QUEBEC CITY — Despite the times, Quebec’s provincial budget is a generally cheery affair. Put to paper on March 4 when oil was still US$46.78 a barrel and COVID-19 had not yet shaken the global economy, it touts Quebec’s “remarkable” growth of 2.8 per cent in 2019 and projects a two per cent growth rate for 2020—allowing the government to secure a $1.9 billion surplus in 2019–2020 and increase expenditures by 5.1 per cent in 2020–2021. “A missed opportunity,” said Renaud Brossard of the Canadian Taxpayers Federation, lamenting the soi disant conservative Coalition Avenir Québec government’s profligate spending.

So strong are Quebec’s finances that the government is confident they will withstand the virulent COVID-19, which has spread to over a hundred countries and killed over 4,000 people. “We are ready. The fundamentals of the economy are strong. Our public finances are in good shape,” said finance minister Eric Girard. 

With unemployment at historic lows, Quebec’s government is relying on increased productivity—which still lags behind Ontario’s—to reach its projected growth rate. “Studies show that approximately 75 per cent of Quebec businesses have low technological readiness,” reads the budget. “C3i,” its new investment and innovation tax credit, will provide nearly $526 million over five years in support of their acquisition of new technology, digital transformation, modernization and automation.

The C3i will also reduce Quebec’s marginal effective tax rate for new investments to an average of 7.7 per cent, nearly half the Canadian rate and far lower than the U.S.’s 19.2 per cent.  

For the technology sector, the government is spending nearly $334 million over six years on research and development. This includes a tax deduction for the commercialization of intellectual property. Quebec-based companies commercializing qualified intellectual property will have an effective tax rate of two per cent on income derived from qualified intellectual property—“the most competitive tax rate in North America,” crows the budget. (The current corporate income tax basic rate in the province is 11.5 per cent.)

Small- and medium-sized businesses trading in artificial intelligence, life sciences, innovative manufacturing, green and information technologies will be able to claim a non-refundable tax credit equivalent to 30 per cent of the value of their investment, for a maximum of $225,000. The government estimates that eligible investments in this sector will total more than $120 million over the next five years.

Quebec’s labour shortage remains a fraught issue, particularly for the current government, which in 2018 campaigned on reducing the number of immigrants allowed into the province by 20 per cent. 

The budget attempts to address the problem with cash: $17.5 million by 2024-2025 for equipment maintenance used in vocational training and adult education; $300 million over five years in “promoting success in higher education and reducing labour shortages”; and an undisclosed amount on “digital technology and automation … to enable businesses to meet the labour shortage challenge.”

Notably, there is no supply-side attempt to address the labour shortage. Immigration “is still a constant balancing act in caucus” a CAQ source told The Logic. “Some of us are okay with it, but there are electoral promises to maintain.”

The budget is notably branded a deep shade of green, with $6.2 billion over the next six years devoted to electrification and the fight against climate change. There is precious little detail as to how this bounty—much of it already budgeted from Quebec’s cap and trade system, and the majority of it shoehorned into the years after the 2022 election, bien sur—will be spent.

The 47-page compendium outlining the government’s environment plan mentions additional investments totalling more than $800 million, earmarked primarily for “cleaner technologies”; exactly what those technologies are goes largely unmentioned. Girard said it will be up to Environment Minister Benoit Charette to make those decisions.