ACQ: Quebec budget lags on short-term infrastructure

Quebec’s construction association says it welcomes increased long-term infrastructure investments announced by the Quebec government in its March 27 budget but regrets the hikes will not immediately bolster a sector that has suffered through a downturn since 2012.

The Liberals promised funding support for three major transportation projects for the first time — Montreal’s new REM LRT system and also Montreal’s Blue Line subway and Quebec City’s Bus Rapid Transit system — but the spending is in the future, noted Jean-Philippe Cliche, economist for l’Association de la construction du Quebec (ACQ).

Help is needed now, said Cliche, pointing out since 2012, person-hours of work per year in the construction sector have dropped from 165 million to 140 million.

"We don’t really see an increase in the construction industry this year, at least not in the public sector," said Cliche.

"There is no new money in the budget, however next year and for the next three years, there will be a billion dollars more. So it is good news in the mid term in the public sector, but for now it is not going to stop the decrease in construction that we have been seeing since 2012."

The REM project was the big new job everyone had their eyes on this budget and the Liberals delivered, Cliche noted.

CDPQ Infra, the infrastructure arm of the Quebec pension fund Caisse de depot, announced plans for the project just a year ago with the latest update budgeting $6-billion to build an automated, electric LRT network 67 kilometres long with 27 stations.

The Caisse is committed to spending $2.67 billion and in the March 27 budget the provincial government pledged $1.28 billion in future support. Now the parties are waiting for the federal government to climb on board, said Cliche.

There are also promised investments of $333 million over the next five years to expand public transit and improve support for paratransit throughout the province. But Cliche said the spending was imbalanced and the province’s infrastructure gap in other areas was not addressed by Minister of Finance Carlos Leitao.

"It’s good for the civil engineering sector," said Cliche. "We will never complain about it, obviously we wanted this kind of transit here in the province, but at the same time if you put a lot of money into those projects you neglect maybe schools and hospitals. Hopefully this is not going to happen.

"One thing is that in Quebec we have been investing in road infrastructure, we are getting better in that, now our elementary schools and high schools need renovations. Our hospitals as well. But our schools, they were constructed 50 or 60 years ago, the gyms are the exact same gym that I had when I was going to school, it is a little scary."

The finance minister brought in a balanced budget for the third year in a row, a feat Cliche said the ACQ supported. Spending under the Quebec Infrastructure Plan covering the period 2017-2027 was targeted at $91.1 billion, an increase of $2.4 billion compared to 2016-2026.

"I think we understood the lesson from the mid ’90s," Cliche said about deficit spending.

"Paul Martin explained how important it was to balance the budget and we still here in our province really feel the government should balance our budget so it is really welcomed from us and the population as well.

"Only Trudeau cannot balance the budget and we are still happy. He’s a magician I guess," said Cliche with a chuckle.

In prebudget consultations the ACQ had asked that if the RenoVert green home-renovation tax credit were discontinued, a tax credit to renovate small businesses be introduced as its successor. The RenoVert program was extended another year but still Cliche said a commercial renovation tax credit is overdue.

"The Canadian Tires and Walmarts don’t need a tax credit, they are pretty good by themselves, but the hairdressers or little stores, they do not look very good, and I feel they could really use these tax credits if they were available," said Cliche.

Another tax measure raises taxes on most businesses with three employees or less from eight per cent to 11.8 per cent, retroactive to Jan. 1. This is a hit of the sort that tends to discourage full reporting of income among small businesses, Cliche commented.

"We have made the research, the tax is going to be four times higher than the average province in Canada," he said.