Executive Summary

The first conclusion taken from our appraisal is that the government of the Parti québécois wanted to transfer to Quebec the same policy of deficit reduction existing in Ontario and Alberta. The government’s attempt was relatively successful but there remain some worries. Not only has it exercised a certain control over the rises in taxes, it also was successful at reducing public expenses. However, a more in-depth analysis reveals that reforms undertaken by the government of the Parti québécois have no sound administrative foundations, and cannot ensure long-term success. The government reduces services for Canadians without amending its way of operating. Instead of adopting innovative ways to produce more with each dollar taken, the present government has behaved the same way as previous administrations have done. Thus the grade of B–.

This lack of innovation is particularly obvious when one considers health care, where one observes an insurmountable resistance to subcontracting and to the introduction of incentive mechanisms similar to those present in the market. Health care industries are happy with reducing hospitalization time after surgery but the savings thus realized are not reinvested in health care as the Parti québécois government had promised. Those savings are reallocated to the reduction of the deficit. In other words, the citizens must bear the burden of a public health system where management is lacking as they are forced to accept inferior levels of care. The Parti québécois government took the opportunity to unload upon the private sector—that is, to those who contribute to a private system—an important portion of the actual costs of the new public system of drug insurance. The 1.2 million Quebecers who were not previously taking advantage of a private drug insurance system force third parties to pay the lion’s share of the costs. An insurance plan where costs are not totally paid by the insured is a sure way for increasing abuse and health hazards. Thus the grade of D.

The obvious absence of a spirit of innovation exists also in education. Rather than favouring decentralization and an increase of choice for parent, the government of the Parti québécois chose to involve itself in the kindergarten. By subsidizing only non-profit child-care centres, it displaces private child-care centres from the market. It maintains the freeze on fees for post-secondary education, and does not make university students aware of the actual costs of their training. Financing university education remains a regressive formula as transfers are made at the expense of low-income families and in favour of high-revenue families. Finally, we can only congratulate the Parti québécois government for resisting the pressure put on it by the teachers union to cancel the annual examinations taken by 10 and 11 graders. The results of those examinations allow parents to compare quality among different schools. Thus the grade of C–.

The employment policy continues to create unemployment. The government increased minimum wages, which is a known destroyer of employment, in 1997 and 1998. It does nothing to restrain the power of the unions’ monopoly. It imposes on enterprises a tax on training while working, which is useless. It is also promulgating a pay-equity act, which, in the end, will have the effect of compressing employment in the target group. Thus the grade of F.

The government of the Parti québécois compensates for the jobs it has destroyed with subsidy programs for creating jobs and for on-the-job training programs. It also undertakes an ambitious program of loan guarantees to small enterprises, better known as the Paillé Plan. Analysis of that kind of program indicates that they are, at best, of doubtful quality. Unfortunately the Parti québécois government is no different from other provincial governments in this regard. Thus the grade of C– for industrial policies.

Wherever you look, it seems that the government’s measures are prisoners of previous Quebecer tradition of supporting non-profitable industries and stifling competition. The Parti québécois government’s refusal to consider Hydro-Quebec’s reform is a source of great disappointment. Some minor initiatives of privatization leave some hope for progress. Thus the grade of C– for its policy of privatization.

The inability of the government of the Parti québécois to lighten the regulatory encumbrances imposes upon the Quebec economy an additional burden that producers already have trouble bearing. This hinders Quebec’s competitiveness, that can only become worse if Quebec chooses separation. In fact, the Parti québécois government follows actively a policy of narrowing market forces by regulating books and gas prices, restricting unduly the use of tobacco, and stifling the trade in agricultural products in flagrant violation of international treaties and agreements on domestic trade. Thus, the grade of D– for regulations policy.

The Parti québécois government also limits effectiveness and competition by its decisions imposed on municipalities. Rather than following the North American tendency in favour of decentralization, the present government pays no attention to the municipalities’ agitation for greater independence, and continues to interfere with their operations. Thus the grade of D for municipal policy.

The Parti québécois government has constantly resisted changes, both in the political and in the economic arenas of Quebec. Rather than giving citizens the right to propose an initiative for popular vote, it keeps jealously to itself the right to formulate the questions about Quebec’s independence. Thus the grade of F.

The general grade that we give the Parti québécois government is D+. In spite of the observations, commentaries, and harsh criticisms that we have expressed about the Parti québécois’ performance, we are conscious that it was facing great challenges in its attempt to stabilize public finances. It inherited a heavy debt, a fiscal program and a regulations environment that were among the most hostile to business in North America, and it had to deal with heavily unionized sectors. The Parti québécois also faces the problem of fiscal amnesia. Part of the tab that results from the poor management of the Quebec government is assumed by the other Canadian provinces because of transfer payments. This diminishes the incentive that Quebec citizens would normally have to demand reforms in depth. It has undertaken to reform the fiscal program, and has opposed unreasonable demands made by union monopolies.

The grade of D+ suggests the Parti québécois government acts like a tightrope walker. It can be successful, and it can miss dramatically. The stabilization of public finances is just beginning, and the obstacles to surmount are still numerous, before long-term success will be achieved. The government of the Parti québécois could have received the grade of B if it had shown a genuine will to innovate in order to offer better services to the citizens. There exist here and there hazy shows of good will, but there are no basic initiatives that would justify the conclusion that the Parti québécois government is on the right track.

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Last Modified: Wednesday, October 20, 1999.