Quebec economic update: $2.1B in new spending, end of tax credit for some older workers

Quebec Finance Minister Eric Girard tabled an economic update on Thursday with $2.1 billion in new spending over five years amid what he described as a stronger-than-expected recovery from last year’s economic slowdown.

Girard painted a positive picture of the province’s finances despite a projected $11-billion deficit that remains unchanged from March’s budget.

“Quebec is progressing,” he told reporters. “The return of inflation to a low and predictable level, combined with the reduction in interest rates, favours economic recovery in Quebec in 2024 and 2025.”

He said real GDP growth is expected to be 1.2 per cent in 2024, compared with the 0.6 per cent that was expected. However, spending is also up, with Girard pointing to expenses related to record-breaking flooding this summer and increased health and social services costs.

The new spending he announced includes more than $250 million for the forestry sector and $1.2 billion for community development, including $880 million for public transit.

The government is also setting aside $250 million to assist flood victims and rebuild infrastructure following post-Tropical Storm Debby, and $208 million to promote access to housing.

2:13 Debby in Montreal: Legault government accused of not taking widespread flood damage seriously

Girard told reporters the government is still reviewing its spending as it moves toward its goal of balancing the budget by the 2029-30 fiscal year, with more details to be provided in next year’s budget.

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As part of the review, the government decided that Quebecers between the ages of 60 and 64 will no longer be eligible for a tax credit that was introduced in 2012 to encourage older workers to stay in the workforce. Girard said Thursday the average age of retirement in Quebec has risen to 64.7 years in 2023 from just over 61 years in 2011.

“For people between the ages of 60 and 64 years old, the historic gap that existed with Ontario has practically disappeared,” he said. Nearly 200,000 60- to 64-year-olds are expected to lose out on an average of about $1,000 per year due to the changing eligibility.

The government is also clawing back the amount of the credit for higher earners who are 65 and over, beginning at $56,500 in net revenue. Those who make over $81,500 will get no tax credit.

These changes are expected to save the government about $200 million per year, said Girard, adding that “people expect us to review measures and eliminate those that are no longer justified.”