The québec Economic plan - …

1 The qu becEconomicplanMarch 2018 Budget 2018-2019 The Qu bec Economic PlanLegal deposit March 27, 2018 Biblioth que et Archives nationales du Qu becISBN 978-2-550-80931-9 (Print)ISBN 978-2-550-80932-6 (PDF) Gouvernement du Qu bec, 2018 THE QU BEC Economic PLAN Highlights Section A Qu bec s Economic and Fiscal Policy Directions Section B The Qu bec Economic Plan: Introduction Section C The Qu bec Economic Plan: Measures for Individuals and Society Section D The Qu bec Economic Plan: Economic Development Measures Section E The Qu bec Economy: Recent Developments and Outlook for 2018 and 2019 Section F Detailed Financial Framework Section G The Qu bec Government s Debt Section H Update on Federal Transfers I HIGHLIGHTS Highlights .. 1 Qu bec s economy is going full throttle .. 2 Maintenance of a balanced budget .. 3 Education and health funding: commitments have been met .. 5 Additional investments under the March 2018 Qu bec Economic Plan.

2 7 Public capital investments .. 8 Qu bec is on track to achieve its debt reduction objectives .. 9 Highlights 1 HIGHLIGHTS The government has achieved its objectives announced in 2014. Public finances have been balanced since 2015-2016. The recorded surpluses have been reinvested in public services, particularly education and health, and in reducing the tax burden for Quebecers to improve their quality of life. In addition, the weight of Qu bec s debt has decreased and planned investments in public infrastructure have increased. The March 2018 Qu bec Economic Plan provides for the continuation of measures needed to strengthen the funding of public services and support Qu bec s economy. More specifically, the plan provides for: maintenance of a balanced budget; additional funding for education and health services; support for Economic development in all regions; measures to improve Quebecers quality of life; an increase in public capital investments; a $10-billion debt repayment over the next five years, while continuing to make deposits of dedicated revenues in the Generations Fund.

3 CHART 1 Budgetary balance(1) (millions of dollars) (1) Budgetary balance within the meaning of the Balanced Budget Act, after use of the stabilization reserve. 1 600 2 824 7252 1912 361850002012-20132013-20142014-20152015- 20162016-20172017-20182018-20192019-2020 Budget 2018-2019 2 Economic Plan QQUU BBEECC SS EECCOONNOOMMYY IISS GGOOIINNGG FFUULLLL TTHHRROOTTTTLLEE Qu bec s economy is going full throttle. Growth in real gross domestic product (GDP) accelerated from in 2016 to in 2017. Economic activity has not been this strong since 2000. The factors that drove Economic growth in 2017 will remain in place in the coming years. Real GDP is expected to increase by in 2018 and in 2019. Qu bec s sound fiscal position will continue to support consumer and business confidence. Families will benefit from the robust labour market, wage growth and the recent tax cuts by the Qu bec government. Growth in investments, which are seeing a strong resurgence, will be supported by high business-owner confidence in Qu bec s Economic outlook.

4 In addition, exports will be supported by the good Economic performance of Qu bec s major trading partners. CHART 2 Economic growth in Qu bec (real GDP, percentage change) Sources: Institut de la statistique du Qu bec, Statistics Canada and Minist re des Finances du Qu bec. Highlights 3 MMAAIINNTTEENNAANNCCEE OOFF AA BBAALLAANNCCEEDD BBUUDDGGEETT Qu bec s financial framework A balanced budget is forecast for the period covered by the financial framework. In 2018-2019, consolidated revenue is $ billion, with growth of , while consolidated expenditure stands at $ billion, with growth of In 2019-2020, consolidated revenue growth will be and consolidated expenditure growth, In addition, deposits of dedicated revenues in the Generations Fund amount to $ billion in 2018-2019 and $ billion in 2019-2020. The government plans to use $ billion from the stabilization reserve in 2018-2019 and $936 million in 2019-2020.

5 TABLE 1 Consolidated summary financial framework March 2018 (millions of dollars) 2017-2018 2018-2019 2019-2020 Own-source revenue 84 527 85 923 88 595 % change Federal transfers 22 669 23 674 24 764 % change Consolidated revenue 107 196 109 597 113 359 % change Mission expenditures 94 817 99 313 102 066 % change Debt service 9 237 9 380 9 422 % change Consolidated expenditure 104 054 108 693 111 488 % change Contingency reserve 100 SURPLUS 3 142 904 1 771 BALANCED BUDGET ACT Deposits of dedicated revenues in the Generations Fund 2 292 2 491 2 707 Use of the stabilization reserve 1 587 936 BUDGETARY BALANCE (1) 850 (1) Budgetary balance within the meaning of the Balanced Budget Act, after use of the stabilization reserve. Budget 2018-2019 4 Economic Plan Change in expenditure The economy s strong performance as well as sound management of public finances enable further investments in public services, particularly education and health, to improve the quality of life for Quebecers.

6 Mission expenditures grew at an average rate of between 2014-2015 and 2017-2018. The target growth rate for 2018-2019 is For the following years, expenditure growth is determined on the basis of revenue growth. CHART 3 Growth in mission expenditures (per cent) to2017-20182018-20192019-20202020-202120 21-20222022-2023 Highlights 5 EEDDUUCCAATTIIOONN AANNDD HHEEAALLTTHH FFUUNNDDIINNGG:: CCOOMMMMIITTMMEENNTTSS HHAAVVEE BBEEEENN MMEETT The government has made education and health a priority. Education Through the Qu bec Economic Plan, the government has taken a number of significant steps to enhance educational success by, in particular, better supporting children and students. As of September 2018, 3 100 additional professionals will support elementary and secondary school students in their learning paths. Another 1 000 resources will be added to teach and support postsecondary students.

7 In 2021-2022, the education system will have an additional 10 200 professional staff. The government committed to an annual growth rate of for spending on education. The March 2018 Qu bec Economic Plan confirms that the target has been met. For 2018-2019, growth in program spending on education is set at Expenditure amounts to $ billion. That includes additional investments made since 2016, totalling $897 million. Moreover, from 2016-2017 to 2018-2019, spending on education will have increased by , which is percentage points higher than the initial spending target. The spending target will be held at growth for the coming years. CHART 4 Program spending ducation et Enseignement sup rieur (per cent) : 2018-2019 6 Economic Plan Health Through the Qu bec Economic Plan, the government has taken a number of significant steps to improve access to quality services, particularly for vulnerable persons, including seniors and people with an addiction.

8 The government committed to an annual growth rate of for spending on health and social services. The March 2018 Qu bec Economic Plan confirms that the target has been met. In 2018-2019, program spending on health and social services is set to grow by Program spending primarily ensures funding for health institutions and physician compensation. In particular, spending by health institutions has increased by This significant improvement in health services was enabled by the fiscal room freed up by the compensation agreements reached with the medical federations, which will hold growth in the cost of medical services below until 2022-2023. From 2016-2017 to 2018-2019, health spending will have increased at an average rate of and growth will be held at that rate for the coming years. The increase in funding allocated to health and social services institutions will be used, in particular, to implement various measures to support the work of Qu bec nurses.

9 CHART 5 Program spending Sant et Services sociaux (per cent) : Highlights 7 AADDDDIITTIIOONNAALL IINNVVEESSTTMMEENNTTSS UUNNDDEERR TTHHEE MMAARRCCHH 22001188 QQUU BBEECC EECCOONNOOMMIICC PPLLAANN The strong performance of the economy and the improvement in Qu bec s financial position enable the government to make additional investments of $ billion in 2018-2019 and $ billion in 2019-2020 relative to the March 2017 Qu bec Economic Plan. These investments will strengthen funding for public services, spur Economic growth and raise Quebecers standard of living. The March 2018 Qu bec Economic Plan announces, in particular, the following additional investments by 2022-2023: $ billion to foster success in education and higher education; $ billion to improve access to quality health services; $ billion to support Qu bec SMBs, including $259 million in 2018-2019.

10 TABLE 2 Measures in the March 2018 Qu bec Economic Plan difference relative to the March 2017 Qu bec Economic Plan (millions of dollars) 2017-2018- 2018-2019- 2019-2020- 2020-2021- Cumul.(1) 6 year(1) Page ref. Education and higher education 163 204 227 1 181 Health and social services 136 255 603 866 3 575 Tax measures for families and seniors 202 125 92 638 Further measures to support families, seniors and communities 72 203 306 371 2 088 Additional support for Qu bec SMBs 36 259 372 472 2 318 Fostering Economic development in all regions 150 42 68 84 417 Fostering business investment and innovation 136 145 253 230 1 059 Meeting labour market challenges 50 104 147 161 796 Reform of the school tax system 499 679 682 3 220 Other measures 268 178 128 97 809 Subtotal 848 2 050 2 884 3 281 16 100 Measures in the November 2017 update 1 340 1 664 1 767 1 917 10 991 Nov. 2017 TOTAL 2 187 3 714 4 651 5 198 27 091 Note: Totals may not add due to rounding.