The provincial government is trimming an additional $600 million, with another 1.1 billion to go before its budget announcement in the spring.

Finance Minister Carlos Leitao said in a news conference to present the mini-budget Tuesday that the economy is growing, but it remains fragile.

Most importantly, the government said it is on track to reach a zero deficit, but will still need to make cuts. Seeking a balanced budget by 2015-2016 has been a priority of the Liberal government.

The government said it has now revealed about 85 per cent of its cutback plans, with another $1.1 billion to be announced before the spring budget.

Government revenues are up and expenses are down for first time in three years, Leitao explained.

"We pledged to reduce the weight of spending in the economy to a tolerable level for taxpayers," Leitao said. "And we are taking the action necessary to do so."

The government is planning to hike some fees and cut tax credits. Among those:

  • $338 million will be raised by cutting tax credits that were destined for banks, insurance companies and research centres; $316 of that will come from banks
  • A tax credit on union dues will be reduced, bringing in $112 million
  • Car insurance is up $20/year
  • Car registration fees may also go up

Leitao said this mixed bag shows the government is on track, because the province needs to prove stability and credibility.

“It is important, it is crucial that we reach a balanced budget so that we can maintain our credibility, and so we can maintain the financial stability of the province. All the other measures that we take to promote economic growth will be for nothing if we are not able to reassure markets, to reassure citizens,” he said.

In last spring’s budget, the Liberals said that without strict cost-cutting, Quebec's deficit would have reached $7.3 billion by 2015-16.

Quebec will not hike taxes for individuals, but will impose another $600 million in increases elsewhere, as well as fees in many areas, including a green tax on gas equal to about two cents per litre, the proposed daycare hikes, and car insurance rates.

PQ critic Nicholas Marceau said the government’s plan is poor.

“I think it’s bad news because Quebecers will have to put their hands in their pockets to pay, but it’s also bad news because this will slow down the economy,” he said. “The economy is not going well right now. The numbers in today’s update are confirmation that the economy has slowed down.”
 

Business community sees positives

The business community sees some positives in Tuesday's announcements, including initiatives to create jobs.

The community had fears businesses would be hurt with new measures, but say they are pleased.

The government will be increasing the tax credits for the film and TV industry, and at a time when the dollar is relatively low, that will certainly bolster that industry.

There was also a fear the government would reduce tax credits to the multimedia and gaming industry, where a lot of high-paying jobs would be at risk, but that didn’t occur.

Possibly the best news for bigger businesses is the announcement of new tax credits for research and development in the manufacturing sector.

“I think it’s good news. I think it’s reassuring news that the government is on schedule to balance the budget, that its revenues are there and that it’s clarifying the fiscal and financial playing field so that investment can take place,” said Michel Leblanc, president of the Montreal Board of Trade. “Companies don’t like lack of predictability, they don’t like uncertainty, and I think that budget clarifies the fiscal situation for the next two years.”

Protests against cuts

The action the government has taken so far has not gone down well with everyone, particularly unions and other groups feeling the brunt of the cuts.

Quebec has been beset recently by street protests, with demonstrators demanding the government reverse its cost-cutting measures.

The most recent was last Saturday when thousands of people gathered to denounce the government's decision to hike daycare fees and cut civil service jobs.
 

With files from The Canadian Press