1998-1999 BUDGET:
- EMPLOYMENT AND YOUNG PEOPLE A PRIORITY
- NO TAX INCREASES
- 80% OF ZERO-DEFICIT TARGET ACHIEVED
(Québec City, March 31, 1998)—Deputy Prime Minister and Minister of State for the Economy and Finance Bernard Landry today presented his 1998-1999 Budget. "This Budget," the Minister noted, "pursues our objective of eliminating the deficit on schedule. It also proposes an economic development strategy that focuses on Québec’s prosperity and job creation. It announces the first measures inspired by the strategy, notably tax relief for businesses, initiatives to foster the success of young people, and a plan to boost private investment in Québec by $19 billion."
DEFICIT TARGETS ACHIEVED
Despite nearly $2 billion in expenses engendered by the ice storm, and massive cuts in federal transfers since 1994, the government has stuck with its 1997-1998 Budget and will achieve its 1998-1999 deficit reduction target without raising taxes. "Sound economic performance has enabled us to do better than anticipated," the Deputy Prime Minister emphasized.
THE FIRST CURRENT ACCOUNT SURPLUS
IN 20 YEARS
Already this year, the Québec government will register a small current account surplus. "For the first time in 20 years, we will no longer borrow to pay ‘the grocery bill’. We are already in a position to say to Québec young people that we have stopped placing on their shoulders the burden of our collective consumption today. We are turning an important page in the economic and social history of Québec", Mr. Landry noted.
UPDATING OF ACCOUNTING POLICIES IN RESPONSE TO
THE AUDITOR GENERAL’S RECOMMENDATIONS
The Québec government has agreed to the Auditor General’s advice to undertake a major reform of its accounting policies. This reform, which takes effect immediately, puts Québec at the forefront of governments in Canada concerning the application of public sector accounting standards.
The government is updating the accounting policies applied for several years and which were repeatedly criticized by the Auditor General. "Gone are the days of retirement plan commitments that do not appear in the government’s financial statements. Gone are the days of disparate accounting in respect of specific agencies. Gone are the days of criticism and suspicion regarding the proliferation of special funds. Under the new accounting policies, the most rigorous and demanding in Canada, the g overnment is maintaining its $1.2-billion deficit target this year and the elimination of the deficit next year. Whether new standards or old standards apply, we will nonetheless achieve our targets", the Deputy Prime Minister added.
AN ECONOMIC STRATEGY CENTRED ON EMPLOYMENT
During the presentation of the Budget Speech, the Deputy Prime Minister unveiled Objective: Focus on Jobs, the government’s economic strategy, which proposes two priority objectives. First, it seeks to make Québec’s job-creation rate one of the highest in the industrialized world. Second, it will endeavour to rank Québec among the 10 most competitive economies in the world.
Objective: Focus on Jobs outlines the government’s economic strategy and suggests a number of targets. The government hopes that a consensus can be achieved with respect to the targets on which Québec must concentrate its efforts and resources in the coming years. These choices will be decisive since they underscore the priorities that will guide government initiatives once the deficit has been eliminated.
Other papers will be published in the coming months. They will indicate possible courses of action and specific measures designed to stimulate job creation and economic growth in key sectors of the Québec economy.
CONCRETE INITIATIVES
Through the proposals in the 1998-1999 Budget, the objectives of the government’s economic strategy are reflected in a number of concrete initiatives.
— The reform of the corporate taxation system will result in a 37% reduction in the payroll tax paid by small and medium-sized businesses (SMBs). This reform will trim by nearly $300 million the taxes borne by SMBs and will foster job creation.
— A plan has been drawn up to promote $19 billion in private investment over five years, notably by means of the revitalization of the Société générale de financement (SGF) and the establishment of Investissement-Québec.
— Measures have been adopted worth $182 million to encourage young people, especially through the organization of 20 000 internships and the creation of 5 000 new jobs.
— An additional $50 million is being earmarked for the implementation of the family policy and to offer child care services to three-year-olds for $5 a day starting in September.
— An action plan has been adopted to spur development in the financial sector in Québec and, in particular, in Montréal.
— Measures worth $49 million are being introduced to support culture and ensure growth in the cultural industries, notably with respect to multimedia productions, special effects and computer animation.
A BUDGET GEARED TO THE YEAR 2000
Now that the attainment of a zero deficit is clearly within reach, we must start preparing for the future. Objective: Focus on Jobs, the government’s economic strategy, marks a turning point. For years we have sought to reestablish Québec’s financial health. We can now contemplate new perspectives on the eve of the 21st century.
For more than 40 years, Québec has developed various tools and instruments that have enabled it to occupy an enviable position among the modern economies. Our prosperity has allowed us to make choices, establish services and maintain a quality of life to which we are deeply attached. It is precisely in order to preserve this heritage and continue to build a society imbued with our values and which reflects our aspirations that this budget seeks to reestablish Québec's room to manoeuvre and focus on prosperity and employment.
SOURCE: ANDRÉE CORRIVEAU
COMMUNICATIONS ADVISOR
OFFICE OF THE DEPUTY PRIME MINISTER
TELEPHONE: (418) 643-5270