Beware the CAQ: How the “efficient” left might eliminate Québec’s only right-of-centre party

This past autumn in Quebec has been fraught with uncertainty for the Action démocratique du Quebec (ADQ), the only provincial party to identify explicitly as right-of-centre. The ADQ’s existence is now threatened by the newly created Coalition pour l’avenir du Québec (CAQ) party, the brainchild of former Parti Québécois (PQ) minister Francois Legault and the successful entrepreneur Charles Sirois. Since the rise of the CAQ, the ADQ has been in talks with a CAQ about a potential merger. Paul Beaudry argues such a merger is wrongheaded. CAQ policies would not bring about the fiscal discipline and reforms needed to improve Quebec’s public finances. Instead, such policies would likely render a CAQ government’s performance largely indistinguishable from that of its predecessors. The ADQ remains the best political vehicle to promote market-friendly changes to the Quebec political landscape. As such, it ought to turn down the CAQ’s advances, and remain an independent political party.

This past autumn in Québec has been fraught with uncertainty for the Action démocratique du Québec (ADQ), the only provincial party to identify explicitly as right-of-centre. The newly created Coalition pour l’avenir du Québec (CAQ), the brainchild of former Parti Québécois (PQ) minister François Legault and the successful entrepreneur Charles Sirois, threatens the ADQ’s existence. The CAQ, initially created as a grassroots movement in early 2011, has quickly gathered popularity with the Québec electorate, which has grown tired of a Québec Liberal Party plagued with corruption scandals and a PQ under the shaky and contested leadership of Pauline Marois. In this political environment, the CAQ is a welcome alternative. Among the CAQ’s better known objectives are preventing the supposed exodus of corporate headquarters from Québec so that it does not become a “branch plant” economy. (Charles Sirois has long crusaded in favour of government intervention to prevent foreign takeovers of Canadian corporations.)

In recent months, a succession of Québec polls has indicated the CAQ would form the government in the event of a provincial election. This even though the CAQ’s official existence as a political party did not occur until mid-November.

Although the CAQ was labeled “right-of-centre” by the Québec media, Legault refuses to accept that label. Rather, he identifies himself and the CAQ as proponents of the “efficient left” (or “gauche efficace”). He does not wish to stray from the main tenets of the so-called “Quebec model”, which is characterized by generous social programs, a public healthcare system and an interventionist role for the state in the economy. Despite these positions, many of the members and even the leadership of the ADQ think that the survival of their party is conditional upon a merger with the CAQ. On November 7, 2011, ADQ leader Gérard Deltell, in a letter to his party members, announced that discussions with the CAQ would start in the coming weeks and that any decision regarding a potential merger would need the approval of ADQ members. The conservative movement in Québec has historically been an alliance of nationalists and economic conservatives. As such, its success has relied on a variation of the fusionism promoted by U.S. political thinker Frank Meyer: the idea that holders of a wide array of conservative beliefs should work together to promote a more limited and decentralized government. The political success of the ADQ in the last several years is a result of this Québec version of fusionism. Founded in 1994 as a nationalist party by former Québec Liberals disappointed with then-premier Robert Bourassa’s embrace of the Charlottetown Accord, the original ADQ platform focused on the adoption and implementation of the Allaire Report, which advocated for a more decentralized federation and the transfer of powers from the federal government to Québec.

The ADQ remained in the proverbial political wilderness – with only one elected member (its leader, Mario Dumont) at the National Assembly – until 2002, when a series of wins in by-elections brought its caucus to five members. As a result, the ADQ was no longer recognized as a voice for nationalist Quebeckers only, but also as the voice of small-c conservatism in provincial politics. The advocacy of a flat tax and school vouchers at one time buttressed the ADQ’s economically conservative credentials. In the 2007 Québec provincial election, the ADQ reached the peak of its electoral success when it became the Official Opposition to the governing Liberal minority government. That success was short-lived, however, as the ADQ caucus dwindled to three members from 43 after a brutal electoral performance in 2008.

The arrival of the CAQ constitutes a real threat to the ADQ’s fusionist alliance and to Québec conservatives in general. Jean Allaire, one of the ADQ’s founders, has publicly indicated his support for a merger. The CAQ seems to appeal to those in the ADQ who may be considered moderates, nationalists and those who tend to simply align themselves with third-party options. However, the economic conservatives and libertarians amongst the party’s base have not been enthusiastic about the prospects of a merger. One of the most outspoken opponents of a CAQ-ADQ merger is well-known Québec businessman Adrien Pouliot, a libertarian-leaning member of the ADQ’s political commission; he has not shied away from heavily criticizing many of the CAQ’s interventionist policies.

The CAQ’s unrelenting protectionism

Beyond ideological criticisms, the CAQ’s policies unreasonably favour protectionism when there is no evidence of any actual improvement in the Québec economy. One of its most potentially damaging proposed policies is using the Caisse de dépôt et placement du Québec, Québec’s pension fund manager, as an economic development tool. Deploring the dwindling number of corporate head offices in Montreal, the CAQ proposes that the Caisse significantly increase its investments in Québec companies and review its mission in order to reflect this new policy orientation.

In addition, the CAQ proposes to set up a $5-billion fund partly financed by the Caisse so that the Caisse can take minority stakes in natural resources companies. Those who can attest to the Caisse’s poor financial performance, which was based on investing in Québec corporations over the last few decades, can only be frightened by such a proposal. The natural resources sector is subject to significant price volatility, and politicizing the Caisse’s investment decisions in this sector could have a catastrophic impact on its investments.

Legault, in particular, should know better and understand the folly of such interventionism: One of the Caisse’s major failed investments was its 1983 acquisition of Quebecair, a struggling Québec-based airline. CP Air bought the unprofitable airline in 1986. It was sold at a loss and, at the time, Legault was its director of marketing.

The CAQ also proposes agricultural policies directed at ensuring Québec ownership of Québec farmland. The mechanism favoured by the CAQ is the creation of Québec-owned regional co-ops that would buy Québec farmland. They would be funded by securitization and then the co-ops would lease the land to Québec farmers. The CAQ position paper on the economy stresses that it is “invaluable that ownership of our farmland remains local.” No clear explanation is provided as to why this is preferable to allowing foreigners to invest in the Québec agricultural economy (after all, the farmland cannot be moved overseas), but it is understood that this is an extension of the Maître chez nous (“masters of our own house”) ideology inherited from the Quiet Revolution.

The CAQ’s efficient manager fallacy

The CAQ also suffers from a belief in the “efficient manager” fallacy. This is the notion that bureaucratic and technocratic prowess alone can solve most shortcomings in the public sector in the same way that new management in a corporation can contribute to the improvement of its financial situation. The CAQ policies are deeply enmeshed in this fallacy. Both co-founders of the party have had long careers in business and this may explain their management-focused approach, but the public sector is not like the private sector in this regard.

The public sector, unlike the private sector, does not have profits and losses – it merely seizes funds from the public. No market mechanism dictates whether government should produce more or less of an item, how it should produce this item and where it should produce it. Thus, government failures, unlike business failures, can never be solely attributed to the shortcomings of individuals and then solved by turning over the reins of government to competent managers. As Ludwig von Mises wrote in Bureaucracy:

It is vain to advocate a bureaucratic reform through the appointment of businessmen as heads of various departments. The quality of being an entrepreneur is not inherent in the personality of the entrepreneur; it is inherent in the position which he occupies in the framework of market society.

An example of this faulty thinking is the CAQ’s policy proposals on health care, which do not provide for any meaningful private sector role in public health-insurance services. This is remarkable given that the party has been identified at being on the centre-right of the political spectrum. Instead, the CAQ’s policies suggest a command and control approach based on improving the “efficiency” of the system; that is, better management of the current health-care system. However, the Québec government has been trying since the inception of universal health care to centrally administer the provision of health care. Despite its efforts, the long wait lists, the shortage of doctors and the misallocation of resources continue. Given this history of unsuccessful government management, it is hard to see how the CAQ’s premise of more system tinkering will solve these massive government failures.

The efficient manager approach is arguably a major reason for the CAQ’s success in recent polls. The co-founders of the CAQ have excellent public reputations in Québec as accomplished businessmen and in Legault’s case, extensive political experience. Legault and Sirois hold themselves out as superior managers who are able to improve the province’s finances in the same way that they were able to achieve success in the private sector. However, even if these two men could accomplish all that they claim, a political strategy that rests solely on the personal involvement of certain individuals may have limited longevity.

Prescriptions for the ADQ

With the presumption of being a political party with a decent chance of winning the next provincial election and with the perception of being a right-of-centre party, the CAQ will likely attract members from the ADQ. Most members of its caucus have already shown some enthusiasm for a potential merger with the CAQ; they might even decide to leave the party if ADQ members vote against a potential merger with the CAQ.

That said, ADQ members who are preoccupied with the ever-increasing size of the Québec government, its out-of-control public debt and its unsustainable social programs ought to take a hard look at what the CAQ proposes. Its positions would not even incrementally improve Québec’s position from a limited government point of view. The reality is that massive government intervention in Québec has been tried for half a century and it is the reason Québec has high taxes, high debt, sub-standard public services, broken bridges and other infrastructure, as well as the inevitable corruption that too much political involvement in the economy brings.

Many CAQ policies would not deliver the fiscal discipline and reforms needed to improve Québec’s public finances. Instead, such policies would likely render a CAQ government’s performance largely undistinguishable from that of its predecessors. The ADQ remains the best political vehicle for promoting market-friendly changes to the Québec political landscape. As such, it ought to turn down the CAQ’s advances and remain an independent political party.

The author wishes to thank Stephanie Chipeur for her editorial assistance.

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