When the United States sneezes, Canada catches cold and Quebec gets that grippe . - Old Canadian saying.
You could call it an economic year - Quebec Premier Rene Levesque, Feb. 21, 1978.
In an address two weeks ago to the National Assembly, Quebec's Premier Rene Levesque pledged that measures to stimulate the economy and fight growing unemployment would dominate the next session. The announcement marked a shift away from emphasis on his radical political and cultural policies of separation from Canada and predominance of the French language that made International headlines during his first year in office.
His words were greeted with lukewarm applause by the business community because while it appreciated that the Parti Quebeco's was at last giving the economic situation the priority it deserves, Levesque's plan of action contain few new proposals.
"It's true there is nothing essentially new," the premier told a new conference afterwards, "in the same way the problems we've facing exactly new." The measure include a "Buy Quebec" campaign development of the new and the development of agribusiness and [WORD ILLEGIBLE] to restrict [WORD ILLEGIBLE] land, promotion of tourism, a convention center in Montreal and a productivity institute to promote experts.
The persistent problem facing Quebec - even more so than the rest of Canada - is recession. Last year Canada's real economic growth slumped to 2.9 percent, off from 4.8 percent the previous year, according to figures released in January by the Conference Board in Canada. Personal income grew 9.7 percent, compared with 14.3 in 1977. Employment was up only the year before. Inflation hovered at 8 percent, albeit an improvement over 1976.
In Quebec the same statistics showed 2.6 percent real growth, compared with 3.5 in 1976. The gain in personal income during the first 10 months of 1977 paralleled the national average, but it was nevertheless the smallest rise since 1970 and less than half the [WORD ILLEGIBLE] recorded in 1974.
While the Conference Board said [WORD ILLEGIBLE] retail sales would equal these in the rest of the country. States Canada recently painted a domier picture a gain of 3.6 percent to $132 billion the lowest of any province. In Montreal sales rose 0.5 percent, versus 5.5 percent in Toronto. More than three-quarters of all retail businesses had lower growth, especially jewelry, furniture and appliance stores and used car dealers. In January Dupuis Freres, the 110-year-old department store in the French east end of Montreal, went bankrupt, putting hundreds of employes out of work.
Unemployment stands at 339,000 or 11.5 percent. There was a one percent rise in employment last year (versus 1.2 percent in 1976), but almost all of the new jobs were in the service sector, many of those in government. A review of the provincial performance by Industry Minister Rodrigue Tremblay shows that manufacturing lost 36,000 jobs. Quebec, he said, is still suffering from the tremendous reduction in purchasing power resulting from oil price increases as well as an inability to compete against imports and expand exports.
Besides the problems it has in common with all of North America, the province suffers from antiquated small business and a traditional lack of management skills. As the old saying goes, these indigenous traits have historically kept Quebec and the Maritime Provinces behind the rest of Canada economically.
Quebec's ability to raise money in the market has been hurt by current political uncertainties as well as the economic situation. Short-term bonds still sell out, but the government is reportedly having difficulty placing long-term bonds privately with institutions. Last week it floated $100 million in 20-year notes yeilding 10 1/4 percent, or about three-quarters of a percent more than Ontario bonds. Some big Toronto insurance companies bought only minimal amounts.
As if that weren't enough. Quebecers are the most highly taxed citizens of Canada, according to the province's Finance Minister, Jacques Parizeau. Last year the average family of four paid $1,000 more in income taxes than did the average Canadian family, because Quebec thus far has not adopted all the tax savings proposed by the federal government. Montreal hoteliers, already suffering from a dearth of tourists and conventions, were recently slapped with a new sales tax that results in an average tax per room of $3,291 annually, compared with $721 in Washington, according to Laventhol and Horwath.
Despite heavy taxes,the financial department expects a $250 million shortfall in revenues in fiscal 1978 that will not entirely be defrayed by federal transfer payments of $235 million.
Noting that 1978 "probably will not be a wonderful year anywhere," the premier neverthless told his people they were also at fault. "Collectively, it is very simple," he said. "We Quebecers do not work enough. Not enough in any event to justify or to provide everything that is demanded by various individuals and groups for the immediate and unchallenged enjoyment."
He continued, "As everyone knows, the public and quasi-public sectors, where job security is the rule and so-called fringe benefits are usually better than anywhere else, will henceforth have the obligation to understand that they have become the locomotive and lead car of all our sociiety and they cannot continue indefinitely to be always ahead of the rest of the convoy where, after all, all the others who pay the freight are."
Levesque's critics contend he was trying to prepare the people for a continuing drop in the standard of living. It is more probable he was warning public employes not to demand too much in upcoming labor negotiations.
Levesque has staked his government's - as well as Quebec's - future on a referendum on be held in the fall of 1979 on the momentous issues of political sovereignty-economic association with the rest of Canada and dominance of French language in the province, as set forth last year in Bill 101. At the moment perhaps 40 percent of Quebec's population indicate they will vote yes. Yet if the economic situation continues to deteriorate in the intervening months, Levesque may lose support. Hence the moderate tone of his message to the assembly.
The Conference Board predicts Quebec's real growth in 1978 will be around 4.5 percent just short of the national rate of 4.7 percent. Employment gains of 1.6 percent, due mainly to a strengthening manufacturing sector, will be smallest for any province. Unemployment, however, is expected to rise and retail sales slow slightly.
On Feb. 22 the federal government announced it would spend more then $198 million on capital works project in Quebec in 1978-79, more than in any other province then 198 million on capital works projects in Quebec in 1978-79, more than in any other province. Including the $113 million Quebec stands to get for maintenance and operation of federal buildings, the province will receive a total of $311 million, or 10.2 percent more than in the last budget. This comes at a time when Ottawa is trying to restrain federal spending to a 9.8 percent above last year's levels.
For the second year in a row, the largest federal capital project in the Canadian budget will be $71.1 million for a postal plant in the Montreal area that will ultimately cost $254 million. Treasury Board President Rober Andras denied that Ottawa is using capital works fund as a political weapon to promote national unity by showing Quebecers how much the federal government does for the province.
Levesque, on the other hand, has tried to portray the federal government as a "untiring inventor of Bandaid, improvised, unproductive and ephemeral programs." He charged that Ottawa refused to answer Quebce's pleas for aid for its mining, dairy, pulp and paper, dairy and housing industries at the February economic summit conference.
As a sign of confidence in the future, Levesque emphasized in his speech that in terms of capital investments, last year Quebec did better than Canada as a whole. According to Statistics Canada, Quebecs share of capital spending rose to 23.2 percent last year. The future, he believes, depends on development of Quebec's vast natural resources, led by the provincial government.
Levesque now points with pride at Hyrdo-Quebec, the provincially owned utility he and many others once scorned as wasteful.The four $16.2 billion James Bay power plants, the world's largest hydroelectric project, will have a capacity of 10,260 megawatts when completed in 1985.
There is lingering controversy over great expenditures for great capacity at a time when demand for electric power is not increasing as fast as had been predicted. However, the provincial government believes the project will have no difficulty attracting investors or eventually selling power south of the border. An international consortium recently offered Hyrdo-Quebec $1.25 billion in medium-term loans and stand-by credit.