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Montreal Economic Institute Debt Clock update: Retirement plans for public sector employees add $71 billion to Quebec's debt

Friday, March 18, 2011 - In the Viewpoint on the debt of the Quebec government, Youri Chassin, economist at the Montreal Economic Institute, examines the retirement plans liability for public sector employees, which is to say the amounts the government has failed to set aside year after year to pay the retirement benefits promised to its employees. This liability has reached $71 billion.

According to Mr. Chassin, few people realize that the government's retirement plan commitments for public sector employees rely on a leveraging strategy. "With the Retirement Plans Sinking Fund (RPSF), the government basically borrows money and invests it in the stock market, hoping to obtain a return that is greater than its interest costs," he explains.

For his part, Michel Kelly-Gagnon, president of the MEI, points out that taxpayers have generally not been well informed about the true costs of the total remuneration that has been awarded to government employees over the years, especially when it comes to retirement plan commitments. "Our Debt Clock, available at www.iedm.org, allows taxpayers to see the real cost of always waiting until tomorrow to get our public finances in order," concludes Mr. Kelly-Gagnon.

Following the release of the budget by Quebec Finance Minister Raymond Bachand, the Montreal Economic Institute proceeded to update its Debt Clock. Quebec's public sector debt has now reached $234 billion dollars, up $13 billion dollars since last year. According to an estimate based on its average growth over the last five years, the debt will continue to grow at a pace of $11.3 billion a year, $31 million a day, or $21,532 a minute.

To see the growth of Quebec's debt in real time, please consult the MEI's Debt Clock here. The Viewpoint on the debt of the Quebec government, prepared by Youri Chassin, economist at the MEI, can be consulted free of charge on the Institute's website.

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The Montreal Economic Institute is an independent, non-partisan, not-for-profit research and educational organization. Through its publications and conferences, the MEI stimulates debate on public policies in Quebec and across Canada by proposing wealth-creating reforms based on market mechanisms.

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Information and interview requests:
Ariane Gauthier, communications coordinator, Montreal Economic Institute
Tel.: 514 273-0969 ext. 2231 / Cell: 514 603-8746 / Email: agauthier@iedm.org


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