Sowing the seeds of economic freedom in La Belle Province

After nearly a decade in Ontario, it is a great and unexpected pleasure to return to my home province of Quebec to join its pre-eminent free market think tank, the Montreal Economic Institute. For those unfamiliar with the MEI, its mission statement says it all: Ideas for a more prosperous nation. The MEI seeks to spread free market ideas in Quebec not for ideological purposes, but for practical ones. It seeks to promote private-sector wealth-generating solutions to help grow the province’s economy and create a climate of prosperity.

In this quest, Quebec presents a special challenge. For years, the province’s public discourse has been dominated by interests which favour high-tax, big-spending policies, in particular strong unions and the political left. Free market ideas are often given short shrift by the media, which is used to hearing the same old arguments that more government intervention is better, and that private interests must come second to ‘social solidarity.’

Unfortunately (but not surprisingly) for Quebecers, the big-government approach has not borne fruit. By many measures, Quebec’s standard of living lags behind that of the rest of the country. In 2004, Quebec’s GDP per capita was $35,117, 13% less than Canada as a whole; among the 60 U. S. states and Canadian provinces, Quebec ranked 53rd. In 1999, the average Quebec family had a net worth of $61,300, just over half that of the average Ontario family, at $101,400. Unemployment in Quebec remains higher than the rest of the country – 8.5% in March 2006, compared to 6.3% in Canada and 6.1% in Ontario.

There are many factors contributing to this state of affairs, one of which is the province’s labour climate. Quebec’s draconian pay equity legislation and byzantine labour laws make it very costly for employers to hire new workers. Meanwhile, the province’s high rate of unionization pushes up wages even further. Forty-two per cent of Quebec’s workforce is unionized, compared to 30% in Ontario and 13% in the United States. While unionized workers reap the benefits of higher wages and job security, other workers are shut out of the labour market because employers can’t afford to hire them. This leads to higher unemployment, which in turn requires a more expensive social safety net, which in Quebec’s case is fed by the highest personal income taxes in Canada.

Those high taxes are a second obstacle to free market reforms. Three years ago, Premier Jean Charest campaigned on a promise to deliver Quebecers $1 billion in tax cuts per year. Today, that promise remains unfulfilled. Instead, his government prefers costly regional development policies – aka corporate subsidies – as a means of stimulating the economy. The failures of such policies are symbolized by Quebec’s most recent fiasco, the Gaspesia pulp and paper mill, which consumed $300 million in public funds before going belly-up. Yet the government continues to throw public money at private industry, instead of lowering taxes to encourage investment and give business a break.

Fed up with the failures of state monopolies and big governments, Quebecers are looking for better solutions to social problems. For example, Quebecers lead the country in their support for increased private health care, with 65% agreeing that patients should have the choice to purchase private care as long as the public system is maintained (the national average is 52%). The ground-breaking Supreme Court decision of Chaoulli v. Attorney General of Quebec, which held that a provincial ban on private insurance was unconstitutional, originated in la belle province, not in Alberta.

Even politicians and public figures are getting into the act, with former Quebec Premier Lucien Bouchard last year co-authoring a manifesto entitled Pour un Québec lucide, making a case for less government intervention in the economy. More recently, federal Industry Minister Maxime Bernier, a proud Quebecer, called for a reduction in subsidies to industry. And in Montreal, the province’s largest employers’ group, le Conseil du Patronat, just appointed free market crusader Michel Kelly-Gagnon, former president of the MEI, as its new President.

In short, it is a very exciting time to be a voice for economic freedom in Quebec. With persistence, support and a little luck, free market ideas can be made to flourish here. True, opposition from big labour and big government will not disappear overnight. But with enough work, the counterpoint to the statist ideas of yesterday will pave the way for a new culture of prosperity in la belle province.

Tasha Kheiriddin is MEI’s Executive Vice President.

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