A new quiet revolution in Quebec?

By: on February 11, 2015 |

Couillard, Daoust, Coiteux and Leitao

Quebec Premier Philippe Couillard with his senior economic ministers (left to right) Jacques Daoust, Martin Coiteux and Carlos Leitão.

Editors note: This article is the first to be published by C2C Journal through the generosity of contributors to the new Link Byfield Journalism Legacy Fund.

For two decades Quebecers have been electing governments that promise to put the province’s fiscal house in order and nurture a stronger market economy. Post-election, however, the political will to implement these reforms almost invariably succumbs to fierce public protests. It happened to former Liberal Premier Jean Charest and his bold plan to “re-engineer” the state in 2003, and before him to former Parti Québécois Premier Lucien Bouchard. Bouchard tried again as a private citizen in 2005 with his “pour un Québec lucide” manifesto. It so antagonized the bureaucracy, unions and the left that it inspired the creation of a new extreme left-wing nationalist party – Québec Solidaire – that now has three seats in the National Assembly.

As a result of this prolonged paralysis of political will and policy reform, Quebec now has by far the largest provincial debt in Canada. It is also one of the highest-taxed jurisdictions in North America and a laggard on just about every measure of economic performance. But there is some evidence that Quebec’s stubbornly statist political culture has reached a tipping point. Ten months ago Premier Philippe Couillard’s Liberal party won a majority government on familiar promises of fiscal responsibility and market-led economic growth. Today, unlike many of its predecessors, the government’s political will seems to be holding up, even after last summer’s violent trashing of Montreal City Hall by unionized city firefighters protesting provincial pension reforms, while unionized city police stood by and did nothing.

Some have interpreted the uncharacteristic resolve of the Liberal government as evidence that Premier Couillard is a genuine fiscal conservative. In fact he has said and done little since entering politics 12 years ago to indicate that he is an ideologue, conservative or otherwise. Rather, the former neurosurgeon seems to be a pragmatist who recognizes the need for change while understanding that in Quebec, change must be subtle and avoid confrontation.

Interestingly, he has given the top three economic posts in his cabinet to people whose backgrounds – as well as words and actions in government – indicate a commitment to a non-dirigiste economic philosophy. This troika is comprised of Minister of Finance Carlos Leitão (a former economist at the Laurentian Bank), Minister of the Economy, Innovation and Exports Jacques Daoust (a former business executive), and President of the Treasury Board Martin Coiteux (a former senior economist with the Bank of Canada). Coiteux, a reputed libertarian, recently said of the need to fix Quebec’s red-drenched balance sheet: “There are no sacred cows… it is time to face reality and to stop living off credit cards.”

So far, the actions of the government have not quite matched its rhetoric. The boldest moves to date involve proposed public sector pension reforms (which provoked the riotous protest in Montreal City Council chambers) to increase worker contributions from 30 percent to 50 percent. Universal subsidized daycare costs are also going up, but not much. While the previous PQ government had proposed an across the board hike of $2-a-day, the Liberal increases will be means-tested: The rate for low-income families will remain at $7.30 a day, the richest will pay $20, and most families will pay less than $10.

In fairness, it’s hard to accomplish meaningful progress in such a short time in Quebec. But even modest reforms to such sacred cows as civil service pensions and daycare are, for Quebec, almost revolutionary. A Leger poll for Le Devoir in December indicated a clear majority of Quebecers support these and other “austerity measures.” The poll also showed the Liberal government is still leading the opposition parties, though its support had fallen to 34 percent from 41.5 on election day last April. Premier Couillard’s personal approval ratings have fallen even farther. Still, for the time being at least, it appears the government has adequate support to continue its reform agenda.

The heavy lifting is being done by two committees that were established in last year’s budget. The Permanent Program Review Commission, whose first report came out in November, is charged with sifting through government spending to identify inefficient programs and cut costs. Their first report did not lead to any major policy reforms, but did provide Minister Coiteux with an extraordinary $2.5 billion in spending cuts when he presented an Economic Update in December.

The Quebec Taxation Review Committee, meanwhile, was formed to review the tax system and propose changes to make it more competitive. Its recommendations, to be released soon, are expected to find their way into the 2015 provincial budget, due in March or April.

If the Couillard government stays on the fiscally conservative track that derailed so many of its predecessors, it will be partly because it has had some outside help. The Charbonneau Commission inquiry into government corruption produced a mountain of evidence linking organized crime to politicians, government bureaucrats and unions. While former Liberal politicians are heavily implicated, the net effect on public opinion appears to have been to lower public trust in government and unions.

It also helps that Montreal Mayor Denis Coderre and Quebec City Mayor Régis Labeaume have mostly supported Premier Couillard’s fiscal and economic initiatives. This was particularly true of the pension reforms: The mayors maintained solidarity with the government despite the civic union protests.

The rise of the Coalition Avenir Québec, Quebec’s second opposition party, has also expanded the political market for right-leaning reform. The CAQ is a moderate nationalist party with a centre-right economic platform that has advocated for smaller government and lower taxes in each of the last two elections.

All things considered, the opportunity for and evidence of a significant shift in Quebec’s political culture seems real. The crushing of the sovereigntist parties in the 2011 federal election and 2014 provincial election have pushed independence to the margins of the political agenda. The stagnant economy, high taxes and onerous debt have taken centre stage.

What’s to come? The government aims to balance the budget in 2015-2016, which will require another $1 billion in spending cuts. It is also targeting another Quebec sacred cow – the healthcare system – for cost-cutting that could eliminate some 1,300 jobs. Conventional wisdom holds that the Couillard government has about another year to pursue austerity before the vote-buying cycle for the next election begins. Or, they could try to break the cycle by ratcheting up talk about Quebec’s dismal economic prospects, creating a climate where responsible fiscal management becomes a political virtue.

This approach served the federal Conservative government well in the rest of Canada through the last three federal elections. It did not gain traction in Quebec, where the Conservatives currently have only five seats. But according to an EKOS poll released last week, the Tories are now polling just ahead of the NDP in Quebec, and just behind the Liberals, with numbers that could translate into as many as 20 seats if an election were held today. This too may be evidence that Quebec’s political culture is in a transition that could sustain the Couillard government’s fiscal and economic reforms.


Tom Kott is the Montreal-based CEO of the Prince Arthur Herald.

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