2024 Economic Update

Finance Minister Eric Girard unveiled his seventh economic update today. The deficit is still projected at $11 billion for 2024-2025. Discover the highlights prepared by our team of specialists.

Finance

A Stable Deficit of $11 Billion

The deficit after mandatory payments to the Generations Fund remains the same as announced at the time of the last budget in March, despite $365 million in new spending announced for this year alone (totalling $2.1 billion over five years). It should be noted that the government had to draw $750 million from its contingency reserve in order to keep the deficit below the $11 billion mark.

Return to Balanced Budget in 5 Years

The government still aims to return to a balanced budget by 2029-2030, although the plan to get there will only be unveiled at the next budget by the Finance Minister.

1.2% GDP Growth

At 1.2%, Quebec’s expected gross domestic product (GDP) growth for 2024 has doubled since the budget was tabled, which at the time projected an increase of only 0.6% this year. The government expects this acceleration to continue, reaching 1.5% in 2025.

$9.9 Billion Per Year to Service the Debt

The government will have to devote $166 million more than expected to servicing Quebec’s debt, an increase attributed to the unexpected rise in the deficit in 2023-2024 and high interest rates. The weight of the debt nonetheless continues to decline, reaching 39% of GDP as of March 31, below its pre-pandemic level. The objective remains to reduce this weight to 30% of GDP by 2037-2038.

Health

$1.1 Billion in Additional Health Spending

The government attributes this increase partly to higher costs associated with the use of private agency workers and an increase in hours worked across the network. In 2024-2025, spending growth in health and social services is 3%.

Education

12.4% Growth in Education Spending, 5.5% in Post-Secondary Education

The government attributes the 12.4% growth in education spending to the expected increase in service delivery costs in the sector, to the 2024-2025 budget initiatives, and to the carryover of spending from 2023-2024 to 2024-2025, notably for the Construction Training Offensive and the School Catch-Up Plan.

This increase is compounded by the non-realization of compensation expenditures resulting from the school staff strike in 2023-2024.

In post-secondary education, the 5.5% growth is linked to a lag in the pace of infrastructure delivery. Without this lag, spending growth would have been 3.4% in 2024-2025.

Transportation

$879.6 Million for Public Transit Agencies

This new investment is in addition to the $265 million allocated in 2024 to help transit agencies cover their deficits and avoid service cuts. It should be noted that the agencies were requesting $600 million for 2025 alone in order to increase their service offerings.

Infrastructure and Public Safety

$262.1 Million in Response to Historic Flooding

Of this amount, $250 million will be devoted to repairing the damage caused by post-tropical storm Debby, which became the most costly weather event in Quebec’s history this past summer.

$16 Million for 18 New Cellular Sites

The government is investing to improve cellular network coverage in the Bas-Saint-Laurent, Mauricie, and Saguenay-Lac-Saint-Jean regions.

$155 Million to Meet Policing Obligations in Nunavik

In addition, $155 million over five years is earmarked to meet policing obligations in Nunavik.

Economy

$252 Million to Increase Support for the Forestry Sector

To increase support for the forestry sector, the government plans $100 million in financial assistance for wood processing as well as $440 million for reforestation efforts. Its total intervention amounts to $540 million, of which $220 million comes from the federal government.

$330 Million Over Four Years for the Metropolis and the National Capital

This investment will notably allow for the renewal of the Montreal Economic Development Fund and the National Capital Region Fund to implement economic development projects in both regions.

American Geopolitical Impacts

The Ministry of Finance identifies certain risks that could affect Quebec’s economy in connection with the American election, including changes to trade tariffs and modifications to corporate and personal taxation.

Employment and Taxation

Raising the Eligibility Age for the Career Extension Tax Credit from 60 to 65

The government argues that it wants to make the tax credit more effective and better suited to the current labour market context by targeting workers aged 65 and over or low-income workers.

2.85% Indexation of the Tax System in 2025

This indexation affects several allowances, tax credits, and deductions, including an increase in the basic personal amount from $18,056 to $18,571, and an increase in social assistance benefits, rising for example from $9,144 to $9,408 per year for a single person.

An amount of $10 million is also earmarked to increase work income supplements for social assistance recipients.

Review of 277 Tax Expenditures to Continue

A total of 277 tax expenditures will be reviewed by the government, at an estimated cost of $49 billion in 2023. The objective of these measures is to ensure they still meet a current need and are achieving their goals. They primarily target the personal and corporate income tax system as well as consumption taxes.

Housing

$208 Million to Improve Access to Housing

In housing, the government is investing $184.0 million to accelerate the construction of new housing units, $17.8 million for 500 new units under the Rent Supplement Program for youth leaving the youth protection system, and $6.2 million to increase the intervention capacity of the Administrative Housing Tribunal, for a total of $208 million.