- Balanced budget for 2013-14.
- Final deficit for fiscal 2011-12: $2.6 billion, $672 million less than projected, as a result of non-use of a $300-million contingency reserve and slower-than-projected execution of infrastructure projects by consolidated entities.
- Deficit for the current year still projected at $1.5 billion (excluding cost of closing Gentilly 2). A revenue shortfall of $195 million due to a weaker-than-budgeted economy is offset by a $100-million reduction of the contingency reserve, by increases in taxes on tobacco and alcohol and by the contribution from financial institutions. In addition, the government is imposing the spending limits budgeted last March despite an estimated $1.1 billion in overruns.
- Compliance with last spring’s budgeted spending limits also applies to the next two fiscal years, implying measures totalling $869 million in 2013-14 and $1.6 billion in 2014-15.
- The health contribution is replaced by a new progressive contribution and a 1.75-percentage-point increase in the tax rate on income exceeding $100,000.
- The contingency reserve is increased $200 million to $400 million in 2013-1114. In subsequent years it will be $500 million.
- Public capital investment reduced by $1.5 billion a year.
- The Generations Fund is maintained but its financing is modified.
- Real GDP growth assumed at 0.9% in 2012, 1.5% in 2013 and 2.2% in 2014.
- Gross debt, estimated at 54.6% of GDP last March 31, is projected to peak at 55.7% at the end of the current fiscal year. The target remains 45% in 2026.
- The borrowing program for the current fiscal year is budgeted at $17.3 billion, including $7.7 billion in refinancing.
- This program has been 54% completed. Borrowing for 2013-14 is budgeted at $15.0 billion, net of a $1-billion draw from the Generations Fund, for a $2.3-billion decrease in the 2013-14 borrowing requirement.
Sticking to the balanced-budget target in 2013-14 is clearly the priority of this budget. Its path to this objective is tight control of spending. Thus the spending objectives budgeted last March are maintained for the next two years despite the large overruns recently disclosed. For next year, three measures totalling $554 million have now been identified to this end, partly offsetting the overrun of $869 million. These measures bear on prescription drug costs ($336 million), on refocusing of the school-board equalization program ($150 million) and on a $68-million reduction in business-support programs (including deferral of the payroll tax rebate to promote employment of workers aged 65 or older).
Additional cuts in budgetary spending in 2013-14 ($100 million) and in 2014-15 ($370 million including $200 million in cuts in public investment) are also budgeted. Hydro-Québec, the SAQ and Loto-Québec are asked to contribute a total of $290 million more in 2013-14. Further gains ($80 million in 2013-14) are expected from efforts to curb tax evasion. But since revenue is running below last spring’s budget, all these measures together will not suffice to balance the books.
To bridge the gap, the budget announces increases in taxes on tobacco and alcohol and in the contribution from financial institutions, increases that are budgeted to bring in $310 million in 2013-14. These combined efforts will fund $68 million in new measures and an increase in the contingency reserve while leaving the budget balanced.
Besides the change in the health contribution, the measures announced today that have a budget effect in the next two years include additional places in subsidized daycare ($10 million in 2014-15, $262 million annually by 2017-18), a tax credit for youth physical, artistic and cultural activities ($7 million in 2013-14), an increase in the tax credit for salaries in biopharmaceutical R&D and transitional funding for the new National Research and Innovation Policy.
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