2009 Quebec Budget Commentary

Some highlights of the budget:

• The primary new measures introduced in Budget 2009 for the coming fiscal year appear modest at face value—only $22 million of fiscal relief and $81 million of new infrastructure spending.
• At a time when slower economic growth impinges on revenue collections, Quebec has prudently opted to increase the Quebec sales tax (QST) by one percentage point, starting in 2011.
• A return to fiscal balance will be the major challenge facing Quebec in the years ahead. With cumulative deficits of $11.6 billion in the cards over the next four years and a ballooning provincial debt (the most burdensome in Canada), it will be incumbent upon the provincial treasury to restrain spending wherever possible if balanced budgets are to be achieved by 2013–14.
• Given that the bulk of new provincial spending hails from the recent infrastructure announcement, Budget 2009 will provide virtually no new economic stimulus in 2009.