Canada: Quebec 2018 Fall Economic Update

On December 3, 2018, Quebec's Minister of Finance Eric Girard, under the newly elected Coalition Avenir Quebec government, provided a fall economic update geared at putting money back in the pockets of Quebec families and seniors, as well as harmonizing recent federal measures aimed at encouraging acceleration of business investment, (through increased capital cost allowance rates) and continuing efforts to fight climate change.

"Today, we are starting to deliver on our promises to families and seniors. My government is not going to disregard Quebecers' financial means. The new government is going to strike a balance between services and Quebecers' financial means, particularly those of families and seniors. This economic update contains measures to spur business investment and create well-paid jobs, but our first steps, our first financial decisions, are aimed at helping families and seniors."

François Legault, Premier of Quebec

"This fall update is providing the government with an opportunity to take it first actions. We had promised to move quickly to put money back in the pockets of families and seniors in Quebec and we're doing so today through a number of concrete actions. In the coming months and years, we will continue to ensure that the Quebec economy is one of the top-performing economies in Canada and North America and to offer Quebecers top-quality public services. The measures announced today for businesses will allow them to boost their investments and improve their productivity so that they can rise to the constant challenge of remaining competitive."

Eric Girard, Minister of Finance of Quebec

(Excerpts from the economic update speeches presented by the Premier and his Minister of Finance)

Further Support for families and seniors

In response to its commitment to improve financial support for families and seniors, the new government is implementing measures that will give them back $1.7 billion over the next five years:

  • Introduction of a family allowance, a measure that is more generous than the former child assistance payment for families with more than one child; 
  • This will raise the maximum amount for the second and third children by $500 a year as of January 2019; 
  • Freeze on the additional contribution for subsidized childcare starting in 2019 to give families even more breathing room until this additional contribution is completely eliminated in the next budget;
  • Introduction, in 2018, of an amount to support low-income seniors aged 70 or over.

Acceleration of business investment

Actions totaling $1.6 billion over five years are also being announced to encourage acceleration of business investment so as to help businesses boost their productivity, in line with federal government actions:

  • Increase to 100%, as of the first year, in the depreciation rate applicable in respect of computer hardware, manufacturing and processing equipment, clean energy generation equipment and intellectual property;
  • Introduction of an enhanced depreciation in respect of all other types of investment.

To make Quebec the best place to invest in Canada, the government has also taken the following steps: 

  • Introduction of a permanent additional capital cost allowance of 30% for certain types of investments; extension of electricity discount programs for major industrial customers and for greenhouses, and broadening these programs to include large businesses served by off-grid systems.

 Continuing efforts to fight climate change

In addition, the government is reiterating its commitment to continue the fight against climate change by encouraging the acquisition of green vehicles and funding rebate programs for the purchase or leasing of new or used electric vehicles until March 31, 2019. At the same time, the government is announcing that it will study the means that should be taken to optimize this measure.

Acceleration of debt repayment

Through the Update on Quebec's Economic and Financial Situation, the government intends to use, by spring 2019, an unprecedented amount of $8 billion from the Generations Fund to repay borrowings on financial markets. This sum is in addition to the $2 billion already paid at the beginning of fiscal 2018-2019. This is a very important step toward ensuring intergenerational equity, an issue of major concern to the new government.

This acceleration of debt repayment will generate interest savings of $332 million over five years. In total, over the same period, debt repayment will free up $1.4 billion that can be used to fund public services.

The government is also confirming that the debt reduction objective set forth in the Act to reduce the debt and establish the Generations Fund is being met. This objective, which is to reduce the gross debt burden to 45% of GDP by 2025-2026, will be achieved as of 2020-2021, or five years earlier than planned.

Information is current to December 7, 2018.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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