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QUEBEC — The Quebec government is wielding a heavier hand in the province’s economy, forcing every business with more than five people to institute employee retirement savings programs and grabbing higher equity stakes in mining and hydrocarbon projects.
The language the Liberal government of Jean Charest used in its budget presented Tuesday suggests it is keen to push forward with oil and gas exploration and commercialization despite public opposition, saying it is “risky” to postpone the development of natural resources. It said it would start awarding oil and gas exploration licences by way of auction.
It also emphasized its vision of developing Quebec’s northern territory to generate much-needed revenue. The government announced that Canadian National Railway Co. and the Caisse de dépôt et placement du Québec are partnering on a new 800-kilometre rail line worth several billion dollars between the port of Sept-Îles and the Labrador Trough mining site. And it said Valener Inc.owned utility Gaz Métro will study the feasibility of building an estimated $750-million natural-gas pipeline to the Côte-Nord region.
The measures unveiled are among the major steps the government is taking as it maintained its pledge to restore budget balance by 2013-2014. With them, lawmakers are responding to pleas that Quebecers are not saving enough and trying to deflect criticism that it is giving away its vast mineral and oil and gas assets without demanding enough in return.
“In this year’s budget, we are putting in place the tools to increase our wealth and maintain our quality of life,” Raymond Bachand, Quebec’s Minister of Finance, said in his budget speech to the provincial legislature.
Among the most controversial measures the government is taking is mandating what it calls “voluntary retirement savings plans” for every business employing five or more workers. Although other countries such as New Zealand have put similar systems in place, this is a first for a Canadian province.
Companies that now do not offer a pension plan will be required to put one in place by Jan. 1, 2015. Eligible workers will be enrolled automatically but can opt out. Employers will not be required to contribute to the plans, which will be administered by third-party financial institutions – a potential income boon for money managers. Employee contributions will trigger tax deductions much like RRSPs.
Some two million people who don’t currently have access to a group pension plan will get one, the government says. It calls the measure an “easier” way for workers to save on their own because doing so “requires a lot of discipline.”
The Canadian Federation of Independent Business (CFIB) calls it a potential administrative shock for smaller companies, which represent fully 50% of gross domestic product. It says it would have preferred if the government took stronger measures to correct the inequity between public-and private-sector systems and relieve the fiscal pressure on all Quebec taxpayers.
“Offering more vehicles for people to try to save money for their retirement is a good thing,” said Martine Hébert, CFIB’s Quebec vice-president. “But making it mandatory? No. This could turn it into a nightmare for some businesses.”
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