Quebec’s economy is posting record employment and significant growth
THE HEADLINE on an article in the National Post on July 28, 2017 proclaimed: “It’s raining money: Quebec’s economy crawled out of the doghouse. Now, it’s a powerhouse.”
In the last several years, Quebec’s political focus has turned from intergovernmental affairs to the economy. The results are evident. Historically, Quebec’s economic performance has almost always fallen below the Canadian average and that of the most comparable province, Ontario. The Quebec government ran deficits when most others found ways to balance their budgets; GDP growth was low and unemployment higher than average.
Over the last three years, however, Quebec’s unemployment rate has fallen to 5.8 per cent, better than the Canadian average of 6.3 per cent and Ontario’s 6.1 per cent, according to Statistics Canada. The Quebec government is running budget surpluses and, for the first time ever, has a better credit rating than Ontario.
Historically, Quebec’s economy has been based on natural resources and manufacturing—both sectors that are under-performing, the first due to low commodity prices and the second because of globalization and low-cost imports.
Why then is Quebec doing so well? It’s a mix of hard-nosed decisions, economic diversification and a dash of luck.
First, Premier Philippe Couillard not only talked about balancing the books, he did it. The resulting surpluses have been re-invested by the public pension fund administrator, the Caisse de dépôt et placement du Québec (CDPQ). The underlying principle was that as long as returns from the CDPQ were higher than the very low interest rate on borrowed dollars, it made more sense to re-invest than to pay down the debt. The government, in essence, streamlined its services while increasing the amount of money available for investment purposes.
By implementing the economic cluster model in the 1990s, the Quebec government was an early adopter of a successful strategy now used by many. This, combined with a push toward innovation, has placed Montreal among the worldwide leaders in such fields as gaming, artificial intelligence and the green-tech sector. The Quebec government has supported private enterprise efforts to diversify the province’s economy.
Lastly, in the age of growing energy demand and climate change, Quebec made choices that have proven both wise and lucky. The province’s decision in the 1970s to go all in on hydro-electricity and shy away from nuclear or other generating sources has meant a steady flow of cheap and clean energy. When climate change and carbon taxes became an issue, Quebec was poised to reap the extra benefits of a low-carbon energy grid.
With public support for sovereignty at an all-time low, Quebec is open for business and positioned to forge ahead as a team player in the federation.