Press Release

2003-2004 BUDGET
RESTORING BALANCE AND TRANSPARENCY
TO PUBLIC FINANCES

Québec, June 12, 2003 – Minister of Finance Yves Séguin delivered the 2003-2004 Budget Speech before the National Assembly today. This Budget is manifestly in line with the mandate given by Quebecers to the new administration to review the workings of government. It allows for the stabilization of public finances without any increase in taxes for Quebecers.

“It was imperative that this Budget be brought down. We must move swiftly to restore fiscal balance and begin changing the way government works,” declared Mr. Séguin.

A tough fiscal situation

Mr. Séguin affirmed that, beyond the technical and legal reasons, this Budget had to be tabled because, when the government came to power, it noted that its financial position was far from the one that had been presented by its predecessor. “In fact, it is probably a situation unique in the history of Québec that the financial data of a budget intended to guide government action for an entire year should be so far removed from reality so soon after being tabled before the National Assembly,” stated the Finance Minister.

The $4.3-billion budgetary shortfall found by the Breton committee for 2003-2004, along with the amount almost as large it identified for the following year, are “not the result of an accounting operation to adjust figures to suit political strategy,” indicated Mr. Séguin. “The shortfall was unforeseeable and the current government was definitely unaware of it. There can now be no doubt: the draft Budget tabled by the previous government would have led directly to a hefty deficit or to substantial tax hikes,” he continued.

To address the situation and restore balance to public finances, the 2003-2004 Budget Speech presents major turnaround measures, such as:

• tighter spending by $1.5 billion—for example, a $793-million reduction in program spending compared with March 11, the absorption of $354 million in overruns that had not been included by the former administration in its total spending, and the cancellation of all initiatives, representing $400 million, provided for in the March 11 Budget;
• $1.5 billion in revenue measures—$800 million in cuts to tax expenditures targeting businesses and $700 million from government corporations;
• utilization, as of this year, of the total additional health funding received from the federal government. The $800-million reserve that was to have been created out of these amounts will therefore not be created.

“Despite the tough measures we are taking now to eliminate the budgetary shortfall in 2003 2004, there will still be a substantial shortfall next year. But the objective is clear: a zero deficit will be maintained next year and every year thereafter,” announced Mr. Séguin.

In addition to bringing the problem of the budgetary shortfall to light, the 2003-2004 Budget Speech clarifies important points concerning the Québec government’s growing debt. “On the basis of capital expenditures and the investments committed, the debt should total $111.5 billion at the end of the year. If we do not reverse that trend, the debt could exceed $115 billion as at March 31, 2005. We intend to do everything possible to halt that growth,” indicated the Minister.

Greater transparency in public finances

The necessary reorganization of public finances, which is being undertaken in the Budget tabled today, will be carried out with the utmost transparency. “Quebecers are entitled to demand that we be clear and transparent about our financial position and the measures we will have to take to improve it. And we will be,” assured the Minister.

Pre-budget consultations will be broadened and systematized. The Minister of Finance pledged to publish, every fall, a consultation paper presenting the fiscal environment, components of revenue and expenditure forecasts and the principal issues relative to public finances. “I want everyone who wishes to express his or her opinion to be able to do so in an appropriate forum throughout Québec. I will announce the terms and conditions of the consultation at the end of September,” stated the Finance Minister.

Moreover, with regard to accountability, Mr. Séguin promised to release government financial statements certified by the Auditor General within six months following the end of the fiscal year, as of 2003-2004.

As concerns the inclusion of the financial results of the health and education sectors in those of the government, Mr. Séguin affirmed his intention of implementing, as of the next Budget, the required mechanisms regarding the management of these sectors and the oversight of their operations. In the meantime, the financial information on these sectors will be published as a note in the government’s financial statements.

Making decisions now to secure our future

“Our government pledged to all Quebecers that it would champion a new vision of the future. A vision of the future that leads us today to rethink the workings of government. We have to adopt new procedures, better suited to the 21st century, that will enable us to rise to the challenges facing us,” declared Mr. Séguin.

“The exercise in which I am asking Quebecers to participate is not merely one of balancing the books. We must go further and ask ourselves whether the money we collect from taxpayers is used soundly, and in an efficient, transparent manner. To that end, we must adapt the State so that it is able to fulfil our ambitions. We must retarget its actions towards its essential missions. Rather than asking what the State can do for us, we should ask ourselves what we can do without it,” concluded Mr. Séguin.

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