Aid to businesses: promises of employment and productivity linked to subsidies rarely come true

Seeing it as a way to enrich Quebecers, the Legault government has exploded aid to businesses since 2018. But are the results there? The Journal presents to you the most complete report ever produced on this crucial issue as Quebec heads towards a record deficit.

Quebec must change its business aid model, specialists argue. Subsidies to multinationals do not give Quebecers value for their money.

Generous gifts to businesses are raining down by the billions in Quebec. But the promises of employment, productivity and collective wealth rarely come true. Some cases are turning into a downright disaster, as the news has shown us in recent months.

“In Quebec, it is the government’s mania to send money to businesses and try to choose winners and losers. And constantly in the media, we are reminded that this is a bad approach,” says Gabriel Giguère, public policy analyst at the Montreal Economic Institute.

Subsidies paid by the Quebec state to businesses jumped 67% under the Legault government, calculated The Journal. Part of this amount is paid in the form of aid to large companies, often foreign multinationals.

“Whether it is Lion Électrique, Taiga Motors or Northvolt, it is always a transfer of risk to the population. In the end, it does not pay off for Quebecers. On the contrary, it costs us money,” adds Mr. Giguère.

Jobs… in the public sector

The subsidies given by the government do not seem to translate into more jobs. Like the chronicler of Journal As Michel Girard has demonstrated, Quebec has, since the CAQ government of François Legault came to power, the lowest rate of employment growth in Canada.

“And when we look at job creation in 2024 in Quebec, we see that we are losing salaried jobs in the private sector, while jobs in government and in the public sector are increasing… It is a dynamic that clearly does not work,” adds Gabriel Giguère.

Has the strategy of providing subsidies increased productivity in the province? Nothing less certain. According to the Institut du Québec, productivity decreased in Quebec and elsewhere in Canada between 2022 and 2023 (latest data available). However, it increased in Quebec (5%) and decreased in Ontario (-2%) between 2018 and 2019, which helped to reduce the productivity gap between the two provinces.

But in recent decades, productivity growth has been slower in Quebec than in Canada and than in other OECD countries.

Reduce the tax burden

“Economic growth requires small and medium-sized businesses, so we must aim for measures that will help them and not choose winners while letting others make arrangements on the job,” argues François Vincent, president of the Canadian Federation. of the independent business.

Survey after survey, the message is clear: SMEs disagree with the current business support system.

“Two out of three companies do not agree with big subsidies for businesses. And according to a Léger survey, only 18% of the population is in favor of giving large subsidies to private enterprise,” he underlines.

A better – and fairer – solution would be to reduce the tax burden on all businesses, he says. “Our members tell us, if we reduce the tax burden on SMEs, they will increase the remuneration of their employees, will invest in business development and in automation to increase productivity,” he says.

Help the little ones

“Quebec has difficulty attracting large companies because we are not competitive on a tax level,” adds Gabriel Giguère. Payroll taxes, for example, are the highest in Canada. If the Quebec government wants to increase productivity and create jobs, it must look to the tax burden and the business environment in general to ensure it is competitive, instead of distributing subsidies.

“It is high time that all the energy that has been put into large businesses in recent years is put into the same way for small businesses. And it must start from the next budget,” concludes François Vincent.