We’re talking… in anticipation of Canada Day. If Quebec had separated on March 31, 2023, what would Quebec’s gross debt be?
Well, the Country of Quebec would have found itself with a gross debt of $642 billion, or $74,038 per head of Quebecer. This is equivalent to 117.7% of Quebec’s GDP. Phew!
The federal government’s share of the debt alone that would have to be assumed in the event of separation was $322 billion. The other $320 billion of the gross debt represented the debt of the various Quebec public administrations for which we are responsible, and even the debt of the Quebec government, Crown corporations, municipalities and universities.
Having to assume such a gross debt of $642 billion, is it viable for Quebec?
According to calculations made by those responsible for the 2024 Edition of the Overview of public finances – Michaël Robert-Angers, Frédérick Hallé-Rochon and Luc Godbout –, Quebec would have appeared in 2022 in fifth place among the most heavily indebted countries within the 30 OECD countries.
Only the United States (where gross debt amounts to 120% of American GDP), Italy (140.5% of Italian GDP), Greece (179.5% of Greek GDP) and Japan (257.2% of Japanese GDP) find themselves in a worse financial situation than Quebec.
Our gross debt, however, far exceeds the average gross debt/GDP ratio of advanced OECD countries, which is 76.5%.
Defenders of a sovereign Quebec could, however, argue that our gross debt ratio of 117.5% of GDP is still not light years away from the six other OECD countries that are struggling with a “debt/GDP” ratio exceeding the 100% mark, namely Portugal (112.4%), France (111.8%), Spain (111.6%), Canada (107.4%), Belgium (104.3%) and the United Kingdom (100.4%).
NOW THE NET DEBT…
Based on a comparison at the level of net debt (after deduction of the financial assets of the Quebec government), Quebec improves its position. It goes from 5e rank of the most heavily indebted OECD countries in 9e rank. Quebec’s net debt amounts to 418 billion, which includes a net debt of 236 billion for Quebec public administrations and a net debt of 182 billion on the part of the federal government.
Quebec has a net debt-to-GDP ratio of 76.7%, compared to an average ratio of 48.1% for the 30 advanced OECD countries. Per capita Quebecer, the net debt to be borne is $48,242.
But with its ratio of 76.7% of GDP, Quebec performs relatively well, compared to the ratio of 90.5% for the United Kingdom; 90.7% for Belgium; at a ratio of 94.7% for the United States; 97.4% for Spain; 101.2% for France; 106.7% for Portugal; 129.1% for Italy; and 150.3% for Japan.
Another way of seeing the extent of the debt. If we take into account the $113 billion in assets of the Quebec Pension Plan, Quebec’s net debt (in 2022) falls to $305.4 billion. In such a case, the “Pays du Québec” finds itself at 12e ranks among the most heavily indebted countries among the 30 OECD members, with net debt representing 56% of its GDP.
But based on net government debt, Canada ranks 6the ranks among the least indebted countries, with net debt equivalent to only 15.6% of the country’s GDP.
IS FEDERALISM PAID OR NOT?
According to the provincial and territorial economic accounts, Statistics Canada reports that in 2022 we paid the federal government the sum of $77.2 billion in taxes, contributions and charges of all kinds.
In return, the federal government spent the sum of $89.8 billion in Quebec, which includes the quantity of current transfers to Quebec households (allowances, benefits) and transfers (health, social, equalization) to the Quebec government. , as well as federal spending on goods and services made in Quebec.
Result: in 2022 the federal government spent some $12.6 billion more in Quebec than the tax revenue collected from Quebecers. And this gap climbs to $19.3 billion when we include “our share” of interest costs on the federal debt which amounted to $6.7 billion in 2022.
Over 11 years? According to data collected by Statistics Canada, the federal government spent in Quebec from 2012 to 2022 some $273.7 billion more than the revenue it collected from Quebec. Oh my!
BUT ACCORDING TO THE PARTI QUÉBECOIS…
Never mind, in the Report on the finances of an independent Quebec that PQ leader Paul St-Pierre Plamondon published in October 2023, the recovery of revenues of $79.2 billion sent to Ottawa and the potential savings of $8.8 billion made on federal charges to be assumed by an independent Quebec would have had the effect in 2022-23 of leading to a deficit of only $10.5 billion for the Pays du Québec.
PQ leader Paul St-Pierre Plamondon presents his update of the Budget for Year 1 of a sovereign Quebec in Quebec City, Monday, October 23, 2023. STEVENS LEBLANC/JOURNAL DE QUÉBEC/AGENCE QMI.
Photo Stevens LeBlanc
This is $2.6 billion less than the $13.1 billion deficit that the current “Province of Quebec” presented in 2022-23 when we include Quebec’s share of the federal deficit.
The Parti Québécois claims that over the seven budget balances from 2021-22 to 2027-28, “independent Quebec” would have generated “additional savings” of $12 billion compared to “Quebec-province”. Thus, instead of ending up with a cumulative deficit of $67.9 billion, “Quebec country” would show a cumulative deficit of $55.9 billion over these seven budget years.
It won’t be easy when the time comes to vote YES or NO!
