MONTREAL - The Quebec and Canadian economies are in strong enough shape that new budget stimulus packages aren't needed at this time, Quebec Finance Minister Raymond Bachand said Monday.
"I don't think it's necessary in Quebec and Canada. The economy is still growing and employment is very, very strong in Quebec,'' he told reporters after announcing the launch of a structured finance and derivatives institute at the University of Montreal's business school.
The province provided $15 million of funding over 10 years to the Montreal Structured Finance and Derivates Institute. Partners include the Bank of Montreal (TSX:BMO), Caisse de depot, Desjardins Group, Power Corp. (TSX:POW) and the Montreal Exchange (TSX:TMX).
Bachand said he supports the position of the federal Conservative government, which hasn't categorically ruled out a new stimulus package.
"It's saying it's not the time now and I think they're right because the economy in Quebec is going well. But we have to be very close to the market and be able to adapt.''
Stimulus package paid off: Bachand
The minister, who plans to provide an economic update in a few weeks, said that provincial revenues over the past few months have held up as new jobs were created.
The province's gross domestic product decreased by 0.2 per cent in the second quarter after increasing by 0.8 per cent in the prior three months. While Bachand said he was surprised by the recent GDP numbers, Bachand said he wouldn't be shocked if they aren't revised upwards when the final numbers are calculated.
Bachand said the government is prepared to act if circumstances deteriorate. He said province's first stimulus package paid off because Quebec lost fewer jobs and recovered more quickly than other jurisdictions in Canada and North America.
Some economic observers have openly talked about a double-dip recession, while others have even broached the possibility of a depression because of the impact of European debt problems.
But as finance minister, Bachand said he would never use the word "depression,'' although he acknowledged there's a crisis of confidence in the capacity of governments to stabilize the financial situation.
As was the case in the 2008 recession, he said, financial problems elsewhere can ripple through the Canadian economy and slow growth.
"It is growing but it is growing much slower than we forecasted it would grow so of course it's going to affect Quebec and Canada because 50 per cent of our economy is exported to Canada and the rest of the world.''
Bank of Canada Governor Mark Carney and federal Finance Minister Jim Flaherty said this weekend that they do not expect a recession in Canada, but admitted growth is already much slower than predicted earlier in the year.
If the deterioration occurs, Carney said Canada has the same tools it used in 2008 to keep the economy from tumbling too precipitously.
The Bank of Canada dropped interest rates to virtually zero and injected liquidity into the system to ensure banks continued to lend. Ottawa passed a two-year stimulus program that it estimates, with provincial participation, pumped $60 billion into the economy.
Meanwhile, Bachand said he doesn't foresee Quebecers rising up in anger against the harmonized tax as was the case in British Columbia.
Residents of B.C. and Ontario faced harmonized taxes on products and services that were previously exempt from provincial sales taxes. In Ontario, that included heating oil, electricity, legal fees and hair styling.
Quebec consumers won't see higher prices since provisions of the tax have already applied on goods and services since 1991. Changes to Quebec's system only affects large corporation and financial institutions.
The provincial and federal governments have said they expect to hammer out a deal this week to provide Quebec $2.2 billion compensation for its participation in a harmonized system.
