Can Quebeckers still afford their economic development model?

Energy, Frontier Centre, Quebec (historic), Uncategorized, Worth A Look

Émile Proulx-Cloutier is Quebec’s newest celebrity. But it is not the budding theatre student’s talents as a thespian that account for his sudden A-list status.

A little over a week ago, Mr. Proulx-Cloutier headed up a pack of students that hijacked the broadcast of a televised awards ceremony to mark their outrage at reforms to the province’s student aid program. The TV stars in the audience, instead of booing the protesters off stage, clapped loudly. A star was born.

It didn’t matter that, even after the changes, which shift the emphasis to student loans from outright grants, Quebec’s program will remain the most generous in the country. Nor did it matter that university tuition fees remain, on average, 60 per cent lower in Quebec than elsewhere in the country. The overwhelming message of Quebeckers to the government has been: “Touche pas.”

Accessibility to higher education is a sacrosanct tenet of the “Quebec model” of socio-economic development that has mobilized Quebeckers since the Quiet Revolution. That model includes an activist government that spends about 35 per cent more on a per-capita basis than its Ontario counterpart.

In a province where even a high-school education was not so long ago a privilege only bestowed on the elite, the student aid reforms being implemented by Premier Jean Charest’s government have only seemed to rekindle Quebeckers’ commitment to their “model.”

Toying with deep-seated passions of Quebeckers is an occupational hazard for the Charest government as it struggles to modernize the “model,” or, at the very least, to render it affordable. With a provincial debt of about $115-billion, or 45 per cent of gross domestic product, and a greying population that will leave only two workers for every retired person in 25 years, the prospects are preoccupying.

Yet, despite his doomsday warnings about Quebec’s long-term economic decline, Mr. Charest has made very little progress in persuading Quebeckers that there is an urgent need to act.

But while much of the population wants to hear none of it, there is consensus among most political and business leaders in Quebec that the economic model born of the Quiet Revolution has sprung a leak.

The debate, though, is between those who still see a glass half full and those who warn the container is emptying fast.

The glass-half-empty school gathered last week for a day-long conference of Quebec model-bashing. Brian Lee Crowley, president of the Atlantic Institute for Market Studies, was brutal in his assessment of Quebec’s economic shortcomings. On two key measures of a society’s success — its ability to spur the birth rate and attract immigrants — the Quebec model, Mr. Crowley concluded, has been a demonstrable failure.

He went on: Quebec gets about 17 per cent of Canada’s private investment (well below its 23.5-per-cent share of the country’s population). Its powerful labour unions have protected their members’ entrenched interests at the expense of all workers, creating more unemployment and welfare recipients than elsewhere in the country.

Mr. Crowley, of course, prefers market solutions to Quebec’s economic woes, that is, no model at all. But Quebeckers, perhaps because they are historically predispositioned to turn like the sun toward Europe, still like models. The question, the conference organizers asked, then, is whether Quebec should try to emulate Ireland’s Celtic tiger (a very good model, according to a La Presse supplement prepared for the conference), Sweden’s social-democratic society (an okay model) or France’s supposed worker wonderland (bad).

None of the above, according to Parti Québécois Leader Bernard Landry. Two days after the conference, Mr. Landry tabled a 64-page, small-print document outlining his economic vision for Quebec. It involves refining the Quebec model for the 21st century by replacing the state-led attitude of the Quiet Revolution with a state-as-facilitator way of doing things.

Backed up by the previously conducted research of Université du Québec à Montréal economist Pierre Fortin, Mr. Landry’s document (entitled Regard sur les enjeux économiques du Québec) underscores the extraordinary success of the Quebec model in improving living standards in Quebec, particularly among francophones. Whereas the gap in per capita GDP between Ontario and Quebec was 30 per cent in 1960, it has shrunk to 16 per cent today.

How to reduce it further, while protecting “les acquis” of the Quebec model — cheap tuition, daycare and drug insurance, among others?

The solution may lie, as it did 40 years ago, with Hydro-Québec. Mr. Fortin advocates steady increases in domestic electricity prices to spur conservation at home and free up energy surpluses for the lucrative export market. For former Liberal minister Claude Castonguay, Quebec Inc.’s eminence grise, the future might lie in Hydro-Québec’s partial privatization. The $20-billion to $25-billion the government could pocket by selling a third of the utility would seriously alleviate Quebec’s debt burden.

And, directly or indirectly, Mr. Proulx-Cloutier’s.