Quebec's Economy: It's Just An Illusion

L'Illusion Tranquille (The Quiet lllusion) is a Quebec documentary I've been meaning to watch since it came out in 2006. I've resisted for fear of getting indigestion.

What follows are some excerpts discussing the film at The Canadian Encyclopedia:

Not a moment too soon. Even a cursory glance at decades of data shows Quebec is in deep, deep trouble. For years now, productivity has lagged while debt soared. It is expected to hit $127 billion by the end of next year, or almost $17,000 for every Quebecer. Provincial budgets rely heavily on federal transfer payments, and efforts to reform the economy have been shackled by powerful unions and an unwavering dedication to the province's cherished but expensive social system, wreaking havoc on public finances. As a group of academics and business leaders led by former premier Lucien Bouchard wrote in a 2005 manifesto, "in financial terms, the Quebec government is like a bulky albatross that is unable to take flight."

Yet, the well-educated Mr. Bouchard, in all his crummy hypocrisy, still pimps the separatist option safely from American shores. And I think it's about time we cut out the word "manifesto" every time a point has to be made. What d'ya think?

"Things are so bad that Quebec's GDP ranks 54th out of 60 provinces and states in North America - behind many with a fraction of its population and resources. It trails Montana and Arkansas, for example, and is only slightly ahead of Mississipi. GDP is routinely 20 per cent below that of Ontario, its closest geographical and economic cousin. "In Quebec, the wealth of a family of four is $21,028 less than that of a similar family in the state of Maine," wrote Alain Dubuc in his pro-business tome, Éloge de la Richesse (In Praise of Wealth). "How is it that an economy such as Quebec's, which is fully capable, doesn't transform into wealth?"

I've taken to calling Quebec the Mississipi of the North.


Wealth will never be transformed here until the business model and overall mentality towards business changes.

"Canadians will be wondering the same thing soon, as Quebec's economic crisis is about to be thrust into the national agenda. Prime Minister Stephen HARPER has hinted that the March 19 federal budget will take steps to correct the so-called "fiscal imbalance." Translation: a hefty transfer payment to Quebec, which already gets $2.2 billion a year more from the federal government than it contributes."

Quebec politics, aside from language, is obsessed with fiscal imbalances. What are equalization payments?

"The trouble now is that Canada is subsidizing a province that is not only in financial trouble, but not all that interested in fixing itself, says Claude Montmarquette, an economics professor at Université de Montréal."

"While all Canadian provinces devote increasingly large chunks of their budgets to things like health care, Quebec's social programs are far and away the comfiest. Quebec has the luxury of two very expensive programs unavailable in the rest of the country. The first is the province's $5-a-day daycare program. Enacted by the Péquiste government in 1997, and bumped up to $7 a day by Charest, it is as popular as it is wildly expensive: there are some 195,000 daycare spaces, costing roughly $1.4 billion a year. The province now claims 43 per cent of Canada's regulated child care spaces, though it only has 23 per cent of the country's children under the age of 13."

"Since 1994, the Quebec government has frozen university tuition at $1,668. Today, a Quebec student entering university pays on average 65 per cent less than his equivalent in Ontario. It might be a sweet deal for students; for universities, not so much. "Quebec universities are underfunded in comparison to other Canadian universities and our peers in the U.S.," McGill President Heather Munroe-Blum says."

And I support McGill University. At some point, we have to grow up.

"Since the Quiet Revolution, a mammoth civil service has become ingrained in Quebec's political culture. The number of civil servants in Quebec per capita is roughly twice that of Ontario, says Pierre-Pascal Gendron, a professor of economics at the Humber College Institute of Technology and Advanced Learning in Toronto. "The public sector is quite large and it's a problem that's not going away." Polls suggest Quebecers are loath to give up the sprawling social safety net and the well-paid government jobs that have become such an integral part of the provincial system."

"In January, the polling firm CROP asked 1,000 people across the province about cutbacks to government services. The results showed 60 per cent of those polled want the government to continue to be a big player in Quebec society. But the system is becomming increasingly unsustainable - 12 cents of each dollar raised by the Quebec government now goes to servicing the province's debt, even as spending continues to outpace revenue, according to a report last month by TD Bank."

"Experts say Quebec's sluggish economy and reliance on federal handouts has created a deeply dysfunctional business climate, openly hostile to competition and entrepreneurship. Consider an incident on a frigid Saturday morning in late February, when dozens of protesters clashed with police in Montreal's north end. The placard-wavers weren't there to fight homelessness and poverty, or even to oppose the war on terror. No, the activists punching the air with their fists were car salesman. One of their own, the Pie IX Dodge-Chrysler dealership, had dared to sell cars on the weekend. The move was a direct slap in the face to a 35-year-old agreement barring any new car dealer from doing business on Saturdays and Sundays in the city. A week earlier, one rival salesman had hurled a chunk of ice at Sam Hajjar, the offending dealership's manager."

Par for the course. Here, don't you dare go faster or do better than the weakest link.

"If it seems strange that car dealers, the most red-blooded capitalists of them all, would fight to not sell cars, consider the wealth of statistics and polls that reinforce Quebecers' aversion to the typical North American workload. When Bouchard claimed that people in the province were lazy, he was pilloried for it, and widely portrayed as a traitor, but he was simply giving voice to data from Statistics Canada that show Quebecers do work less than everyone else in the country."

Part of the problem is that just 44 per cent of Quebecers hold a steady, full-time, year-round job, compared to 57 per cent in Ontario. But there's more to it than that. Quebec bosses have grown used to the fact that on any given day, a disproportionate number of their employees are going to call in sick, compared to other provinces. Full-time employees in Quebec missed an average of 11.2 days of work in 2005, according to Statistics Canada, compared with Ontario's apparently healthier workers who averaged 8.6 days off. Still, Quebecers employed in the private sector look like they're working themselves to death compared to their civil servant colleagues. A Treasury Board document that was leaked to the Journal de Montréal revealed the province's civil servants called in sick an average of 14.14 times in 2005, double the national average. The report stated that the Quebec government lost nearly $170 million to absenteeism. It's only getting worse. The report noted sick days have been on the rise for half a decade.

Oh, come now. This is just heartless right-wing propaganda. It's just that we know how to live here and the Anglos are godless capitalists without culture.

"Quebecers seem to relish their downtime more than other Canadians. They watch more TV than residents in every province save New Brunswick, says Statistics Canada. And they sleep more (a poll by Léger Marketing in 2004 found Quebecers snore away for 7.3 hours a night, while Ontario alarm clocks go off after just 6.8 hours). A Journal de Montréal poll commissioned after Bouchard made his comments found 43 per cent disagreed with his assessment of their work habits."

Yet cultural nationalists do nothing but deride American culture.

Low worker productivity, economists note, is tied in part to labour regulations and punishing tax rates. Along with having the highest taxes, Quebec is the most unionized province in Canada - a one-two punch that has knocked the Quebec economy back on its heels.


Foreign investors are taking notice. As it is, Quebec's share of the foreign and domestic investment flowing into Canada is below 18 per cent, according to economists, a surprisingly low figure given the province's large population and strong reputation for research and development. Last fall, CAI Global Group, a consulting firm in Montreal, surveyed the perceptions of multinational companies operating in Quebec, duplicating a study it carried out in 1994. Back then, when asked whether the province was becoming more globally competitive, 70 per cent said yes. In 2006, that figure has plummeted to just 33 per cent.

Perhaps most worrisome for Quebec is the steady stream of young people leaving the province to work elsewhere. "Quebecers are voting with their feet," says the Fraser Institute's Clemens. Between 1981 and 2005, the province was the only one to be on the losing end of net interprovincial migration every single year.

The ride is over.


A financial analyst friend of mine, who works for a Swiss-based firm, characterized Quebec's finances and economy as a "disgrace."


Personally, I'm glad some in Quebec's artistic community are willing to risk public scorn and attacks to at least spark a discussion on this serious matter.