Business embraces Quebec budget; critics slam tax cuts

Quebec's Liberal minority budget got a lukewarm reception on most fronts except from the province's business association, which welcomed the $950 million in tax cuts it says will stimulate economic growth.

"It's a budget that touches on the real strategic questions, that doesn't spread itself too thin, that is very targeted, and proposes real solutions," said Franoise Bertrand, president of Quebec's Federation of Chambers of Commerce.

However, other observers think the tax cuts, to be paid from an envelope of federal transfer money originally meant to resolve the fiscal imbalance, could be put to better use elsewhere.

The money was burning a hole in the Liberals' pocket, but they were too quick to spend it, said Henri Mass, president of the Fdration de Travailleurs du Qubec: "We could have put that money in the health-care system, and then in education."

Mass was also disappointed there weren't more measures to assist the manufacturing industry, which has been broadsided in recent years by plant closures.

But business leaders were pleased to see the Liberals fast-track a commitment to eliminate taxes on capital gains, which it promised to phase out by Dec. 31, 2010.

"It's a very positive note that we have here," Bertrand said, while noting it puts significant pressure on businesses in depressed sectors to rebuild on their own dime.

The Liberals' contention that their budget is balanced is misleading, said Sbastien Lavoie, a Montreal-based economist with Laurentian Bank Securities.

"There's an illusion of a balanced budget, but it's not, because the debt is increasing, Lavoie said. "There is still a world apart between the government's finances, which are deteriorating, and what the government is showing the taxpayers, which is that we have a deficit zero."

Economist encouraged

Lavoie said it's encouraging to see the government take steps to increase its financial transparency, notably by adopting recommendations made by the Quebec auditor general on including school board and hospital deficits in the provincial budget.

However,he added, it will take time: "You cannot change accounting practices in a month."

The Liberal task force on health-care financing to be headed by Claude Castonguay, a health minister under Robert Bourassa was dismissed by critics.

Quebec doesn't need another new health care study, said Lise Denis of the Quebec Association of Health Establishments, "what we need is a plan to move ahead."

The Quebec Federation of Women was disappointed to see the absence of 20,000 day-care spots promised in the spring provincial election.

"There are thousands of families waiting," federation president Michle Asselin said.

And students were not impressed by the budget's formal commitment to lift a decade-old tuition freeze, a hike that will cost an average of $50 a semester.

"The Liberal government reneged on its promise to reinvest in universities," said Jean-Patrick Brady, president of the Quebec Federation of University Students.