Que. budget tackles deficit at consumer cost

Quebecs Liberal government is staying the course to master the provinces massive debt, with a new $69.1 billion budget that caps program spending and raises consumer fees including tuition.

Quebec is ahead of schedule to reduce its looming deficit and is on track to achieve a balanced ledger, said Finance Minister Raymond Bachand, who tabled his budget 2011-2012 on Thursday.

A balanced budget is achievable by 2013-2014, given Quebecs relative resilience through the recession two years ago, the finance minister said.

But eliminating Quebecs debt requires "rigorous management" given "our debt level and aging population," Bachand said.

If the province can "control spending, and control the deficit, we can look and plan for the future."

Public program spending will go up by 2.4 per cent, with health care accounting for 70 per cent of new costs.

Revenue generated by user fees and "aggressive" tax evasion recovery will partially offset spending increases, Bachand said.

Tuition fees are going up in September 2011, by an average of $325 per year, for the next five years.

Public pension contributions will increase by 0.15 per cent per year for six years. Higher QPP contributions come with new pension rules to encourage people to delay drawing benefits.

The Liberal governments 2011-2012 budget also proposes several targeted public service funds for road infrastructure and health care that will be financed in part by "indexed" user fees.

Many of those consumer costs were first introduced in the 2010-2011 budget, including a $25 annual health service fee, a one per cent provincial sales tax hike, and staggered gas tax increases.

The budget proposes measures for natural resource development, including a review of Quebecs mining royalties, and funding for shale gas development.

The budget also pledges $1.6 billion over five years for the Liberal governments ambitious Plan for Northern Quebec, a long-term road map for economic development.

Zero deficit fantasy says opposition

The Parti Quebecois called the Liberals balanced budget promise a pipe dream and questioned the governments accounting.

"They will miss it by [one billion] dollars," said PQ critic Nicholas Marceau. "It will be a complete failure."

Business leaders were more optimistic, saying the Liberal government is sending the right signals about cleaning up its books.

But it could do more to reduce public spending, said Francoise Bertrand, president of the Association of Chambers of Commerce.

"We feel if the private sector has to improve productivity" to balance their budgets, "the public sector should do the same."

The government still has work to do to streamline its health care and education services, Bertrand said.