Quebec launches stimulus plan as election talk heats up

Reuters
Quebec Minister of FInance and Economy Marceau waits for Premier Marois to release new economic policy in Montreal
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Quebec Minister of Finance and Economy Nicolas Marceau waits for Premier Pauline Marois to arrive and …

By Louise Egan

OTTAWA (Reuters) - The government of Quebec announced a C$2 billion ($1.94 billion) stimulus package on Monday aimed at creating jobs and jump-starting the French-speaking province's sagging economy, which has underperformed the broader Canadian economy this year.

Premier Pauline Marois announced the spending package, which includes tax breaks and power subsidies for companies that invest, amid speculation her separatist government might force a snap election later this year in hopes of turning her minority government into a majority.

But she denied any electoral ambitions and cited growth downgrades by other major economies and the situation in the United States, where a political deadlock has partially shut the U.S. government and raised fears of an eventual debt default, as a reminder of how "precarious" the external environment is.

"Our action has become more pressing because of the world economic context," Marois said in a speech unveiling the spending package. "The recovery has been slow to be felt everywhere in the world."

"These are not policies that were written on the back of a napkin in the expectation that there would be an election tomorrow morning. Far from it," she added.

Quebec's economy contracted in recent months and job creation has also disappointed, with the provincial unemployment rate at 7.9 percent compared with the national average of 7.1 percent.

The government plans to eliminate its budget deficit in the 2013-14 fiscal year.

Marois promised four short-term measures aimed at creating 43,000 new jobs by 2017 and triggering public and private investments of C$13 billion over 10 years.

These include tax credits for companies and individuals; subsidizing electricity for companies that make major investments, speeding up investments in infrastructure, particularly schools and sports establishment; and investing in a road and railway in northern Quebec.

Another prong of what Marois called a "restructuring" of the Quebec economy aims to bolster research and innovation, develop new export markets, boost manufacturing and become a world leader in the creation of electric vehicles.

Some analysts speculate that Marois, whose Parti Quebecois wants the province to break away from Canada, is betting the opposition parties will bring down her government and force an election, possibly in December.

The economic overhaul is the latest bold move by her government in as many months.

A political storm was already raging over the government's proposal last month to ban teachers, doctors and other public workers from wearing Muslim headscarves, Jewish skull-caps or other visible religious symbols.

It is not clear whether the so-called charter of values will broaden support for the separatists, which have twice lost referendums on separating from Canada, or backfire.

So far, polls suggest it has deeply divided the province and the separatist movement itself. Three senior patriarchs of the party have voiced their opposition and polls show the opposition Liberals gaining ground.

The charter requires support from at least one other party to become law, and it will certainly face legal challenges.

(Additional reporting by David Ljunggren; Editing by Dan Grebler)

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