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Plus ça change, plus c’est la meme chose. Once again, the Quebec government is championing government intervention as the cure for the province’s economic malaise.
On Tuesday, provincial finance minister Raymond Bachand presented the province’s 2012-13 budget. After digging Quebecers into a deep financial hole — a whopping $184-billion debt, representing 55% of provincial GDP — the government is promising to dig a few more, in the form of multi-billion dollar mining projects, in which it will take an equity stake. Mr. Bachand credits former Quebec premier Jacques Parizeau with the idea: “It comes down to what Mr. Parizeau said … we have to make sure we get a share of the business.”
The mining proposals form part of Premier Jean Charest’s “Plan Nord,” an ambitious northern-development proposal that brings back memories of the massive Hydro Quebec developments at James Bay in the 1970’s. To help develop the north and exploit the province’s abundant mineral resources, the government is setting-up Resources Québec, a new Crown corporation that will oversee a $1.2-billion equity portfolio. And assuming commodity prices remain high, the government expects to collect $4-billion in mining royalties over the next 10 years.
But mining isn’t the only sector getting attention — and cash — in this provincial budget: So are forestry, tourism and agribusiness, indeed, any industry located in parts of Quebec where the Liberals are currently trailing in the polls. For example, the government is creating a “Fonds Valorisation Bois,” or a “Fund to value wood,” which will spend $95-million of taxpayers’ money to encourage forestry companies to invest in projects with “high added value.” And in this one, the public partner is a union: The solidarity fund of the Federation des Travailleurs du Quebec will kick in $75-million for the project.
This kind of collaboration between labour, government and private enterprise is a hallmark of European economies, most of which are performing dismally at the moment. It also smells like an attempt by Mr. Charest to bring labour interests into the Liberal tent and away from their traditional political home, the Parti Québécois. Most worrisome, however, is that it represents a further entrenchment of the “the Quebec model,” where the government’s very visible hand dips eagerly into the workings of private enterprise.
For the rest of this column, please go to the National Post website: http://fullcomment.nationalpost.com/2012/03/21/tasha-kheiriddin-quebecs-new-budget-is-business-as-usual/#more-71932