• Economy and public finances
• Education
• Health
• Tax

• Economic development
• Immigration
• Cyber security and data governance

Economy and public finances

While the first CAQ mandate was significantly affected by the pandemic, the new government will take office in a time of considerable economic uncertainty. Soaring inflation in the last few months, tightening monetary policies by central banks around the world, persistent supply chain problems and geopolitical instability worldwide will lead to a global economic slowdown. In the coming months, Québec will not be able to escape the impact of these phenomena.

In this context, it is essential that the new government take a prudent approach to managing the government’s finances. Quebecers have made significant efforts over the past decade to improve the state of our public finances.

The objective of maintaining a balanced budget should therefore be maintained despite the economic upheavals. Using the Generations Fund to finance new initiatives also seems risky in the current uncertain economic context. The Fund has proven its effectiveness as a tool for managing Québec’s public debt and as a vehicle for intergenerational equity.

Moreover, fighting inflation will be one of the major priorities of the new Québec government in the next few months. Although inflation is expected to slow down in the coming year, its impact will continue to be felt by Québec households and businesses.

In this regard, targeted measures to support those most affected by inflation seem more desirable than general tax measures that could indirectly fuel the rise in prices.

Lastly, in the current context of an aging population and labour shortages, the new government must continue to implement initiatives to promote labour productivity and work incentives.

This is how Quebecers’ standard of living will be maintained in the long term and how we will be able to afford the public services that society needs.

Jean-Philippe Brosseau
Vice President of practice
Management consulting

Education

In his first speech following his re-election as Premier of Québec, François Legault stated that education will be the government’s priority for its next mandate. To do so, the government will have to work on several fronts simultaneously to set the right conditions for learning and create an environment conducive to effective teaching for current and future students.

A healthy learning environment begins with an adequate infrastructure. The government must continue its commitment to invest heavily to address the backlog of infrastructure maintenance and upkeep. In order to optimize the use of sports and cultural facilities, sharing agreements with municipalities should be accelerated for the benefit of students and communities.

Technological resources, such as advanced data analysis and artificial intelligence, have shown that we can act strategically and quickly to reduce gaps following the pandemic and improve student retention. This means making their use more accessible and driving the pedagogical and organizational transformations required within the school system to ensure that all students are supported as early as possible in their journey.

We also have to optimize the training of teaching and educational support staff. The number of students with special needs is increasing. It is therefore important to have enough specialists in schools and classrooms, such as psychoeducators, and to draw on winning practices from educational research.

After overhauling the governance of school boards to transform them into school service centres during its first mandate, the government must now work to build a pool of quality successors to counter the shortage of managers and teachers in the school network.

Lastly, all Quebecers must have access to quality education that promotes educational success. Recent studies on the fluctuation of graduation rates must become an issue that concerns us all.

Pierre Fortin
Partner
Management consulting

Health

At the end of its first term, the CAQ government outlined its main priorities, raising hopes in many respects. However, how will challenges be addressed and, more importantly, what can the population expect in the coming years?

First, all Quebecers face great difficulties in accessing health and social services. Improving access must be the main objective, and all actions must flow from it.

To achieve this, tangible gains must be made with respect to the prevailing labour shortage, a major obstacle to improvement. This will require a renewed management approach, working conditions that meet the needs of all professionals and workers, and remuneration methods that align with Québec’s financial capacity, while making it possible to mobilize the workforce.

Efficiency gains must also be attained: simplifying, reinventing and strengthening patient pathways, in particular to avoid ERs and hospitalization, enhancing efficiency (using resources fairly and appropriately) and reorganizing administrative and clinical services by making greater use of new technologies and innovations.

In this regard, it will also be necessary to continue the shift towards a data culture that facilitates day-to-day decision-making and complete the revision of the financing method and the network’s digitization.

It will also be necessary to review all players’ areas of expertise to promote complementarity, invest more in public health and prevention, and introduce a financing shift similar to that of some other countries by investing more in front line and home support services and less in hospitalization and housing.

And although we welcome the review of the housing model with seniors’ homes and accreditation of private CHSLDs, the aging population curve indicates that this will not be enough and that we must look ahead now and set clear directions.

This is a collective project that will require making difficult decisions but which should bring us together.

Jonathan Perrier
Senior Director
Management consulting

Tax

Our firm has raised this issue many times: our tax system is out of step with the current reality.

Over-taxation and red tape are hampering the growth of many organizations.

Québec entrepreneurs are under the greatest tax pressure in the country.

In addition to giving our entrepreneurs and SMEs more breathing room from a tax perspective, tax incentives must be created to better address the labour shortage.

Intended to encourage experienced workers to stay longer in the workforce or return to it, the current Career Extension Tax Credit unfortunately only benefits low-income workers and applies only to negligible amounts.

This 15% tax credit does not currently apply to the first $5,000 of wages or business income earned.

Also, starting at annual earnings of $35,650, it begins to decrease and disappears for those earning more than $65,650 annually, or more than $68,650 if the worker is 65 years of age or older.

If we want to create a real incentive, the tax credit should remain at a rate of 15%, with no reduction, regardless of the individual’s taxable income, and the $5,000 deductible should be abolished.

In addition, a tax shield should be applied if an individual receives Old Age Security or Guaranteed Income Supplement benefits and chooses to work past age 60.

In doing so, the social program benefits paid to the individual would be offset by a refundable tax credit in the event of a reduction or loss of these social programs, up to an eligible annual salary increase of $20,000, for example.

Sylvain Gilbert
Partner
Tax

Economic development

Continuing to close the wealth gap with Ontario will remain a priority for the CAQ government. The government’s targets will include increasing business productivity and creating high value-added jobs.

However, the government will have to address the issue of labour shortages, otherwise businesses will lose their competitiveness to foreign competitors or simply move their production facilities elsewhere.

For local businesses, this issue will likely result in a number of them reducing their hours of operation or closing their doors, which will adversely affect the vitality of many regions.

Along with the issue of attracting labour and regionalization, it will be important to prioritize the factors that make it possible to welcome and integrate workers in their living environment.

The availability and accessibility of housing and daycare spaces and effective welcoming mechanisms for newcomers must be among the various ministries’ priorities, starting in the first year of the new mandate.

In terms of digital transformation, it is well known that our businesses are falling behind. To address this issue, ensuring the continuity and predictability of support funds and simplifying existing support programs will be needed across the value chain.

Lastly, the government and all ministries will have to recognize the urgency of taking action to reduce the impact of climate change, or risk leaving a legacy that will last for generations to come.

For example, massive investments in the development of public and active transportation, improving the infrastructure resilience or supporting the decarbonization of the economy will need to be made in the short term in order to have a positive impact in the long term.

Immigration

First, it would be in the government’s interest to combine immigration and permanent immigration, both in terms of policies and immigration thresholds.

At AURAY, 90% of the temporary foreign workers recruited for Québec SMEs are Francophones. The reason is simple: Québec companies want to make them permanent residents as quickly as possible. This is why we believe that, in addition to the various programs leading to permanent residence, the government should adjust its targets based on the influx of foreign workers who have been in Québec for more than two years and who are beginning the process of obtaining permanent residence.

Businesses also feel that processing times in Québec for both temporary and permanent residence are unfair when compared to the much shorter times in other provinces. AURAY has raised these timelines with the Québec Ministère de l’Immigration, de la Francisation et de l’Intégration on several times, suggesting that the same procedure be implemented as in other provinces for labour market impact assessment (LMIA) requests. T

his would mean no longer requiring that employment contracts be concluded prior to the submission of the LMIA application. This Québec requirement slows down the process by a few months for our businesses that need workers quickly. As for permanent residency for these foreign workers, compared to other provinces, there is a 6- to 18-month difference in processing times in Québec. This further weakens the attractiveness of our companies for foreign workers.

Finally, given the economic outlook suggesting a certain slowdown, the government should quickly consider reopening its Immigrant Entrepreneur Program, which allows the creation or acquisition of businesses in Québec, as well as its Immigrant Investor Program, which allocates funds to Investissement Québec. The latter program supports the growth of our businesses, at no cost to Québec taxpayers.

Marc Audet
President and Chief Executive Officer
AURAY Group
Raymond Chabot Grant Thornton’s immigration division