Quebec business leaders call on PQ government to water down economic policies

MONTREAL--Quebec's business leaders called on the new minority Parti Quebecois government Wednesday to water down some of its election promises they say most threaten the province's economic development.

Increased regulations and higher taxation will create an environment that is less attractive for investment that help create wealth and jobs, said the head of the Quebec Employers Council.

"Every time you increase threats to economic development in Quebec you reduce the possibility for the population to improve their quality of life and most importantly to reduce the economic context for future generations because of the high, high debt we have in Quebec," Yves-Thomas Dorval said in an interview.

The leader of the powerful business lobby wants to meet as quickly as possible with incoming premier Pauline Marois and the leaders of the opposition parties to get reassurances that they will collectively seek "to maintain winning economic conditions in Quebec."

Changing its economic proposals won't paralyze the government from tackling other important challenges, but it could ensure that investment doesn't go to other more supportive jurisdictions, Dorval added.

Quebec doesn't have the necessary financial flexibility to fund all the electoral promises, especially if projected revenues don't materialize amid an economic slowdown, he said.

The group said it supports the party's proposals to improve the education system, modernize public transit and balance the provincial budget. But its members are deeply worried about PQ pledges concerning regulations, public finances and the imposition of higher taxes on the wealthy.

The council is particularly concerned that proposed changes to language law Bill 101 would extend provisions of the French language Charter and increase operating costs for smaller companies.

Dorval pointed particularly to cancellation of increases in tuition fees and electricity rates, abolition of the health premium and higher taxes and natural resources royalties.

The council also disagreed with strengthening of anti-replacement worker legislation.

But Marois said Wednesday that she plans to proceed with several key planks in her election platform either by cabinet decree or by legislation.

These include eliminating tuition fee increases, launching a $10-billion fund for the Caisse de depot to support Quebec businesses, eliminating the health premium and preventing the elimination of corporate head offices such as Rona (TSX:RON) if it is sold to U.S. rival Lowe's.

She also vowed to proceed with changes to Bill 101.

Marois conceded that some proposals will be easier to adopt than others, pointing specifically to potential challenges in hiking natural resources royalties.

"We have many programs which are not exactly similar but not too far from the other parties," she said during a news conference the day after her historic victory.

"I will present my project, we will have discussions and I will adopt what it is possible for me to adopt and the population of Quebec will be able to judge if it's a good position or not."

The Quebec Manufacturers and Exporters Association called Marois' comments part of the negotiating strategy with opposition parties.

President Simon Prevost said the weak minority government is probably the best of the available options for the business community because it will prevent the Parti Quebecois from adopting big changes.

But it also creates a period of instability and potential paralysis over the 18- to 24-month expected life of the government.

"There are a lot of challenges for Quebec. We can't afford to lose two years of fighting at the National Assembly without resolving important files for Quebec," he said.

Prevost said the government can strengthen the economy by supporting the manufacturing sector. He cautioned the PQ not to force the Caisse to use depositors' money to support Quebec companies and said it would be hypocritical to prevent corporate takeovers by foreigners when so many local firms want to grow through international expansions.

The Montreal Board of Trade said the new government must adopt concrete plans to strengthen the province's largest city as the economic engine of Quebec.

President Michel Leblanc welcomed the PQ's commitment to appoint a minister responsible for Montreal and invest in public transit.

But he said other proposals that would "overtax Quebec companies" trouble the business community and would harm their competitiveness in North America.

Quebec voters elected 54 PQ members, shy of the 63 seats required to form a majority in the legislature. The Liberals elected 50 members, while the Coalition Avenir Quebec obtained 19 seats and left-wing Quebec Solidaire elected two members.

The results had a muted impact on the value of the Canadian dollar or markets since polls had long predicted a PQ win.

The loonie was lower ahead of the EBC announcement and Canadian jobs data which also comes out on Friday, falling 0.52 of a cent lower at 100.92 cents US.

Meanwhile, Dorval saluted Jean Charest's nine years in power as he announced his resignation as Liberal leader.

"Nobody is irreplaceable but he will be missed because he had always the reflex to listen to the business community and he had clearly in his platform the objective to improve the economy."