COVER

QUEBEC

BARRY CAME in Montreal March 13 1995
COVER

QUEBEC

BARRY CAME in Montreal March 13 1995

QUEBEC

COVER

Like every other province, Quebec was hit hard by Finance Minister Paul Martin’s move to slash federal transfer payments for health, education and other social programs. But how hard was the hit? It depends on whose numbers are used. According to federal figures, transfers to the province will be reduced by 9.3 per cent when the new system kicks into place in 1996-1997, in line with the national average and amounting to roughly 27 per cent of the total cutbacks. Quebec Finance Minister Jean Campeau, however, vigorously disputed those numbers, arguing that the province is being singled out for special punishment. According to Campeau, Quebec’s share will reach 41.7 per cent of the cuts, a figure he said will strangle economic growth and cost the province 36,000 jobs. “We are the ones losing the most,” he charged, in remarks obviously aimed at boosting the Parti Québécois’s case for separation. “The Martin budget makes it urgent to leave the federal system for it is clear the boat is sinking.”

While few outside the ranks of the PQ government and its Bloc Québécois allies in Ottawa accept Campeau’s numbers, it is true that the province faces major reductions in transfer payments. In cash and lost taxes, Quebec’s receipts for health, education and welfare will fall by $765 million, dropping to $7.4 billion in 1996-1997 from $8.1 billion in the coming year. Part of those losses, however, will be offset by a rise in equalization payments, a factor left out of Campeau’s calculations. Equalization payments to Quebec are scheduled to increase over the same period, to $4.1 billion from $3.7 billion, lending some weight to Martin’s claim that Campeau’s figures are “crazy.” Still, Quebec will be left with about $350 million less in federal money in the next fiscal year, a shortfall that

will present the PQ government with the unpalatable choice of either trimming services or raising taxes.

Martin’s budget included other measures with a direct impact on Quebec. Among the most controversial was the move to phase in a 30-per-cent reduction in subsidies to dairy farmers over the next two years. Close to half of Canada’s industrial milk production comes from Quebec, supplied by some 12,000 diary farmers. Once the cutbacks take effect, Quebec’s milk producers will lose roughly $68 million in federal support payments each year. Laurent Pellerin, president of the Quebec Farmers’ Union, estimated that the average milk producer in the province faces losses of between $3,000 and $5,000 annually. And that, in turn, is likely to lead to higher prices for cheese, butter, ice cream, yogurt and other milk-based products. “It’s the consumer that is going to have to pay,” said Pellerin.

The closing of the St. Hubert military base south of Montreal and the scaling down of a jet fighter base at Bagotville, northeast of Quebec City, will also hurt Quebec. The shrinkage at Bagotville will be minimal, involving the loss of five civilian jobs and the transfer of 300 military personnel. But St. Hubert is a major operation. More than 1,500 people work at the base, 438 of them at army headquarters, which is being moved to Ottawa. The other 900 military and civilian personnel who will not relocate to the capital are expected to be absorbed by the five other military installations in and around Montreal. But the town of St Hubert itself, home to 78,000 people, faces the loss of $1.8 million in lieu of taxes that the defence department now pays annually for 71 buildings on 850,000 square metres of land. It is now up to the federal public works department to decide what to do with that property.

BARRY CAME in Montreal