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economy

This is getting buried in the news cycle. But it’s actually a pretty big deal, and a sign that Quebec’s economy is in its best shape since before the ’95 referendum:

U.S. bond rating agency S&P Global has boosted Quebec’s credit rating to AA- – helping the province surpass neighbouring Ontario for the first time.

The agency says over the next couple of years it expects Quebec to keep its budget in the black and its debt ratios in decline thanks to strict cost controls, growing tax revenues and prudent fiscal policies.

Quebec Finance Minister Carlos Leitao tells The Canadian Press his province hasn’t reached this level with S&P, which was formally known as Standard and Poor’s, since 1993.

A little bit of political stability can go a long way, it seems.

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Carlos Leitao reveals budget updateQuebec Finance Minister Carlos Leitao announced Quebec’s budget update today, setting off what is sure to be a continuing series of protests against the cuts, austerity measures and fee increases. The Liberal government claims that this sort of painful pruning is necessary in order to rein in Quebec’s out-of-control finances and balance the budget. The opposition and those affected, of course, will claim otherwise.

But, cutting through the slogans and rhetoric, what does this update actually contain? The details are still pending, of course, but at first glance it reads to me as surprisingly… balanced.

The good

For one thing, the rich and corporations are being asked to shoulder the lion’s share of the cuts. This is far from a conservative approach. The budget includes such measures as suspended bonuses to senior executives, reduction in tax credits to large corporations, and added taxes on financial institutions, insurance companies and oil companies. Small and medium business, meanwhile, are getting some tax breaks.

Even the much-decried increase in daycare fees is largely limited to households making over $75,000 per year, and even that is an increase from $7 to $8. Most families will see an increase of only 30 cents per day, to $7.30. The only families who will pay the $20/day maximum are those with household incomes of $155,000 and above. The current system was very tough on lower income families stuck on long waiting lists — sometimes for years — for a $7/day spot. The updated pricing will be more expensive for wealthier families, to be sure, and might drive more of them to the private system, but this would mean the coveted public system spots will be more available to the people who need them most. Again, hardly Attila the Hun policy.

The budget update also contains a number of environmental measures, including registration fee increases for large vehicles, insurance fee premium increases for drivers, added taxes on fuel at the pump, and several green energy and anti-climate change initiatives.

The not-so-good

Yes, the general population will shoulder some of the burden, too. The most contentious austerity measures aim to trim back public sector pensions, which arguably needs to be done, but the government’s heavy-handed approach here is backfiring. Someone who has worked in a public sector job for their entire career on the promise of a certain pension should not be told, now that they’re close to retirement, that they won’t be getting what was promised. There simply isn’t enough time for them to go back in time and save more money. In addition, the MNAs had to be shamed into scaling back their own ridiculous pensions — something that should’ve been a no-brainer in “austerity” times. They did it, but kicking and screaming. However, on the whole, the private sector can’t afford to indefinitely shoulder the burden of such high public pensions, especially when the taxpayers supporting them largely have no pensions and insufficient retirement savings themselves.

The politically questionable

To make matters worse, the government has picked a fight with unions by reducing the tax credits for union dues. This will cost union members a mere $70 or $80 each on average per year, but the unions are powerful foes and are already angry about Bill 3. The last election saw many unionists break with the PQ in anger over Pierre-Karl Peladeau, the Charter of Values and a whole host of other things. But the unions and the PQ are traditional allies, and the small amount of savings that the Liberals will get from this tax credit scaleback (estimated at about $112 million per year) probably isn’t worth the political cost of driving them back together.

The bottom line

On the whole, this budget update reads refreshingly Liberal by Canadian standards, though perhaps not by Quebec ones. It’s not a Tory reward-the-rich-and-oil-companies-at-the-expense-of-everyone-else budget.

But the actual provisions may end up mattering very little when compared to the visceral opposition to the A-word: Austerity. A lot of people are angry.

The Liberals have little choice but to do their deepest cutting early on in their mandate, hoping that by the time the next election rolls around in four years, there will be enough of a recovery to shower the population with pre-election gifts. But in the meantime, it may not be pretty.

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“I’m too rich: Tax me more, please!”

12.06.2011

That’s the theory behind this site: We are the 1 percent. It contains manifestos of a bunch of people who claim to be part of the American super-rich, but who feel that it’s unfair that they aren’t taxed their fair share. Now, admittedly, this concept might be better if more of the people in the […]

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By the numbers: Canada’s debt load

08.02.2011

As the eyes of the world have been on our American neighbours and their efforts to make a deal childish grandstanding and petty squabbling to avert a default on the national debt, it’s understandable that many of us Canadians have been feeling pretty smug. After all, we may have problems, but not problems to the […]

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Musings on the US-Canada price gap

04.17.2011

A new BMO report suggests that on average, Canadians pay about 20% more for the same goods and services as our American neighbours do — even though the loonie is above par: BMO’s survey compared 11 items, including golf balls, Blu-ray movies, running shoes and cars. There is no denying Canada is smaller and that […]

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Back to the polls we go

03.30.2011

High-ho, high-ho, it’s election time again in Canada. And it sure does feel an awful lot like 2008: 4 out of 5 of the party leaders are unchanged. Only Iggy is new this time around, though his post-election political days are probably as numbered as Stephane Dion’s were. The party positions and platforms are largely […]

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Best quote ever

12.14.2010

A coworker, on hearing the recommendation of the Senate Finance Committee to finally, finally get rid of the penny: “We have a Senate that actually does something?”

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UK to eliminate cheques

12.16.2009

Cheque’s in the mail? Not after 2018 in the UK, it seems: Cheques will disappear within eight years after the Payments Council decided today to abolish the 350-year-old payment method by October 2018. [. . . ] The decision will save banks hundreds of millions of pounds a year, as each cheque costs banks about […]

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Loonie hits 81 cents

10.25.2004

Friday, the loonie closed at a 12-year high of over 81 cents. Might be a good time for a cross-border shopping trip…

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Interview with Netanyahu

05.06.2003

The Jerusalem Post has an interesting interview with Benjamin Netanyahu, currently Israel’s Finance Minister, about his plan to reverse the disastrous trends in the Israeli economy. Israel with a right-wing economic policy, focusing on lowering taxes, paying down the deficit, and privatization and decentralization? This should be interesting indeed.

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