The Quebec Government: An End of Term Review

Quebec government earns an overall grade of D+

Contact:

Michel Boucher, Professeur de science économique
École nationale d’administration publique, Telephone: (418) 657-2485

Release Date: 20 October 1998

Sainte-Foy, Quebec>>> The Fraser Institute today released an extensive review of the economic and social policies of the Quebec government. The central finding of this report card, Evaluation de la Performance du Gouvernement du Parti Québécois, 1994–1998, is that the government of Quebec has attempted the fiscal restraint of provinces such as Ontario and Alberta. In this role it has been remarkably successful. Not only has it kept tax increases in check, but it has also managed to cut spending in three of its four years in power.

However, a deeper analysis reveals that the Quebec government’s fiscal reforms are without sound administrative foundations. The government is cutting its services to citizens, even when those services provide more benefit than cost. By inhibiting competition and continuing to over-regulate, the government has not fundamentally addressed the problems of Quebec’s business climate. As the report's author, Michel Boucher, professor of economics at the École nationale d’administration publique in Sainte-Foy, explains, "instead of innovating to find ways of bringing us more value for our tax dollar, the Quebec government has gone about business as usual."

"The Parti Québécois government is walking a fine line between controlling the deficit and protecting the provincial government's size and power."

Lack of innovation shows up in health care in the form of resistance to both contracting out and the introduction of market-type incentive mechanisms. Health policy has focused on forcing people out of hospitals after operations as quickly as possible. Further savings were not reinvested in health as the government promised, but used for deficit reduction. Rather than applying proven cost-saving methods that could have reduced health costs by as much as 30% while maintaining services, the government has forced citizens to accept lower levels of service in order to fight the deficit. "Creativity in administration is at a low ebb," says Boucher.

Lack of an innovative spirit is also evident in education. Instead of decentralizing and giving parents greater choice in how their children are educated, the government has expanded into kindergarten and is forcing private daycare centres out of business. In addition, the government has not raised university tuition fees, nor has it done anything to sensitize university students to the true costs of an education. As a result, university education continues to be supported by a subsidy from the poor to the rich.

Labour policy persists in creating unemployment. The government has raised the minimum wage (proven to lead to less job creation), done nothing to lessen the strength of the unions, imposed a needless job training tax on businesses, and pursued pay equity schemes that have further eliminated jobs. To make up for the jobs it has destroyed, the government has launched job creation subsidies, and job training programs, as well as undertaken an ambitious program of loan guarantees to small business known as the "Plan Paillé." A survey of such programs gives evidence that they are of dubious value at best. Quebec, however, does not seem any more misguided than other provinces in this domain.

The government seems to be a victim of the well-established provincial tradition of propping up unprofitable industries, which in turn stifles competition. The government’s failure to consider a major reform of Hydro Quebec is troubling, but some minor privatizations are a sign of hope. On the other hand, the province has interfered with market forces by attempting to regulate book and gasoline prices, suppress smoking, and restrict trade in agricultural commodities (in direct violation of international and inter-provincial trade treaties).

The government’s failure to significantly ease regulatory burdens gives the province a reputation of hostility to competition it can ill afford, especially should it choose to separate and expose itself to the buffets of international markets without the protection of Ottawa's transfer payments.

Quebec's policy on municipalities also strikes a blow against efficiency and competition. Instead of following the growing North American trend toward decentralization, the Quebec government has ignored demands by municipalities for greater financial independence and has continued to micro-manage their affairs.

The Quebec government has proved as resistant to change in politics as it is in economics. Instead of allowing its citizens the right of initiative (rights that governments in Ontario, BC, and Manitoba are nurturing) the government has jealously guarded its monopoly on setting questions on independence, and has tried to quell citizens' abilities to express themselves freely during elections.

The overall grade this report gives to the Quebec government is D+. As Professor Boucher explains, "in spite of the harsh assessments made in some sections of the report card we have to acknowledge that the Parti Quebecois has faced some formidable obstacles to reform. It inherited a large debt, one of the most hostile tax and regulatory environments to business in North America, and faced a militant unionized sector. The government also faces a problem of fiscal anesthesia. The tab for poor management of the province is picked up in part by other Canadian provinces through equalization payments. This has blunted any incentives ordinary Quebeckers have to send the government the message that reforms must be undertaken."

The D+ grade signifies that the government is walking a fine line. It has paid attention to fiscal reforms and has resisted some union demands, and for this it must be lauded. But it still has a long way to go. The government would have obtained a grade of C or B had it shown at least some willingness at least to innovate in order to provide its citizens with better quality service. There are vague glimmerings of such a spirit, but there has been no substantial government actions that enable us to conclude that the government is definitely on the right track.

The Fraser Institute is an independent economic think tank. The Institute has an annual program of economic evaluations of federal and provincial governments. In the past ten years, the Institute has released report cards on the Alberta, British Columbia and Ontario provincial governments, as well as the previous conservative, and current liberal, federal governments. A new report card on the province of British Columbia is scheduled for release the end of October 1998.

Established in 1974, The Fraser Institute is an independent public policy organization based in Vancouver.

For further information:

Suzanne Walters, Director of Communications,

The Fraser Institute, (604) 714-4582,
Email suzannew@fraserinstitute.ca

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