Quebec’s economic update indexes social assistance, increases family allowance
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Finance Minister Eric Girard said the move reflects the reality of Quebec’s finances and the need to help those hurting the most.
Published Nov 07, 2023 • Last updated 41 minutes ago • 3 minute read
Quebec Finance Minister Eric Girard’s economic update confirms hints he has been dropping for weeks: Quebec’s economic growth has slowed and that situation will linger. Photo by Jacques Boissinot /The Canadian Press
QUEBEC — With limited leeway at his disposal, Finance Minister Eric Girard has used his fall economic update to index the income tax and social assistance system by $2 billion a year to help Quebecers cope with the rising cost of living.
Presenting his update Tuesday, Girard said that as of Jan 1, 2024, taxpayers will benefit from a 5.08 per cent indexation, which means higher amounts for personal tax deductions as well as more tax credits and assistance for individuals. The amount is almost twice the estimated inflation rate for 2024, which is 2.71 per cent.
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In that sense, Girard goes farther than he is obliged under the current law, which requires him to automatically index the system to the rate of inflation.
Girard said his move reflects the reality of Quebec’s finances during a period of flux and the need to help those hurting the most.
“The situation is very difficult for Quebecers,” Girard said at a news conference releasing his report. “The government’s actions are designed to protect their purchasing power.”
But unlike past updates, Girard is not offering any “inflation shield” cheques.
Given the financial reality, he said indexation is the best he can offer.
“We are not in a recession but in a very difficult period, which can be called stagnation,” he said.
His indexation applies across the board of the government’s services. It is the second year in a row that Quebec has indexed higher than the inflation rate.
Concretely, the basic personal amount of a single person living on social assistance will rise from $8,700 to $9,144, an increase of $444 annually. There are currently 355,689 households living on social assistance, up 28,000 from a year earlier.
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The basic family allowance per child, which is pegged to family income, will go from a maximum of $2,782 to $2,923, an increase of $141 annually.
On taxes, the maximum threshold at which citizens start to pay income tax is also increased. In the third tax bracket, where people pay 24 per cent tax, the level rises from $119,000 to $126,000.
Indexation will represent, on average, $282 per taxpayer for 2024, Girard said.
Girard is offering other assistance in the short term and over the long term.
To deal with short-term crises, the Quebec Food Banks Network, which has been asking for an $18-million government top-up of their funding to cope with demand, gets $21 million immediately.
Quebec has already announced additional aide for emergency shelters for the winter months ahead.
In the long term and with the help of $900 million from Ottawa’s Housing Accelerator Fund, Quebec will invest $1.8 billion over the next five years to build 8,000 social and affordable housing units to help lower-income households.
Broken down, Quebec will build 7,500 affordable housing units as well as 500 units to be reserved for people experiencing homelessness.
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Girard has not budged on the amount the government has earmarked to help Quebec’s transit corporations deal with the deficit. The economic update confirms the amount announced last Friday by Transport Minister Geneviève Guilbault: $265 million.
He does confirm $961 million over five years to sustain climate transition in Quebec. That includes $292 million in adaption measures and to mitigate the risks associated with forest fires. In addition, there is $404 million to support communities and the forestry sector, which are still dealing with the devastating effects of the forest fires of 2023.
But Girard’s update confirms hints he has been dropping for weeks: Quebec’s economic growth has slowed and that situation will linger.
“The persistence of inflation and high interest rates will dampen economic activity this year and next in most economies and Quebec will be no exception,” the update says.
It add the “negative adjustment,” sparked by the combined effects of lower tax revenues and debt servicing will be $1 billion.
For 2023, projected growth in Quebec is 0.6 per cent but Girard adjusts his 2024 growth figures downward: from the 1.4 per cent he included in his March budget to 0.7 per cent.
He nevertheless maintains his $4-billion 2023-2024 deficit projection, largely by dipping into the $1.5-billion contingency fund included in his last budget. Quebec’s target of returning to balanced books by 2027-2028 is “maintained.”
His forecast on the unemployment level, nevertheless, remains stable. It was 4.3 per cent in 2023 and is projected to be 4,4 per cent in 2024.
pauthier@postmedia.com
twitter.com/philipauthier
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