Return to balanced budget won't be easy: minister

Quebec taxpayers should brace for some pain as the province heads deeper into deficit than originally expected, Finance Minister Raymond Bachand said Tuesday.

The provincial deficit will reach $4.7 billion by the end of the fiscal year — $749 million more than announced in the budget last March, Bachand said in an economic update presented to the national assembly.

He blamed a deeper than expected recession, which brought job losses.

"If you lose your job, you’re still going to feed your children," he said. "You’re going to borrow money from the bank to feed your children. Then afterward, you have to reimburse it."

But Bachand played down the impact of the deficit.

"When we look at the Quebec economy, it is going better than our neighbours, and the rest of the world," he said. Quebec's deficit is at 1.6 per cent of its gross domestic product, compared to 3.7 per cent for the Canadian government and 10 per cent for the United States, he said.

"Our public finances are under control," Bachand said.

Quebec expects to have accumulated a deficit of $13.2 billion in the next few years but aims to be back in the black in 2013-14. Achieving a balanced budget by then won’t be easy, Bachand warned.

The government will pursue several options, including a crackdown down on tax cheats, especially in the restaurant and construction industries and the contraband tobacco trade.

The government will also cap spending at 3.2 per cent — an ambitious goal considering spending has increased an average of 4.9 per cent a year since 2003. Last year, spending rose 6.8 per cent. News of the spending cap comes on the eve of the government's negotiations with public sector unions.

Bachand said the government is also looking at other options, such as increasing the sales tax next spring, raising electricity rates and indexing fees for other services.

The minister defended the decision not to cut public services.

"It's a choice we made … to support our workers and bring liquidity to companies, so they can get through this recession. And you know, when you bring liquidity to companies, workers keep their jobs."

Opposition doubtful

Nicolas Marceau, the Parti Québécois finance critic, said the government was "wearing rose-coloured glasses" and predicted the provincial deficit would top the $4.7 billion anticipated by the minister.

Marceau said he would have liked the update to include information about the province's borrowing and its impact on the debt.

Francois Bonnardel of the Action Démocratique said the government should cut spending before asking Quebecers to pay more and should have provided a more concrete plan for the return to a balanced budget.

Amir Khadir of Quebec Solidaire said he appreciated the government was not "giving in to panic" and the "zero-deficit obsession" by stretching the plan to balance the budget over several years.

Quebec is only the latest Canadian jurisdiction to project higher-than-expected deficits.

Ontario announced its shortfall this year would balloon to $24.7 billion, up from the $14.1-billion forecast in the March budget and the revised June prediction of $18.5 billion.

Federal Finance Minister Jim Flaherty has admitted the national deficit is expected to grow to more than $50 billion — much more than the $34 billion he predicted in the January budget.