Quebec austerity, what's the issue? Consensus-building in a divisive time.
08:09 Anonymous 0 Comments Category : Canadian
In recent weeks Quebec has seen a surge in civil unrest—a sign that our democracy is healthy, sort of. For the most part, this revolves around the Quebec government’s, formed by the Quebec Liberal Party’s (QLP), 2015-2016 budget. The alleged austerity measures has caused a raucous: student expulsions and suspensions, protests with ensuing police brutality, coercive student boycotts, threats from the Minister of Education, François Blais, and a rowdy occupation… This doesn’t even address the budget itself.
What’s the matter?
With respect to the actual budget, critics claim the budget and those who shape it (namely Finance Minister Carlos Leitão and President of the Treasury Martin Coiteux) suffer from presentism: a fixation on current-day problems followed by short-term planning while disregarding long-term effects. They argue this violates the rights of future citizens.
In addition to this, this "fast-track" to lowering Quebec’s debt will supposedly cripple many vital services, not to mention it has the potential to damage Quebec’s economy—according to Pierre Fortin, professor of economics at UQAM and columnist at L’actualité. For example, the budget is cutting $40 million dollars from the budget of cegeps. For Vanier this represents a cut of $1.133 million in its spending. Vanier’s Board of Directors officially opposes the cuts for fear it won’t be able to provide first-rate education, but plans on cooperating.
In an attempt to understand the conflict, this author read through twenty-somewhat articles, french and english, from more than a dozen different sources (newspapers, textbooks, blog-pages, the CBC, etc), and one thing is abundantly clear: public discourse has derailed from its main course of discussion, that is, how the government should be raising and spending revenues. What’s more, misinformation and lack of understanding seem to be spreading—which digs an even deeper ditch for us to climb out of.
Not everyone’s an economist, so before getting into the government’s budget, let’s go into how this even works (click here for a reference).
Fiscal policy and public debt
What’s important about this? Well, every year when governments (municipal, provincial and federal) organize their services and operations, they must first look at how to finance this with a budget. In short, fiscal policy refers to how government raises money (taxes) and how it spends this income. This can be put into a simple equation:
Budget=Taxes-Spending
This brings us to differentiating "deficit" and "debt". It’s important to highlight this difference because these terms are being swapped like bartered goods in a pre-modern market.
Deficit: When, in a given year, the government spends more than it is able to raise. When this happens the public debt grows. It’s important to note that government may deliberately do this to breath new life into an economy or to save it from collapse (for example after the ’08 recession).
Debt: The amount of money a government owes by dint of accumulated deficits. What’s key to remember is this results from years and years of not being able to meet expenses—it grows with the economy and the more this grows, the heavier the burden we leave to future generations. Notwithstanding, it is completely normal for a government to hold debt: as it needs to borrow money, private companies in the financial sector take advantage of the investment opportunity by "buying" parts of the debt with interest. If this gets too big, government risks paying huge sums in interest to lenders—this is why we have to keep our debt to a minimum.
Finally, we’re left with looking at the two financial directions a government can take: "austerity" and "expansionary". These too, are important to clarify, since they seem to be a source of confusion.
Austerity policy: When government either increases taxes or decreases spending with the objective of avoiding deficit (which we saw contributes to public debt).
Expansionary policy: When a government lowers taxes or increases spending. The bottom-line in this case is to boost a weakened economy, as we’ve experienced in ’08.
Quebec’s finances, getting into it
First and foremost, it’s misleading to simply cite Quebec’s debt as a matter of numbers. Reason being this debt is supported by an economy, whose strength is measured through gross domestic product, or GDP. When we do this, we get a ratio: debt as a percentage of GDP. The debt-GDP indicator let’s us see how our debt is growing compared to our economy (see graph for Quebec’s record in the past 40 years).
You’ll notice that our current situation isn’t even the direst to date. In the mid ‘90s, the debt-GDP ratio climbed to 61%, compared to today’s near 55% (54.9% specifically). Therefore, if we compare the government’s action at the time, led by the Parti Québécois, with those of today’s government, it’s clear the proposed measures aren’t the most austere we’ve seen. However this comparison doesn’t justify the proposed measures; it puts them into perspective.
We could analyze the specific cuts in programs and social services anticipated in the proposed budget, but the fundamental problem rests with how the government chooses to achieve the set goal of reaching a 45% ratio by 2026—as prescribed by law in the Act to reduce the debt and establish the Generations Fund (see section 1.6 on Debt Reduction in the submitted budget). As Pierre Fortin outlines, the current route would lower the ratio to 50% by 2019, reaching the halfway mark four years into the eleven-year stretch we have to meet the goal. In other words, the proposed austerity measures are needed to some degree, but are being implemented more quickly than needed. It can be argued this is done in view of the 2018 elections—getting ahead to look fiscally responsible for campaign time.
Political motives aside, Pierre Fortin, a former president of the Société canadienne-française de science économique (SCSE) and of the Canadian Economics Association (CEA), cautions that the proposed cuts could plunge the province into recession—promptly removing nearly $4 billion from an economy is likely to have damaging effects. As mentioned above, a weakened economy would require government to take on "expansionary policies" (see above)—an irony of government’s intentions and ensuing results.
Prejudices aside, please
In the final analysis, in Quebec we have the bitter-sweet tendency to become uproarious when it comes to our politics. On the one hand, we carefully watch our opponents’ moves, and, on the other hand, we forget we’re working together in building Quebec society; we may not choose the citizens we live with, but at some point, we have to put prejudices and feuds aside for the sake of civic life.
Gabriel Nadeau-Dubois, a student-activist largely present in the 2012 Maple Spring, put into question the reigning attitudes media have regarding police violence aimed at student-protesters. Similarly, David Gray-Donald wrote for Media Co-op on how English media are downplaying resistance efforts in Quebec. Fair enough. However, when Gray-Donald argues the anti-austerity movement is going strong, he writes "police came onto […] UQAM, and arrested people for enforcing strike mandates voted on at general assemblies." Let’s put aside the fact that those—whether they were all students is uncertain—who "enforced" the strike mandate were masked and intimidating classrooms in-session, and question whether such a mandate truly embodies the will of students given the means needed for implementation. Let’s not pretend that some student associations and resistance groups don’t carry with them an antigovernment bias, or act in purely peaceful manners. A cause isn’t worthy because it’s fought for; it’s worthiness is based on the injustice it seeks to set right and the just means used to this end.
Having said that, we shouldn’t be stigmatizing students for taking on a cause—civic engagement is something to be moulded, not scolded. Likewise, we shouldn’t be stereotyping all militant students into a single, unchangeable category; some groups are respectful in their efforts. For example, l’association pour une solidarité syndicale étudiante (ASSÉ) organized an exemplary mass protest April 2.
In his final letter to Canadians in 2011, Quebecer Jack Layton echoed the very remedy needed in Quebec at this time; a wish he hoped would guide Canadians at times of dispute, that, ultimately, "we can be a better, fairer, more equal country by working together. Don’t let them tell you it can’t be done." No one enjoys seeing protests go awry; no one enjoys seeing their country in a divisive state. Lest we forget this divisiveness emerged out of conflict over public finances, not out of mutual hatred.
May 1st, a date to look out for
Multiple groups on protest: https://grevecontrelausterite.wordpress.com/mandats-de-greve/
Suggested readings
- On the QLP’s broken electoral promises (in french): http://plus.lapresse.ca/screens/e6b635c7-bf6a-4062-8119-610d4131b648%7C.QXq4qnuuLTQ.html
- For short video explaining Pierre Fortin’s analysis (in french): http://www.lactualite.com/actualites/politique/les-3-questions-a-se-poser-au-sujet-de-la-dette-du-quebec/
- For the most recently submitted copy of the 2015-2016 budget: http://www.budget.finances.gouv.qc.ca/budget/2015-2016/en/documents/BudgetPlan.pdf
- For a copy of the 1999-2000 budget (for comparison purposes): http://www.budget.finances.gouv.qc.ca/budget/1999-2000/fr/PDF/plan-fr.pdf
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