March 2012

2012-2013 Quebec Budget
Balanced by next year?

2012-2013 Quebec BudgetLast Tuesday, Quebec Finance Minister Raymond Bachand tabled his government’s budget for the next fiscal year. Now that we’ve had our initial reactions, what should we be focusing on?

The budget tabled by Raymond Bachand on March 20 contains a number of economic and fiscal measures. Which ones will actually affect our wallets directly? Good question! The bulk of the measures announced on Tuesday are support and assistance programs for various sectors. It’s a sign of the times that there is less in the new budget that directly affects personal income tax, compared to what we saw in the last decade in the form of tax cuts and increases, increases in the QST and new fees.

It’s all about programs

The situation is due partly to the fact that such measures have already been announced in previous budgets and that some of them, in particular those regarding health and the increase in tuition fees, will soon come into effect. That means our wallets are more likely to feel the impact of the 2012-2013 budget primarily through the macroeconomic measures and programs contained in it.

There are many of these, in fact, and you can see the details at the Ministry of Finance website. Meanwhile, here are a few things that warrant our attention.

A balanced budget next year
The recovery plan adopted after the economic crisis of 2008 had its price: the return of budget deficits for Quebec, which the Finance Minister said he would try to eliminate within four years. His was a more aggressive deficit-reduction strategy than that adopted by his colleagues in Ottawa and a number of provinces, and Mr. Bachand now believes he is on course to achieve his objective. That would be good news for taxpayers and would lead the way to debt reduction, but don’t expect this immediately: Quebec’s debt is expected to continue rising over the short term.

Looking north
The government is continuing to roll out its Plan Nord, specifically by creating Ressources Québec, a subsidiary of Investissement Québec, which will buy equity interest in mining and hydrocarbon companies with an investment envelope of $1 billion.

Gross debt

The challenge of retirement
Problems caused by underfunded public and private pension plans remain a concern. The Voluntary Savings Retirement Plan (VSRP) announced last year will therefore go into effect starting January 2013 to encourage savings through deductions at source and offer Quebecers a retirement savings plan with lower management fees than those charged for individual plans. If you are an employer with more than five employees, you have until January 2015 to set up your VSRP. The budget also confirms measures announced last year to encourage people 65 and over to stay on the job.

Support for seniors and health care
The challenge of retirement also extends to people who are already retired. The Aging at Home plan, to be unveiled soon, will increase assistance to seniors by 26%, from the current $3.3 billion to $4.2 billion in 2016. Details include more money for health services and home support and assistance to adapt homes to accommodate the elderly. Funds are also provided to support family practice groups and to make surgery more accessible, among other things.

Help for business
The Bachand budget contains $1.3 billion in assistance for business. Tourism, forestry and cooperatives are among the areas targeted, with $2 million a year specifically allocated to help SMBs incorporate new information technology in their operations.

Help for energy-efficient renovations
Finally, if you have been thinking about renovations to make your home more energy efficient, there is at least one provision in the budget that will put money in your pockets directly and almost immediately. The Réno-Climat program has been enhanced to compensate for the end of the federal ecoENERGY program on March 31. Your renovation project could earn you a $1,900 grant from the Quebec government, starting April 1.

After the severe budgets of recent years, many people will be relieved to see that skies are clearing with regard to the province’s finances, at least according to the Finance Minister’s forecast. It remains to be seen what we’re going to get from his counterpart in Ottawa, who thus far has led us to expect a series of cuts and austerity measures.

We’ll know for sure on March 29!