Quebec on path to Greek meltdown, study claims

By 
  • November 9, 2011

OTTAWA - Quebec could be headed for a fiscal collapse like that threatening Greece if it doesn’t re-examine its social programs, says a new study by the Institute of Marriage and Family Canada.

“There are real reasons to be concerned about the sustainability of the rather ambitious Quebec welfare state,” say the authors of A Quebec Family Portrait released Nov. 7.

“Without substantial fiscal restructuring, the province may not be able to afford to maintain the extensive social benefits it currently offers families.”

Quebec’s debt-to-GDP ratio is 94 per cent, according to an estimate by the Desjardin Group, putting it right behind Japan, Italy, Greece and Iceland, the study says. Canada as a whole is not doing that well either, with a 69.7-per-cent debt-to-GDP ratio.

“Since the Quiet Revolution in the 1960s, Quebec has embarked on a radical experiment in social and economic transformation, which has changed the face and character of that province forever,” say the study authors, Paul Malvern, Andrea Mrozek and Catherine Benesch.

In 50 years, Quebec has gone from being a traditional, religious society with an agricultural and resource-based economy to “a modern, secular, social-democratic state modeled upon Western European lines with a highly diversified and increasingly high-tech economy.”

The authors say reformers created a “large and highly interventionist state that reaches into all aspects of society” to accomplish such radical social change.

“From the beginning, this state has sought to change the way Quebeckers live, work and think — by promoting greater equality and inclusion and by imposing an uncompromising secularism (that at times has smacked of intolerance towards religion and traditional modes of living),” they write.

Quebec has “often led the way” in wealth re-distribution and the development of innovative social programs.

For low-income Quebeckers, the highly progressive tax system is “a blessing rather than a curse” and as many as 40 per cent of Quebeckers currently pay no income tax.

Though the study noted some positive signs — an increase in the fertility rate to 1.74 children per woman in 2008, up from 1.48 in 2004 (though still well below the replacement rate of 2.1); good education outcomes relative to other provinces; and indications the province fared better during the recession than other provinces — it pointed to a number of worrisome trends. Those trends include: the highest tax rates in Canada; the lowest marriage rates — only 2.9 per 1,000 people compared with the 4.4 rate for the rest of Canada; the highest cohabitation rates — 34.6 per cent compared with 18.4 in the rest of Canada; and a coming “demographic winter” as the Quebec population is aging more rapidly than elsewhere in Canada. By 2031, an estimated 1.6 people (in the active age group between 15-64) will support every Quebec dependent.

The authors warned that unless Quebec restores a marriage culture, families will find it harder to recover if austerity measures bring cutbacks to programs they depend on.

The study is available at www.imfcanada.ca.

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