Fall 2019 Update on Québec’s Economic and Financial Situation
“The Update on Québec’s Economic and Financial Situation shows that Québec is doing very well. The robust economic growth in Québec allows us to reduce the debt burden and to step up the implementation of the government’s commitments. Today, we are completing the implementation of several measures that will benefit Quebecers. We are giving money back to Quebecers more quickly.”
-Eric Girard, Minister of Finance
On November 7, 2019, Minister of Finance Eric Girard presented the province’s Update on Québec’s Economic and Financial Situation (the “Fall Update”).
Minister Girard emphasized Québec’s economy is performing remarkably well. In 2019, GDP growth will reach 2.4%, up 0.6 percentage point compared to forecasts in the budget of last March. This strong economic performance points to a surplus of $1.4 billion for fiscal 2019-2020. According to the Minister, the government intends to use this surplus to fight climate change, deal with a potential economic slowdown, and reduce the debt. The provincial government’s objective of reducing the debt burden to 45% of GDP is forecast to be achieved in the current fiscal year, six years ahead of schedule.
Indexing of Personal Income Tax and Certain Government Fees
Minister Girard announced a 1.72% indexing rate which will apply as of January 1, 2020, impacting the parameters of the personal income tax system, social assistance benefits, and certain government rates. In particular, this indexing of social assistance program benefits will allow the most disadvantaged Quebecers to benefit from additional financial assistance.
The indexing rate will apply to government fees that are not yet subject to an indexing rule or set annually. Indexing reflects the increase in the cost of fee-based services without raising the service user’s share of the cost. Indexing will generate additional revenues which will be used to maintain the quality of public goods and services.
Spending Highlights and Related Initiatives
Minister Girard announced an additional $857 million will be invested starting this year to accelerate the implementation of the government’s commitments made to Quebecers, including:
- the full enhancement of the family allowance as of next January (two years earlier than expected), whereby nearly 679,000 families will receive on average an additional $779 per year;
- the elimination of the additional contribution for childcare and the return to a single reduced rate for subsidized childcare services starting this year (three years earlier than expected), which means that 140,000 families will no longer have to pay an additional fee of $1,100; and
- a significant reduction, starting next spring, in Québec’s healthcare institution parking fees, meaning the first two hours will be free of charge and the maximum rate will be set at an amount varying between $7 to $10 per day depending on the region
Furthermore, the provincial government is acting on a request from the Québec Ombudsperson by granting social assistance recipients who have not filed an income tax return access to the basic amount under the QST component of the solidarity tax credit by June 2020. In the Fall Update, the Minister also highlighted the fact that the province introduced last June a second level for the supplement for handicapped children requiring exceptional care, which will allow 3,000 families to receive an additional $652 per month.
Initiatives totaling more than $1.4 billion over five years are also planned to meet specific needs of Quebécers, including:
- establishing Partnership 2020-2024, an initiative towards building stronger municipalities and regions;
- implementing the support plan for print media companies (announced last October 2);
- modernizing the taxi industry; and
- extending the electricity discount programs.
For additional information regarding the Fall Update, please see the related articles published on IntelliConnect and with the next DVD.