$1.7 BILLION IN TAX CUTS
Through its political campaign and in other ways, the APTS has been developing innovative proposals to make sure that the government plan to reform the health and social service system actually leads to its consolidation and the preservation of its public and universal character, while improving the working conditions of the people it employs. The government, however, has chosen a completely different path. The budget tabled on March 21 establishes the following priorities: cutting taxes, reducing targets for paying off government debt, and accelerating the proposed reform.
A key measure in this budget is the fact that it carries out the promise of tax cuts made by Premier Legault during the last election campaign. It’s an old recipe, borrowed by the CAQ from previous governments: when you have some leeway, use it to distribute tax handouts instead of providing more funding for services to Quebecers. More than $4.1 billion can be said to have been scattered to the winds in this way over the past five years if we count both the tax cuts in this budget and $2.3 billion in reduced school taxes.
So the government has chosen once again to reduce its financial leeway, and in addition, it is choosing not to help the people most affected by the rising cost of living. Thirty-five percent of Quebecers pay no income tax because their income is so low. Nor do these Quebecers generally benefit from reduced school taxes since almost all of them are tenants.
The tax cuts in the 2023-2024 budget will dig a $1.7 billion hole in Québec’s finances, and their benefits will chiefly be experienced by a small number of people. Not only will more affluent taxpayers receive twice the benefits of middle-income taxpayers, but the top 8% in terms of wealth will corner 25% of the money in the pool.
FISCAL CONSERVATISM WINS AGAIN
The budget also embodies a second priority, which is to protect the conservative budgetary framework that governs the Québec state. This is a choice that we find hard to understand. If there’s one thing the pandemic has shown us, it’s that investments in health and social services are crucial and must not be sacrificed on the altar of short-sighted budget objectives. This is especially true at a time when key indicators confirm the soundness of public finances, as shown in Figure 1.
The first thing this figure tells us is that the government has reached, and even surpassed, its initial objectives in terms of reducing public debt. The latter currently represents about 40% of Québec’s gross domestic product (GDP), which means that we’re already ahead of the 2026 target by 5%. In addition, the real cost of the debt is also going down, even though the Bank of Canada has raised its policy interest rate. At 6.6% of consolidated revenue, debt service is at an all-time low.
This would be an excellent opportunity for the government to change its perspective. Instead of viewing health and social service expenditures as a simple accounting entry, it could see them as investments providing our society with valuable returns.
But the government is going in the opposite direction as it lowers its debt reduction targets, putting Québec back in a position where it has to meet creditors’ demands before it can respond to Quebecers’ needs.
HEALTH AND SOCIAL SERVICE ANNOUNCEMENTS
So this budget, overall, is unsatisfactory and does not bode well for the future. Still, does it bring any good news in terms of health and social services? Well… no. Over the next five years, it provides for a cumulative increase of $5.6 billion in health and social service spending. The lion’s share of this, $1.4 billion, will consolidate the new approach developed for vaccination and screening and extend it to other frontline services. The idea is to make the vaccination centres set up to fight COVID-19 into permanent service points.
Other major announcements are related to mental health, for which the budget will increase by $211 million, and home care and residential care programs, which will receive an additional $1.6 billion. Approximately $770 million will also be dedicated to structural changes and making the system more “efficient”. Of this amount, close to $400 million will be used to create 23 new clinics organized around specialized nurse practitioners (SNPs) who will provide front-line services, while $46 million will serve to establish the “Votre santé” platform that will make it easier to schedule appointments and support the development of telemedicine. Finally, a special $60 million budget will be allocated, this year and next year, to set up the new Santé Québec agency.
For three years now, the APTS has been suggesting a new way of thinking about funding for the health and social service system. If we created a budgetary shield that would protect the system by making it illegal to reduce its funding, we could genuinely prepare the ground for a wide-ranging reform.
At a time when it’s announcing tax cuts and reduced targets for paying off the public debt, and an economic slowdown is looming on the horizon, the government is missing the opportunity to provide the health and social service system with long-term protection. Next year, in fact, it is already planning to revert to a way of functioning where spending on health and social services will lag behind rising system costs. This budget, unfortunately, is bringing us closer to the return of austerity in health and social services.