The Québec Economic Plan - March 2017
The Act to reduce the debt and establish the Generations Fund was passed on June 15, 2006 with the goal of reducing Québec’s debt burden.
The Generations Fund is a fund dedicated exclusively to repaying Québec’s debt.
So as not to leave future generations the burdensome legacy of having to repay the public debt, the debt reduction objectives to be achieved for 2025-2026 have been set in the Act to reduce the debt and establish the Generations Fund.
As at March 31, 2017, the gross debt will stand at 52.7% of GDP and the debt representing accumulated deficits, at 30.1% of GDP.
The debt reduction objectives set forth in the Act to reduce the debt and establish the Generations Fund are as follows:
In order to finance the Generations Fund, we have turned to our most important renewable collective resource: water, Québec’s blue gold.
The Generations Fund is financed by revenue sources dedicated to debt repayment and consisting of, in particular, water-power royalties from Hydro-Québec and private producers of hydro-electricity.
The Generations Fund also receives sums relative to the indexation of the price of heritage electricity, an additional contribution from Hydro-Québec, mining revenues, the specific tax on alcoholic beverages, the liquidation of unclaimed property administered by Revenu Québec, a portion of the proceeds of government asset sales, and gifts, legacies and other contributions received by the Minister of Finance.
The Act also allows the government to order that a part, which it establishes, of any sum that would otherwise have been attributed to the General Fund of the Consolidated Revenue Fund be allocated to the Generations Fund.
Since 2016-2017, additional deposits of $400 million a year, drawn from revenues from the specific tax on alcoholic beverages, have been made in the Generations Fund.
These contributions are in addition to the deposits of $100 million per year provided for in the Act with regard to 2014-2015 and 2015-2016. Thus, $500 million per year drawn from the specific tax on alcoholic beverages has been deposited in the Generations Fund since 2016-2017.
The sums allocated to the Generations Fund are deposited with the Caisse de dépôt et placement du Québec and managed in accordance with an investment policy determined by the Minister of Finance in collaboration with the Caisse. The income thus generated on these investments helps to grow the Generations Fund and pay the debt down more quickly.
The Generations Fund should reach $26.7 billion as at March 31, 2022, taking into account the deposits made since its creation and those forecast for the coming years.
The March 2017 Québec Economic Plan provides for the following deposits in the Generations Fund:
To find out more, please refer to the budget paper entitled The Generations Fund: A Renewed Commitment to Fostering Intergenerational Equity .
To find out more about Québec’s debt.