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TACKLING
THE DEBT
Québec’s debt stood at $118 billion on March 31, 2006, which represents close to 43% of our economy and almost double the Canadian average.
Firmly resolved not to leave future generations with the heavy burden of repaying the public debt, the government’s aim is to reduce the debt below 25% of GDP by 2025-2026, i.e. the current average of the Canadian provinces.
Currently, the government pays over $7 billion in interest on Québec’s debt, making it the third-largest expenditure item after health and education.
Our budgetary discipline has enabled us to make great strides in restoring order to public finances. We can now take up the challenge of reducing the debt burden with even more determination.
Moreover, on October 24, 2006, the Minister of Finance announced that the government would make, under the provisions of the Act to reduce the debt and establish the Generations Fund, an additional deposit of $500 million in the Generations Fund from the gains arising from the sale by Hydro-Québec of its interest in Transelec Chile.
With this decision, the balance of the Generations Fund will be close to $600 million as of March 31, 2007, which confirms the government’s commitment to reducing the debt burden for the benefit of future generations. That way, it will be possible, in 20 years, to devote more than $32 billion to paying down the debt.
MOST
FREQUENTLY
ASKED QUESTIONS ABOUT
THE GENERATIONS FUND
| 1.
What is the purpose of the Generations Fund? |
The Generations Fund is devoted exclusively to reducing the debt.
A law to this effect was passed by the National Assembly on June 5, 2006. |
| 2.
How will the Generations Fund be financed? |
To finance the Generations Fund, the government is tapping into our largest collective renewable resource: water.
Water is associated with the Generations Fund’s major sources of revenue:
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•
water-power royalties paids by Hydro-Québec as of January 2007; |
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| • |
water-power
royalties already collected
from private producers of hydro-electricity; |
| • |
a portion of the profits from export sales of Hydro-Québec’s surplus electricity; |
| • |
the government is studying the possibility of introducing a royalty on the harnessing of water. |
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In addition to these four sources, the Fund will also receive all the revenues from the liquidation of unclaimed assets administered by the ministère du Revenu, donations for debt retirement and it may receive a portion of the proceeds of government asset sales.
The last source of revenue consists of the Fund's investment income.
In short, everything has been done so that no new taxes will be levied to finance debt reduction. |
| 3.
Why reduce the debt? |
| Citizens,
society as a whole and Québec’s economy are
suffering the harmful effects of the government’s
heavy debt load. The need to act is urgent, above all,
to improve equity toward future generations, but also
to be better prepared for the demographic shock and ensure
continued funding for Quebecers’ priorities. |
| 4.
Who will manage the Generations Fund? |
The
government will entrust the Caisse de dépôt
et placement du Québec
with the responsibility of growing the assets of the Generations
Fund, which will accelerate repayment of the debt. |
| 5.
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What
impact will the Generations Fund have
on the reduction of Québec’s debt? |
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The burden of the debt in the economy will be reduced to:
- 38% by March 31, 2013
- 32% by March 31, 2020
- 25% by March 31, 2026
By March 31, 2026, more than $32 billion will be available for debt reduction.
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With the creation of the Generations Fund, the
government is taking another step in restoring order to its
public finances and improving equity toward future generations.
This unprecedented initiative is indicative of the government’s
determination to preserve, for the future, the level and quality
of the public services Quebecers value so highly.
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Source: Ministère des Finances
Note: Including the additional deposit of $500 million arising from the sale of Hydro-Québec’s interest in Transelec Chile as announced on October 24th of this year. |
FASCICULE
The
Generations Fund : to foster inter-generational equity,
sustainable social programs and prosperity (52 pages, 736
Kb) 
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