Press release No. 4
2005-2006 Budget Speech
Disciplined management to maintain a balanced budget
“To encourage wealth creation and stay the course of our priorities, it is crucial that we continue to exercise fiscal discipline and maintain a balanced budget.”
— Michel Audet
Québec, April 21, 2005 – In delivering his 2005-2006 Budget Speech before the National Assembly, Finance Minister Michel Audet identified the issues regarding Québec’s public finances, saying that: “When we took power, Québec's public finances were in a lamentable state. The previous government affirmed a zero deficit. It was not at all the case.”
Faced with this heavy burden, in June 2003 the new government concentrated on making up a budgetary shortfall of several billion dollars and, in last year's budget, took a first step toward putting $1 billion back into the pockets of taxpayers, especially families, and kept its commitment to fight poverty.
“Throughout the past year, our government made strict fiscal discipline a rule, enabling us to meet, to the dollar, the spending objective set in the last budget,” said the Minister, congratulating his Cabinet colleagues and, in particular, the Chair of the Conseil du trésor, for “having accomplished that feat.” As a result, the Minister announced that the government succeeded in achieving a balanced budget in 2004-2005.
2005-2006: Disciplined management to maintain a balanced budget
The Minister also highlighted the challenges facing the Québec economy in 2005-2006, in part due to the rapidly changing global competitive environment. Mr. Audet mentioned that the external sector, long the engine of Québec's economic growth, now poses major challenges.
In addition to the heavy burden left by the former government, which the current government now has to shoulder, the Finance Minister said that he had to take into account the pressure on Québec’s public finances stemming from the fiscal imbalance, the government’s pay equity obligations and the negotiation of collective agreements in the public and parapublic sectors.
“In 2005-2006, we are going to continue on the same path: that of disciplined, responsible management of government spending,” stated Mr. Audet, adding that the government will achieve a balanced budget again this year and that the objective for program spending growth, which was increased to 3.6%, will enable the government to, among other things, achieve its goals regarding pay equity and renewal of the collective agreements of government employees.
The Minister went on to say that: “We are also going to continue our efforts to modernize government, thereby enabling us not only to save money and meet our spending growth target—and thus achieve a zero deficit—but also to provide more efficient, better-quality public services to Quebecers.”
2006-2007: Maintenance of fiscal discipline
The Minister estimates that the government will have to make up a budgetary shortfall of $800 million in order to achieve a zero deficit in 2006-2007.
“I can assure you that we will do everything to make up that shortfall without sacrificing the quality of our services. Balancing the budget is and will remain an inescapable obligation,” affirmed the Minister.
Mr. Audet also said that he intends to reduce the debt load. “The total government debt now stands at 44% of GDP. We will see to it that, by maintaining a balanced budget through tight spending control, that percentage falls to below 40% by the end of this decade.”
Restoring balance and equity within the Canadian federation
Lastly, the Minister of Finance pointed out that to maintain a balanced budget while preserving public services, the Québec government must not only impose strict fiscal discipline, but it must also have at its disposal the financial resources necessary to assume its responsibilities.
Even though Québec made substantial gains last fall when the federal government agreed to considerably increase its funding for health services, the Minister considers that there are still major problems regarding equalization and the funding of post-secondary education and other social programs.
“Clearly, the federal government has the necessary manoeuvring room to correct the fiscal imbalance and restore equity within the Canadian federation,” the Minister said in closing, adding that there will be just as much ground to cover in regard to federal-provincial relations in 2005 as in 2004 and that he is ready to take up the challenge.
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