1998-1999 BUDGET:
ENCOURAGE $19 BILLION IN PRIVATE INVESTMENT OVER FIVE YEARS
"Investment by businesses is a decisive component of job creation, competitiveness and the standard of living. The strategy that I have just submitted rightly singles out investment as a key priority for intervention.
For this reason, the Budget I am presenting today makes provision for a series of new tools to increase investment in Québec."
— Bernard Landry
(Québec City, March 31, 1998)—In the Budget Speech that he presented today, Deputy Prime Minister and Minister of State for the Economy and Finance Bernard Landry announced a vigorous action plan aimed at encouraging $19 billion in private investment over the next five years.
A REVITALIZED SGF WILL GENERATE $10 BILLION
IN PRIVATE INVESTMENT
Without affecting spending or the deficit, the government will allocate $400 million a year for five years to a revitalized SGF to enable the agency to collaborate, in partnership with the private sector, in some 125 projects in at least 10 sectors of the Québec economy: metals and minerals, chemicals, petrochemicals and plastics, forest products, transportation equipment, machinery, health, technology, agri-food, recreational tourism, and industrial logistics.
These projects should engender private investment on the order of $10 billion and create 75 000 jobs over the next five years. The projects will be carried out on a business basis. The SGF will never hold a majority or permanent stake. Its initiatives will focus on the instigation and monitoring of new projects.
The SGF is contemplating a wide array of strategies geared to modernization. Among other things, it will emphasize the development of technologies in local research centres, the industrialization of biotechnology, the structuring of an industrial semi-conductor assembly line, the development of world-class tourist attractions, and the consolidation of the petrochemical industry in the east end of Montréal. An appendix to this press release presents the list of strategies and niches.
In order to enhance the cohesiveness and synergy of the initiatives of government corporations, SOQUEM, SOQUIA, SOQUIP and REXFOR will be consolidated with the SGF in a single consortium, while preserving their identities. The consortium is suited to more open markets where big businesses have growth potential.
$7.1 BILLION EARMARKED FOR INVESTISSEMENT-QUÉBEC
The government will establish Investissement-Québec, whose sole purpose it will be to promote additional investment in Québec. The agency will act as a single government information outlet for investors seeking government support. It will have access to $500 million under the Private Investment and Job Creation Promotion Fund (PIJCPF) to encourage $5 billion in private-sector investment over the next five years.
Investissement-Québec will be mandated to promptly present local and foreign investors with a comprehensive offer from the government. In particular, the agency will provide an offer adapted to the investor’s specific needs from the standpoint of financial assistance, worker training assistance or specific information on potential sites and other strategic information. Such an offer will show the potential investor that it is decidedly in its interests to invest in Québec.
Assistance may take the form of loan guarantees, interest payments, job subsidies and tax credits.
Garantie-Québec, a subsidiary of Investissement-Québec dedicated to financing SMBs, will encourage $1.3 billion in private investment over five years. The main types of assistance include loan guarantees, export credit margins and the financing of tax credits.
EMPLOI-QUÉBEC
Over the next five years, Emploi-Québec will allocate $40 million a year to worker training in conjunction with investment projects. This funding should generate projects worth $800 million.
Requests for training assistance will be submitted to the Commission des partenaires du marché du travail, which will establish Emploi-Québec’s contribution in light of the impact on employment of the proposed investment.
INNOVATECH CORPORATIONS TO GENERATE $1.6 BILLION
IN INVESTMENT
The Innovatech corporations will be converted into capital-stock companies. They will have at their disposal $250 million to invest in job-creation projects. This funding should enable them to carry out investment projects worth up to $1.3 billion over the next five years. Through minority interests, they will support the start-up of technology-based enterprises.
In order to broaden the presence of the Innovatech corporations in the regions, a fourth corporation dedicated to the resource regions will be set up. It will have an initial budget of $50 million, which will enable it to invest in projects totalling $250 million.
SODEC BETTER EQUIPPED TO SUPPORT THE CULTURAL INDUSTRIES
The Société de développement des entreprises culturelles (SODEC) will be better equipped to support the cultural industries and will be allowed to make use of financial instruments such as debentures. Moreover, it will be authorized to purchase minority interests in cultural enterprises and dissemination projects.
SODEC will receive $20 million to engage in projects with the private sector, totalling as much as $30 million.
Moreover, the agency will support high-risk newly established enterprises, in particular in sectors such as multimedia, software and cultural applications of the information technologies.
Through its investments in dissemination projects, SODEC will be in a position to invest in the lucrative worldwide market for large-scale productions.
MANDATE OF THE SDBJ BROADENED
Under its incorporating act, the Société de développement de la Baie James (SDBJ) is confined to investments in the natural resource sector. Its mandate will be broadened to more efficiently satisfy the needs of the James Bay territory.
The SDBJ will be restructured to enable it to participate jointly with the private sector in economic diversification projects.
The government will allocate funds so that the SDBJ can invest in the capital stock of enterprises that could carry out $40 million in private investment.
The SDBJ’s initiatives must conform to the same principles governing other government investment corporations, i.e. the investment must be profitable and the SDBJ must be a minority shareholder.
$250 MILLION FOR MINING AND ENERGY
Development of the mining industry
Some $18 million over three years will be allocated to support the development of the mining industry, which should facilitate a number of investment projects that could amount to over $200 million. In particular, these projects focus on studies and work related to the development and operation of mineral deposits.
Extension of the natural gas distribution system
Measures will be introduced to support investment projects of up to $50 million aimed at extending the natural gas distribution system to serve customers in the Saint-Hyacinthe, Coaticook, Outaouais and Québec City regions who do not yet have access to natural gas.
ENCOURAGE $19 BILLION IN PRIVATE INVESTMENT OVER FIVE YEARS
| Measure | Method | Private investment (in $M) |
Total cost to government over two years | |
| Revitalized SGF | • Creation of more consortia with the private sector • Minority interest; patient capital; government outlay: $2MM • Pro-active approach to project development (prospecting, financial engineering, establishment and follow-up) • 10 target sectors: metals and minerals, transportation equipment, recreational tourism, agri-food industry, forest products, health, chemicals, technology, machinery, industrial logistics |
10 000 | - | 1 |
| Innovatech and other government corporations | • Accelerating the start-up of technological SMBs • Minority interest • Creation of Innovatech Régions ressources • SODEC: creation of SODEC financière in cooperation with the private sector; financing of projects to distribute large-scale cultural productions on the world market • SDBJ: promote economic diversity |
1 650 | - | 1 |
| Investissement-Québec | • Package for investors • Prospecting for foreign investments • 5-year extension of PIJCPF for projects that are worth over $10M or create at least 100 jobs, and projects worth over $2M that create at least 50 jobs in the multimedia sector, call centres or the mining sector • Types of assistance: payment of interest, subsidy per job created, loan guarantees • Main sectors: metallurgy, chemicals, forest products, tourism and technology |
5 000 | 902 | |
| Garantie-Québec | • Loan guarantee for SMB investment projects • Credit line for exports • Financing of tax credits |
1 300 | 29 | |
| Emploi-Québec | • Manpower training assistance | 800 | 643 | |
| Mining and energy | • Assistance for studies and work in the mining industry • Extension of the natural gas distribution network |
250 | 20 | |
| Total | 19 000 | 203 | ||
1 Return higher than the cost of government funding.
2 Expenditure for the first two years in respect of commitments totalling $200 million.
Overall commitments total $500 million and should be spent over a period of more than 10
years.
3 Already provided for in the appropriations of the ministère de l’Emploi et de la
Solidarité.
STRATEGIES AND NICHES IN THE SOCIÉTÉ GÉNÉRALE DE FINANCEMENT INVESTMENT PLAN
| Sector | Strategies | Niches |
| Metals and minerals | • Foster acceleration of the shift to the secondary processing of
light metals, particularly aluminum and magnesium; • Encourage the development of new technological capabilities. |
• Primary and secondary aluminum and magnesium; • Possible intervention with respect to silicon, ferrosilicon, lithium, titanium and stainless steel; • Glass industry: • containers • treated glass • fibre glass. |
| Chemicals, petrochemicals and plastics | • Consolidate petrochemical operations in the east end of Montréal;
• Encourage the subsidiaries of foreign chemical firms to obtain North American mandates; • Facilitate the consolidation of the plastics processing industry. |
• Petrochemical products: phenol, phenolic resins (bisphenol,
polycarbonate), aromatics, polypropylene carbon monoxide and dioxide and hydrogen; • Chemical products: fine chemistry (pharmaceuticals), chemistry for electronics, electrochemistry and animal pharmaceuticals; • Plastics processing: recycling, products with added value for specialized sectors (health, electronics, transportation). |
| Forest products | • Development with international partners of an equipment
manufacturing sector; • Introduction of international partners in the wood processing sector; • Execution and financing of international projects in partnership with engineering firms; • Manufacturing of specialized chemical products (biomass inputs or derivatives). |
• Forestry equipment, wood processing, manufacture of coated papers. |
| Transportation equipment | • Aeronautics: encourage the grouping of subcontractors, attract
foreign firms, encourage projects relying on innovative technologies; • Ground transportation: promote aluminum/magnesium parts, strengthen the network of subcontractors, support projects using innovative technologies. |
• Aeronautics: helicopters, subcontracting; • Ground transportation: electric car motor, urban monorail. |
| Machinery | • Develop partnerships with foreign companies; • Develop financing adapted to the needs of companies that are often SMBs; • Promote the establishment of a marketing/ser-vice/training/machinery assembly centre; • Use as anchor points the key sectors that use machinery. |
• Electrical and automation products: electric industrial motors,
industrial fans, excavation, packaging, wind generators; • Machine tools/machinery for sheet metal and bagging. |
| Health | • Develop technologies produced by local research centres; • Participate in the industrialization of biotechnology; • Carry out fermentation projects; • Set up a company to market medical equipment. |
• Emerging technologies: high-speed screening, combinatorial
chemistry, functional geonomy; • Production of active ingredients (biopharmaceuticals, albumin, nutraceuticals, enzymes, peptides, nucleotides); • Formulation and manufacture of pharmaceuticals; • Telemedicine (with electronics and software). |
STRATEGIES AND NICHES IN THE SOCIÉTÉ GÉNÉRALE DE FINANCEMENT INVESTMENT PLAN (CONTINUED) |
||
| Sector | Strategies | Niches |
| Technology | • Information technologies: initiatives geared to flourishing
sectors, i.e. manufacture and development of software and content; • Semi-conductors: put into production in Québec all facets of an industrial assembly line, from raw materials to semi-finished products and including design. |
• Information technologies: • telecommunications: wireless communications, satellites, multipoint multimedia networks; • computer equipment: specialized terminals, multimedia equipment, smart cards; • instrumentation/production automation; optics and programmable automatic control systems; • specialized applications software: teleconferencing, medical imaging, telemessage, telemedicine, remote sensing, electronic trade; • multimedia and information highway: integrated video/audio/data interfaces. • Semi-conductors: • polycrystalline silicon and wafers; • conception and design ; • manufacture of semi-conductors; • photomasks and other chemical products; • optoelectronics and display screens. |
| Agri-food | • Promote niches that are complementary to human health; • Create a major industrial hub in the Saint-Hyacinthe area; • Develop manufacturing operations under international mandates with multinational firms. |
• Milk proteins, nutraceuticals, enzymes, vaccines (animal health); • Freezing and packaging of products transiting through ports and airports; • Regional mandates. |
| Recreational tourism | • Encourage the realization of major projects; • Rely on synergy with other sectors, especially the new information technologies, to develop specific niches in Québec. |
• Urban tourism: development of one or more major attractions; • Tourism "in the great outdoors": development of attractions along a "blue tourist route"; • International year-round hospitality industry. |
| Industrial logistics | • Help position Québec as an industrial logistics centre for the northeastern part of North America by investing in the development of world-class commercial infrastructures and the creation of major expertise groups. | • Creation of a specialized industrial zone in partnership with an
international enterprise; • Construction of distribution centres in collaboration with European companies whose products transit through the Port of Montréal; • Specialized food product operations that use refrigerated trucks to haul perishable foods from the southern United States; • Construction of turnkey distribution centres. |
SOURCE: ANDRÉE CORRIVEAU
COMMUNICATIONS ADVISOR
OFFICE OF THE DEPUTY PRIME MINISTER
TELEPHONE: (418) 643-5270