‘More projects than dollars’: the complicated balancing act of managing Quebec’s public finances

Many are looking closely at how much Quebec spends on what projects as the province tries to balance its books.

It was a surprise to many Quebecers when the provincial government reversed course earlier this month and said it had somehow found money for the badly needed repairs at Montreal’s Maisonneuve-Rosemont Hospital.

The province had initially postponed the construction project, citing budgetary constraints, but all that changed when Health Minister Christian Dubé said on May 6 that the government had found the necessary funds after all.

So, how does a government, especially one that is facing a historic deficit forcing it to rein in spending, decide how to fund one project over another?

“The first thing I would say is there are always way more projects than dollars,” said former Quebec MNA Geoff Kelley.

Kelley, who served as Minister of Indigenous Affairs for the Quebec Liberal Party (PLQ) from 2011 to 2012 and from 2014 to 2018, says he knows what it’s like to be in government and plead for funding for worthwhile projects.

“It’s a very complicated process, but you try to be the best informed possible, and then you go to bat, and sometimes you win and sometimes you don’t win, then that’s part of the game as well,” he said.

According to Concordia University economics professor Moshe Lander, coming up with a budget is often a straightforward exercise, since the majority of the funds are predetermined for major sectors like health care and education, plugged in from the last budget.

Things get complicated, however, when deciding where discretionary spending goes.

One factor governments often consider when making these difficult choices is the marginal benefit versus the marginal cost.

Take, for example, the 2025-2026 budget announced in March when the Coalition Avenir Québec (CAQ) government set aside the same amount of money ($25 million) for the Office québécois de la langue française (OQLF) as it did for extending support to welcome Ukrainians in Quebec ($25.4 million)

It also earmarked $24 million for programs to develop tourist attractions, which is the same amount it said it would spend to hire more wildlife protection officers.

“If the marginal benefit is not equalized across these two projects, then you should be reallocating your budget to the one that delivers the greater bang for your buck. So, that’s the simple economics of it,” said Lander, who also served as a senior economist with Ralph Klein’s Progressive Conservative government in Alberta.

Nevertheless, there are unavoidable political considerations that come into play.

Lander says public pressure can have a huge influence on where taxpayer money flows.

“If they realize that this one group is going to scream unless we give them everything that they want, sometimes they end up getting more than what they deserve merely as a means of shutting them up,” he explained. ”You’re well behaved and you’re quiet, then you’re not going to get as much money as you might otherwise deserve because you’re not creating a fuss about it.”

The government’s about-face on the Montreal hospital came after weeks of mounting pressure from union groups and opposition parties that boiled over when the facility was plunged into darkness after its backup generators failed during a powerful storm, leading to several cancelled surgeries.

Even then, the province didn’t confirm the total budget for the project, aside from announcing approximately $90 million for the hospital’s parking lot.

Quebec’s largest health care union, the Fédération interprofessionnelle de la santé du Québec (FIQ), was quick to point out what it called the “very political timing” of announcing new funding for not just the Maisonneuve-Rosemont Hospital, but others as well.

“With an upcoming byelection in Victoriaville, suddenly the renovations at the Hôtel-Dieu d’Arthabaska Hospital are back on track,” the union argued on May 6.

“It’s not the state of the walls determining the government’s priorities, it’s their electoral agenda. And that is deeply concerning,” added FIQ President Julie Bouchard.

Was the spending worth it?

The government faces scrutiny not just for what it doesn’t pay for, but also for projects that it does decide to fund.

Back in the fall of 2023, the CAQ was heavily criticized for allocating upwards of $7 million for the L.A. Kings to play a pair of exhibition games in Quebec City.

Premier François Legault defended the move back then, saying, “it’s important to invest in leisure, whether it’s sports or culture.”

Last week, La Presse reported that the total subsidy ended up being $5.6 million.

Was it worth it, economically speaking? There’s no clear answer.

CTV News asked Quebec City what the impact of the two hockey games, held in October 2024, was in terms of money brought to the local economy.

A spokesperson for the city said it wasn’t evaluated and referred questions to the provincial government.

A spokesperson for Finance Minister Éric Girard initially told CTV News that, “the spin-offs are long-term: we’re reminding the hockey world that Quebec is a destination of choice, with first-rate infrastructure, history and fans second to none.”

When pressed again for a dollar figure on the economic impact of the two games, the spokesperson said in an email, “we don’t have the number.”

Similarly, Quebec’s tourism ministry could not say what the economic impact was following the 2024 Presidents Cup golf tournament in Montreal, held last September with a $6.5-million provincial government subsidy, which was also criticized.

Tourism Quebec said in an email last week that the analysis is “ongoing.”

“There is a general argument that these kinds of glamorous events, if I can put it that way, put Montreal or put the province of Quebec on the map, and they deserve support,” Kelley said, with the caveat that, in his view, taxpayer money should not have paid for the L.A. Kings exhibition games.

“I think [that] was pretty soundly criticized as unnecessary,” he said.

Spending got out of hand after the pandemic: MEI

The province’s March budget forecasted a $13.6 billion deficit, one of the largest in Quebec’s history.

In the weeks following the announcement, the Montreal Economic Institute (MEI) released a report that found that the provincial government could have been in a surplus in the previous two years had the province slashed spending once the COVID-19 health crisis was over.

“This deterioration of public finances could have been avoided if the government had reduced spending after the pandemic, instead of maintaining it at its extraordinary level,” the report stated.

Gabriel Giguère, a senior policy analyst at the MEI who authored the report, said the Legault government went into what is called the “ratchet effect” trap, in which the size of government and the money it spends fail to wind down once a crisis is over.

“The government never made that cut after that explosion of spending,” Giguère said in a recent interview.

He said he believes the province could have found ways to lower spending by reducing the size of administrative positions in the public service and reassessing subsidies given to private enterprises.

Quebec is now hoping to balance the budget by 2029-2030.

Lander says one of the likely options is to cut spending, as it will become a question of the premier going to his MNAs and asking, “Which one of you is going to give up the hospital, which one of you is going to give up the university, which one of you is going to give up the bridge repairs that I promised, and which one of you is safe enough that you can go back to your voters and say, ‘I know we promised, but these are exceptional circumstances?’”