Philippe Couillard risks making the same mistakes as Charest

Quebec, said the incoming premier, is at a crossroads. While the French language and culture have never been stronger, Quebec itself is larded with bureaucracy and mired in red ink. Extricating Quebec society from debtor’s prison, the premier said, would take tough decisions from the government and a hardy pull of the collective bootstraps by Quebecers themselves.

State interventionism must be staunched; entrepreneurs, encouraged. Bureaucracy must be culled, productivity increased, and spending curbed. The sacred cow of an all-present state must be slayed once and for all. “Given Quebec’s financial situation, such a revision is urgent,” thundered the premier. Clapping and cheering soon erupted from the government backbench.

They might have been Philippe Couillard’s own words—but they weren’t. Though the newly minted Quebec Premier issued a similarly dire take on Quebec’s public finances during his inaugural address this month, those are Jean Charest’s first bons mots, when he was sworn in as premier in 2003.

And yet Couillard made the same diagnoses of the need for budget cuts and economic stimulus in large part because Charest’s promised “re-engineering of the state” failed to materialize. Amid howls of neo-liberalism and the destruction of the Quebec model, hurled at the then-new premier by various unions and Quebec’s restive sovereignist movement, Charest relented.

His ensuing decade-long legacy as premier speaks for itself: though he promised to downsize Quebec’s bureaucracy, the province’s public sector actually grew by 2.3 per cent, according to Statistics Canada data, which further noted that government spending as a factor of GDP increased by roughly four percentage points between 2003 and 2009. Though it was a hallmark of his inaugural address, “re-engineering of the state” became so verboten that Charest apparently told his treasury board president, Monique Jérôme-Forget, to cease using the term in public.

Politicians make promises all the time, and break them almost as frequently. Still, the rather alarming rate at which Charest dismissed large swaths of his keynote post-election platform—and because the problems he outlined have only worsened 10 years on—it begs an answer to the question: will Philippe Couillard do the same?

Couillard enters into the governmental fray at a similarly precipitous time as his Liberal predecessor 11 years ago. Both men came to power on the cusp of a global economic resurgence—though in Couillard’s case the size and longevity of the resurgence seems less assured. In 2003 Quebec had one of the oldest populations in the country. Not surprisingly, the problem has gotten worse: as a recent report commissioned by the Couillard government noted, 2014 marks the first year in Quebec’s history in which there will be a net reduction in the number of people between the ages of 15 and 64.

This report, co-authored by economists Luc Godbout and Claude Montmarquette, puts numbers to the statement in Couillard’s own inaugural address that “what was necessary 15 years ago has become an emergency.” The decrease in productivity wrought by this aging population will mean an economic growth rate of 1.8 per cent a year between 2014 and 2018, while simply maintaining existing programs will vastly outpace this.

At the same time, Quebec’s many aging bodies will avail themselves of the province’s public health system at a much greater rate. “If the health ministry maintains its current growth rate, it will represent 77 per cent of the province’s budget in 2030,” economist Pierre Fortin notes. That’s not the most shocking number.

Arguably the starkest figure of all in the report is the debt, which is nearly $200 billion. Servicing it, Godbout and Montmarquette say, costs Quebec $10.8 billion a year—more than the yearly budget of the education ministry. The two economists say the debt must be reduced to 45 per cent of GDP by 2025-26. (It is currently at roughly 54 per cent.) Doing so, Fortin wryly notes, means cutting spending, raising taxes or “getting on your knees and begging Ottawa for help.”

Couillard has pledged not to raise taxes, and he won’t likely break out the kneepads anytime soon; he notably didn’t blame Ottawa for Quebec’s shortcomings in his inaugural speech. He has also studiously avoided the term “austerity,” claiming it too negative. But those within his government say Couillard won’t shy away from cuts to government spending.

In Finance Minister Carlos Leitao, Couillard has recruited one of the world’s best economists, according to a 2008 Bloomberg News economic survey. And Couillard’s choice for treasury board president is telling: Martin Coiteux is a professor and former senior economist with the Bank of Canada, and one of the more outspoken critics of Quebec’s all-encompassing government.

The nebbish yet punchy academic is also an unlikely lightning rod for many on the left. Parti Québécois MNA Jean-François Lisée recently labelled him a “neo-conservative” who will foist American (or, gasp, Canadian) economic principles on the province. Coiteux is arguably an odd fit for the Liberals, the very party that birthed the interventionist “Quebec model” in the 1960s. He is more in the vein of Coalition Avenir Québec leader François Legault, whose right-of-centre party has criticized Quebec’s high taxes and low productivity.

Still, the treasury office has already dulled the edges of the long-time economic polemicist, it seems. “We have the right to have different programs and priorities in Quebec,” Coiteux tells Maclean’s. “The gap between what they cost and what we can afford must be eliminated, but it doesn’t mean we have to have the same programs as Ontario or Alberta.”

The Quebec model he has often critiqued is here to stay, in other words. Yet under Couillard it will become leaner and less expensive, Coiteux says. The government has set up two commissions to oversee the streamlining. The first will attempt to alter Quebec’s model of taxation to “encourage work, effort, investment and job creation,” as Couillard said. The premier didn’t elaborate on how the commission would be up to this task.

The second commission will be permanent, and charged with the constant evaluation of Quebec’s existing public services. Programs may be eliminated outright. “I wouldn’t comment on errors if there have been any,” Coiteux says of the Charest government. “I won’t blame anybody. The only thing is that many people have been disappointed with the absence of durable results. One major difference between 2003 and the way we will be conducting ourselves is the existence of those two commissions. It is a commitment that will ensure overall reform.”

Apart from saying that “there are no sacred cows” when it comes to the cuts, Coiteux is short on details as to where, exactly, the cuts will happen. Couillard has instituted a public sector hiring freeze in advance of the budget, expected in early June. Godbout and Montmarquette suggested a partial privatization of Hydro-Québec and the province’s liquor board, two of Quebec’s more stubborn sacred cows. For CAQ Leader Legault, the government’s further success depends entirely on how much room Coiteux is given. “I know him. He understands the problems of public finances. The question is, will Leitao and Couillard have the same courage as Coiteux?”

At the outset of its mandate, the Couillard government has a couple of advantages over Charest’s lot in 2003. The province’s union movement, then loud and persuasive, has been tarnished by corruption allegations emanating from the inquiry into the province’s construction industry. For months, Quebecers heard tales of union leaders intimidating company managers and rival unions, and/or cavorting with construction company magnates and known Mafia types. Clearly, organized labour has not been well served by its leadership.

Though the PQ is the government’s official Opposition, it is without a permanent leader, and in the face of its trouncing in the last election, it is now in the midst of what promises to be yet another very long questioning of its very existence. Meanwhile, Legault has given his conditional support to Liberal cost-cutting measures. “We’ll judge the tree by its fruit,” he says.

Pierre Fortin isn’t entirely optimistic—if only because he’s heard many government cost-cutting pledges over the years. And yet, he says, the status quo has only become larger and more expensive. “I hope he doesn’t make the same mistakes, but I fear he will. I wish Couillard all the hope in the world, because it’s going to be difficult.”