Quebec’s Mounting Government Costs

Quebec, too, has been smitten by "a hurricane of public expenditure"

C. L. SIBLEY November 1 1932

Quebec’s Mounting Government Costs

Quebec, too, has been smitten by "a hurricane of public expenditure"

C. L. SIBLEY November 1 1932

Quebec’s Mounting Government Costs

Quebec, too, has been smitten by "a hurricane of public expenditure"




HAVE no hesitation in saying that the credit of Quebec is superior to that of Canada.” was the proud boast of Premier Taschereau at the last session of the Quebec Legislature.

Nevertheless, this staid old province, where thrift is a tradition and conservatism an instinct, whose leaders have avoided so many of the pitfalls which have plunged other communities into debt— this province has been so smitten by the hurricane of public expenditure and taxation that has swept across the continent that its governing authorities are at their wits’ end to devise means whereby money can be raised to keep pace with their ever mounting expenditures.

They, like the governing authorities in other parts of Canada, have been faced with the question of using more axe or mora tax in preparing their budgets, and they, like other governing authorities, have persisted in the face of inert asing depression in aligning themselves with the “more tax” s| lenders.

When the slump came, when sources of taxation showed progressive decline and business firms in every direction were engaged in heroic retrenchment, they seemed unable to grasp the fact that they too must cut down their expenditures. They regarded the inflated scale of expenditure established in the boom years as a standard which could not be dc|xirted from, and they refused to wield the axe on the scale of living to which they had grown accustomed.

Today there are many signs of a dawning fear that the day of judgment cannot forever be postponed, yet expenditures still increase and taxes mount.

Trebled Expenditure

npilE three classes of spending authorities are the Provincial Government, the municipalities and the educational corporations. I doubt if there is one man in ten thousand in the Province of Quebec who has any idea of the expenditures and obligations which have been incurred by these authorities in post-war years. The figures are astounding when added together. Ín the last year before the war the total ordinary and extraordinary expenditures of tljese bodies amounted approximately to $80.000.000. Today they are spending to the tune of around $250.000,000 annually.

The growth of governmental indebtedness is no less alarming. Whereas in the year prior to the war the total outstanding indebtedness of the province, the municipalities and the school authorities amounted approximately to $250,000,000, today it is around $540,000,000, an increase of some $290.000,000.

Thus the rate of public expenditure today is more than treble what it was before the war, while the public indebtedness has been more than doubled.

But that is not all. In the Province of Quebec the Roman Catholic church corporations have the power of taxing property for the erection of church buildings, of which some notable examples have been constructed in post-war years; and recently Maurice L. Duplessis, M.L.A., rather startled the Legislative Assembly bv stating that the Federal, provincial, school and church taxes in the Province of Quebec amounted to no less than $166 per capita per annum.

Premier Taschereau made no effort to deny the claim. Nevertheless, he in his turn occasioned a gasp of surprise by making the counterclaim that of this only $6 per head could be attributed to provincial taxation.

Hit right and .left by new taxes, taxed more for doing business (11 j per cent on the net profits of all corporations) more for gasoline, for liquor and for amusements, slapped in the face day after day by a new tax on every meai of thirty-five cents and over served in a public place, the people of Quebec may w'ell wonder if, after all, provincial taxation in the past has amounted to only $6 per capita.

Study of the Government’s statement of receipts for last year shows that Mr. Taschereau’s claim as regards that year was approximately correct, for of the Government’s revenue of $41,630,620. the sum of $23,346,403 came from taxation, and $18,284,216 from other sources.

From this emerges the surprising fact that if the Government’s expenditures last year had been kept to the level of the total expenditures in the last year before the war, namely $8,624.367, the Government could have had a surplus of nearly $10,000.000 without having to impose a cent of taxation. Even if they were on the scale of only ten years ago, namely $20,190,275, the Government would still have had a surplus of around $2,000,000 without collecting a cent of revenue by means of taxation.

Additional Sources of Revenue

AS A MATTER of fact, the Government has sources of revenue now' that it did not have prior to the war. Last year it made a profit of $8.700,721 on Government monopoly of the liquor trade, enough in itself to pay the whole expenses of provincial administration on the scale of 1913-14. Other substantial sources of revenue include the Dominion subsidy of $2.128,959, some $4,500,000 from natural resources, over

$500,000 from mines, $385,000 from colonization, game and fisheries, over $500,000 from various fees, and so on to a total of $18,284,216.

With a profitable liquor trade in control of the Government, and with a vast public domain in its possession rendering its tribute from water powers, forests, mines and fisheries, the suggestion that the provincial administration could be run without imposing any taxation whatever represents a possible ideal —and what an advertisement that would be for the Province of Quebec !

However, the large commitments of recent years have made that ideal impossible of attainment for the time being, though it is certainly one to which the province could even yet aspire.

When the budget was presented last November for the ensuing year, the Provincial Treasurer preached rigid economy in all departments in view of the depression, and made announcements of added taxation in various forms. But the fact remains that, in spite of the abandonment of various proposed schemes, his estimate of ordinary expenditure for the ensuing year of $39,575.252 reached the highest figure in the history of the province, comparing as it did with estimated expenditures of $38,895,286 for 1931, the peak year to that date in estimated (and actual) expenditures.

The Quebec Government has a proud record in the matter of its finances. From 1900 to 1932 there has never been a year in which it has not announced a surplus of revenue over expenditure. In that time the total surpluses have amounted to over $40,000,000. Yet the fact remains that in the same period the net debt of the province has increased by $35,500,000, and now stands at $60,418,249.

Where have all the surpluses gone? The question has been asked many times, but never yet has the Opposition admitted that the answer was satisfactory. Recently, as a result of their challenge on this point, the Quebec Government had its accounts audited by Price, Waterhouse & Co. Their return showed an accumulated surplus of $18.607,267, and in addition there wras this item: “Surplus arising from capitalization of Dominion subsidy, per contra, $42,579,184.”

It is all very puzzling, but the fact remains that in spite of surpluses the expenditures are increasing and taxation is increasing; so the surpluses have not been going, and are not going, apparently, into relief from taxation, unless it may be said that by being used for capital commitments they afford relief from still higher taxation.

The key to most of the financial troubles with which the province is faced is to be found in the statement made by Premier Taschereau in a manifesto issued August, 1931, that Quebec in recent years had spent the colossal sum of Continued on page 44

Continued on page 44

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$100,000,000 upon the building and maintenance of its roads.

Fine For The Farmers

THE GOVERNMENT began its good roads policy by granting money to municipalities upon favorable terms for the improvement of roads. This became too burdensome to the farmer, and as the farming vote controls the Legislature, and doubtless for other good reasons, the Government took over the whole cost of building and maintaining the main highways. Then the farmers began to agitate for the building of secondary roads, and this in its turn becoming burdensome, the Government took over (he whole cost of this also. Last year alone the Government spent on roads no less than $14,133,000, of which $9,652,353 was collected from motorists—$4,377,153 in the form of gasoline tax and $5,275,200 in the form of licenses. On October 1, 1931, there were 15,090 miles of improved rural roads in the province, not counting roads in cities and towns, to which roads the province dees not contribute.

It is an interesting fact that although the farmers of Quebec control the Legislature, their contributions to provincial taxation are negligible. Not only has the Government relieved them of expenditures on the roads, which explains their enthusiasm for road building, but it pays part of the interest on farmers’ loans; gives schools, chapels, ploughing, land clearing and residence premiums; supplies them with seed grain; offers grants for the purchase of chemical fertilizers and indemnities for cattle killed by reason of tuberculosis; has inaugurated subsidies for a scientific system of land drainage; supplies agricultural schools and winter agricultural courses; helps in the formation of co-operative societies; and creates experimental farms. Recounting all this, Premier Taschereau said in his -manifesto of August, 1931:

“I will close by asking what are the taxes which apply directly to the farmer today? The only one which might touch even the richer farmer, the succession duty, has been abolished on all estates which are lower than $25,000.”

A system of 15,000 miles of roads on which $100,000.000 has been spent in a comparatively few years is a staggering burden for a population which at the last census was shown to be but a bare 3,000.000 people, out of which the farming class are not contributors to taxation. Premier Taschereau declared in August. 1931, “Over 30,000 men are employed on highways and colonization roads.” He did not exaggerate. Thirty thousand men of the farming class actually were at work on the roads, even in midsummer, and many were the rural districts where road building appeared to be the main industry.

Referring to the figures regarding road building. President C. M. Black of the I Royal Automobile Club of Montreal, said I in his annual report to that organization early this year :

“These figures serve to show either the tremendous courage or the folly of some 3.000.000 people. The policy of extravagant subsidization on construction, and even more so on maintenance, still persists in our province, and has been kept up through

taxation considered high on this continent. So much of our money has been used up in the subsidization of every local road in the province that for the most part we have wound up with an antediluvian main highway system. In company with all contributors of taxation, the motor vehicle owner has every right to demand that this money be expended in a manner productive of sound results. I can truthfully state that this has not been done in our province, and we now have a greatly overbuilt system of local roads, which in many cases lead nowhere and only serve a few people. There must be a stop to this extravagance, or we shall kill the goose that lays the golden egg. Even a small attempt to bring expenditures down to levels dictated by honest necessity would eliminate much of the increased taxation. A really serious scaling down such as is practised by successful businesses is undoubtedly the proper solution.”

Costly Bridges

THEN there has been an ambitious programme of bridge building. Here again the Government started by subsidizing municipalities in the work and ended up by assuming the whole cost itself. Since the war the total number of bridges constructed has been 995, and the total cost to date $12,509,635. Here again local pressure has resulted in the undertaking of costly projects. The most conspicuous example is the Harbor Bridge over the St. Lawrence River at Montreal, the total cost of which was some $19,000.000. The Federal and not the Provincial Government was responsible for this scheme, yet the Provincial Government, like the city of Montreal, obligated itself for a proportionate sharing of the cost.

The most outstanding example of purely provincial projects in this direction is the plan of the Provincial Government for the building of a bridge to the Island of Orleans. This is officially estimated to cost $3,000,000, with a further $500,000 for building the approaches. It has been charged in the Legislature that the bridge, which is an expense of the immediate future, will cost not less than $5,000,000, and will serve a population of only 3.600 people, half of whom, according to Aime Guertin, M.L.A., are opposed to the project.

In addition to this, there is a project for building another costly steel bridge across the St. Lawrence River from Lachine to Caughnawaga, at an estimated cost to the province of $3.000,000. This bridge will be in competition with the new $19,000,000 bridge at Montreal, and also the Victoria Bridge at Montreal, in giving access from the north to the south shore of the St. Lawrence, its proposed site being only eight or nine miles from these existing bridges.

Premier Taschereau recently stated that an early start was to be made on both the proposed new bridges, and in the Legislature last spring, in defending the building of the bridge to the Island of Orleans, he said that it would prove a good investment and would ultimately pay for itself in tolls. No announcement has been made of the postponement of either of these two bridges, but at the time of writing they seem to be hanging fire. Perhaps the Government, in view of the financial situation, hesitates to commit itself to actual construction, though pressure asserts itself from time to time on

the ground that the building of them would help relieve unemployment.

Millions For a New University

A PART from these two major sources of ■4*expenditures, there have been many other directions in which the Government has been spending large sums of money, notably in constructing palatial buildings for provincial purposes, in building schools, in large grants to universities, and in subsidies to many causes, even to the extent of providing yearly prizes for literature. Last year there were expenditures of $132,200 on the Polytechnic School at Montreal; over $100,000 on schools of fine art in Quebec and Montreal; $55,200 in scholarships for students in Europe; $7,000 for a director of scholarships in Europe; support for a students’ residence in Paris; and $102,800 for “encouragement to literature and fine arts.”

Regarding money spent on educational buildings, nothing more adequately shows how grandiose schemes develop through encouragement on the part of taxing authorities than the plan for the building of the University of Montreal. Already the province and the city of Montreal have advanced several million dollars on the enterprise.

This university, as planned, is a magnificent group of buildings on the northern slope of Mount Royal, in Montreal, the site for which was donated by the City of Montreal. The buildings constitute the most ambitious conception of the kind ever put forward in Canada, and when completed they will constitute by far the most stately group of buildings of the kind in Canada, and will vie in impressiveness even the Dominion Parliament buildings at Ottawa. Although millions have been spent on the scheme, millions more are needed. The latest plan for raising money for this purpose is to put a special assessment on Catholic property in the ecclesiastical diocese of Montreal, which comprises a wide area of the countryside in and contributory to Montreal. When completed the question of maintenance will be a serious one. At the time of writing all available funds have been exhausted, the work of construction, although well advanced, has in consequence been suspended, and a Royal Commission is busy investigating how the present impasse arose and how the authorities can be helped out of the hole they are in. Incidentally the university is declared to be the third largest in the British Empire. It has approximately 10,000 students and 500 professors.

Now and again one hears the suggestion that in the interests of economy the costly upper house, the Legislative Assembly, should be abolished, and there have been suggestions that expenses in connection with the Lieutenant-Governorship should be curtailed. In regard to the latter, the public accounts show that in addition to the Lieutenant-Governor’s salary of $10,000, the expenses of his official residence, “Spencerwood,” where much entertaining is done, amounted to $16,000 last year, and the pay list to another $22,333. Then, on Government greenhouses $34,287 was spent.

Despite the fact that the Dominion Government has elaborate offices in London to care for all the needs of Canada, the province maintains an Agent-General there, at a cost of $39,785 last year, and another in Belgium at a cost of $4,100. It was charged at the last session of the Legislature, and not denied, that in 1931 the Government paid in salaries, wages, and indemnities $25,000,257.

Municipal Expenditures

NOW let us turn to the municipal expenditures in the Province of Quebec. In the ten years from 1919 to 1929 - for the last year of which I can get complete figures —the total ordinary and extraordinary expenditures by municipalities more than doubled, rising from $60,747,638 to $155,265,639, while the bonded indebtedness of all municipalities in the province rose from $171.168,650 in 1919 to $323,395,745 in

1930. Of this Montreal was, of course, responsible for by far the largest share, and in 1931 the total debenture debt of Montreal was $225,321.129.

In Montreal many ambitious projects have been, and are being, carried out. largely in the name of unemployment relief, to which Federal and Provincial Governments have contributed. On these works the scale of wages paid has been higher than that paid the same classes of labor by private enterprise. Several handsome new markets, and many new fire and police stations have been built, some of great architectural pretension. Many subways, pedestrian and vehicular, have been constructed, as well as ambitious tunnels under the Lachine Canal and in other places. Gigantic sewerage and waterworks projects have been undertaken; elaborately appointed sw'imming baths have been provided in various wards; many comfort stations and a number of park chalets have been built. Of the latter the most notable is one crowning the Lookout on Mount Royal —an elaborate stone structure, richly ornamented inside w'ith mural paintings, and w'ith a great hall which could be used as a ballroom. One purpose of this chalet is to be a place in which to give banquets to distinguished visitors; another is as a restaurant for serving light refreshments.

There has been a regular battle of the w'ards for favors in the way of public works. As an instance, there is now being erected a community hall in Notre Dame de Grace Ward at a cost of $200,000, which will be equipped with a swimming pool, gymnasium and auxiliary services, besides having a large auditorium and various clubrooms.

So much for the business deflation as it has affected the provincial and municipal authorities !

Now take the expenditures of the various educational corporations in the province. The total cost of education has risen from $8,896,989 in 1913 to $32,917,489 in 1928-29. In 1913-14 the contributions of municipalities to education amounted to $7,172,879; in 1928-29 they amounted to $27,964,711. In the same time the contributions of the Provincial Government increased from $1,724,110 to $4,952,778. The number of pupils rose from 459.636 to 624,601 in that period, and the average cost per pupil rose from $19.36 per annum to $52.70 per annum, an increase of $33.34 per annum per pupil. In 1929-30 the cost had risen to $33,230,636.

Grave Disquietude

THE above gives a general idea of the way in which Governmental expenditures have been increasing in the Province of Quebec, bringing in their train increasing taxation and burdens of every form of industry such as it has never had to bear before. Many of these greatly increased expenditures are only beginning to bear fruit in the shape of added tax burdens, and the ogre of “maintenance” is now raising its head beside the other ogre of payment of capital cost and its attendant interest.

Evidence of grave disquietude over the whole subject of public finances is already observable, especially in Montreal, whose one million people have to bear the bulk of the burden. That drastic retrenchments on a scale paralleled only by the tremendous inflation of public expenditures will have to take place there can be no doubt. When will those retrenchments begin in earnest?

Note: Since this article was w'ritten Premier Taschereau has issued the financial statement of the Province of Quebec for the fiscal year ending June 30, 1932. This show's that for the first time in thirty years the Provincial accounts record a deficit instead of a surplus, expenditures having been $584,708 in excess of the revenue of $36.941.020. This revenue was the fourth highest in the history of the province, being exceeded only in the fiscal years 1928-29, 1929-30 and 1930-31. The statement also shows that at June 30, 1932, the net funded debt of the province stood at $66,860,821, as compared with $60,418,249 in 1930-31.

The End