I was recently discussing the economic situation in Quebec with a business acquaintance from outside the province. She asked what the new Pauline Marois government was planning to do to get rid of our "huge deficit."
But she was quite surprised to learn that, among Canada's four large provinces, Quebec is actually the best positioned in terms of deficit control.
Granted, Quebec's debt is still, by far, the largest in Canada in per-capita terms and relative to GDP. But that's because of red ink accumulated many years ago. Since the financial crisis began in 2008, Quebec has had relatively modest deficits, including $1.5 billion this year. It plans to return to a balanced budget next year.
That's not at all what went on in Ontario of course, whose humongous $19-billion deficit in 2009 broke all records. At almost $12-billion in the current year, the deficit is still quite large. Unless the new Kathleen Wynne government takes drastic measures, Ontario's finances won't return to black ink until 2017. By then, Ontarians will have become almost as indebted as Quebecers.
Perhaps the most rapidly deteriorating situation is that of Alberta, whose government had paid off its provincial debt in 2004. Thanks to rather profligate spending habits, deficits were back in 2008. And with oil prices lower than expected, those deficits may be about to skyrocket. The one for the current year could top $4 billion, while the government has said that it's facing a whopping $6-billion revenue shortfall next year.
There is better news further west, however. Like Quebec, British Columbia kept its deficit under control during the crisis and plans to have eliminated it by next year.
The best student in the class is of course Saskatchewan, which did not register any deficit during the recession, thanks in part to revenues from its dynamic natural resources sector, and does not forecast any either during the coming years.
Newfoundland and Labrador also kept its financial situation under control during the crisis, but because of lower oil prices its deficit this year may reach $725 million, quite a large sum for such a small province.
All in all, the deficit situation is improving in most provinces, but is still quite shaky (to say the least) in Ontario and clearly getting worse in Alberta and Newfoundland.
Michel Kelly-Gagnon est président et directeur général de l'Institut économique de Montréal. Il signe ce texte à titre personnel.
* Cette chronique est publiée dans les journaux de Sun Media, tant dans ses quotidiens présents dans plusieurs des marchés urbains canadiens les plus importants (Toronto, Ottawa, Calgary, Edmonton, Winnipeg et London) que dans ses 28 quotidiens régionaux.