgetary and tax spending. He will not achieve this before the next general election, scheduled for 2026, according to projections from the Ministry of Finance. Indeed, the deficit will amount to $4.2 billion in 2026-2027, $3.9 billion in 2027-2028 and $3.2 billion in 2028-2029, we can read.

“Thanks to our review of tax expenditures, we are already forecasting an improvement in the budgetary balance of $700 million over time, which will bring the structural deficit to $3.2 billion [rather than $3.9 billion] in 2028-2029, or 0.5% of GDP,” notes Mr. Girard.

Trump effect on growth ?

Gross domestic product (GDP) growth will be 1.2% in 2024, according to Quebec, a forecast twice as high as that of last March (0.6%). “Consumer spending will remain the main factor of economic growth, supported by strong population growth and the improvement in household purchasing power,” says Mr. Girard.

For 2025, the Department of Finance expects GDP growth of 1.5% “supported in particular by the decrease in interest rates and inflation,” contrary to an estimate of 1.6% in last March’s budget.

Minister Girard believes that “it is still too early to assess the economic and budgetary effects for Quebec of the policies proposed by the new administration [of the next president of the United States, Donald Trump], and to adjust the forecasts” for economic growth accordingly.

That said, he already identifies “certain risks that could affect the Quebec economy”, including “a modification of trade tariffs and changes to corporate and personal taxation” after Donald J. Trump arrives at the White House next January.

Additional investments

Mr. Girard took advantage of his “economic and financial update” to announce additional investments of nearly $2.1 billion over the next five years (from 2024-2025 to 2028-2029) to address “priority issues”:

– $252 million to support the wood processing sector and reforestation efforts, including $15 million in 2024-2025 and $22 million in 2025-2026.

– $218 million to increase access to housing (housing construction, increased support for young people leaving youth protection services and “decongesting” the Administrative Housing Tribunal) and increased work income supplements for social assistance recipients, including $60 million in 2024-2025 and $80 million in 2025-2026.

– $1.2 billion to support the transition of public transit companies and “contribute to the dynamism” of Montreal and Quebec City, including $325 million in 2025–2026. “Public transit services help improve the fluidity and efficiency of travel. In a context where operating costs have increased rapidly, the government is providing additional assistance to transit companies by helping them optimize their activities,” the Quebec government emphasizes, granting them additional assistance totaling $880 million.

– $433 million to ensure community safety and respond to the consequences of flooding, including $290 million in 2024–2025 and $37 million in 2025–2026.