A text by Louis Lévesque, President of the Public Policy Committee of the Association of Quebec Economists

READER MAIL. The National Assembly yesterday held a parliamentary consultation commission on the replacement of the Balanced Budget Act and amendments to the Debt Reduction Act, as well as the establishment of the Generations Fund, and the Association of Quebec Economists was invited to participate.

The Public Policy Committee (CPP) of the association, of which I am chairman, had recommended in its recommendation Statement on the preliminary draft budget 2023-2024 that Quebec returns to its pre-pandemic good habits of balanced budgets and debt reduction as quickly as possible.

The bill goes in the right direction. However, the committee recommends that parliamentarians create the position of parliamentary budget director to improve discussions and improve information about Quebec’s budget situation.

Quebec adopted a unique legal framework, the Balanced Budget Act and the Debt Reduction and Generations Fund Act, which contributed to the significant improvement in the government’s financial position before the pandemic.

The CPP notes with great satisfaction that the legal provisions proposed in Bill 35 to modernize this legal framework are in line with the intentions announced last March by Finance Minister Éric Girard.

The new balanced budget law will give the government more flexibility to respond to crisis situations. This is intended to avoid the need to suspend application, as has happened in the past during difficult economic times.

The CPP also welcomes the proposed setting of a new debt target in the Generations Fund Act, moving forward using net debt, which takes into account the impact of infrastructure investments and is the most appropriate approach for comparisons across Canadian provinces.

However, the CPP regrets the decision to reduce payments to the Generation Fund to finance the personal tax cut announced in the 2023-2024 budget. Bill 35 therefore proposes to limit the list of revenue allocated to the fund.

The CPP considers that this change does not comply with the principle of intergenerational equity in the use of revenue allocated to the Fund. This decision delays the achievement of the debt target by 5 years.

For the CPP, deleveraging is not an endless exercise, but a means of ensuring that the government continues to have the necessary resources to meet the needs of Quebecers.

These principles also led a group of experts with which the CPP partnered to recommend in 2021 that after reaching the debt target, the government will be able to redirect the revenues earmarked for the Generation Fund to state priorities related to intergenerational equity such as reducing the deficit in the maintenance of infrastructure assets and measures related to climate change adaptation.

In fact, issues related to intergenerational justice need to occupy more space in public debates that are completely dominated by immediate questions. For this reason, today we reaffirm our recommendation that Quebec, as the Federal Parliament and the Ontario Parliament have already done, equip itself with a parliamentary budget director tasked with conducting independent analysis and informing parliamentarians and Quebec society about longer-term economic issues and economic developments to inform financial problems.