Premier Pauline Marois’s government recently announced that it was planning to spend $2 billion in public funds to create 43,000 jobs by 2017. Then a few days later, as part of its $1-billion industrial policy, the government committed to spending $254 million on 300 promising small businesses that it wants to identify as having potential for growth.
As she must surely be aware, there are a whole lot of professional venture capitalists in the world who make their living looking for good companies to invest in. How could politicians have a better eye than real market players betting their own money?
There are only two possibilities: Either the companies that the government will help do not constitute a good investment, in which case good money will be thrown after bad; or else they are a good investment, in which case private capital would be happy to help them. In other words, this measure is either harmful or useless.
Allow me to share five personal anecdotes that I hope will broaden the premier’s perspective, and that of her government, regarding what should be done (or not done) in order to slow the relative decline of the Quebec economy.
First story: All but one of the children of an important Montreal business family live and work outside the province of Quebec. Their mother was telling me last year that she suggested the remaining one should seriously consider setting himself up somewhere else, because “there’s no future for him here.” Yet I can assure you that she has Montreal “tattooed on her heart,” more than just about anyone I know.
Second story: An investor who could be called moderately wealthy, in that he is among the richest 1 per cent in the province, but just barely, invested $18,000 (his total savings, apart from his Registered Retirement Savings Plan and his Tax-Free Savings Account) in a small mining company operating in Quebec’s northwest. But his shares are unproductive, and have even lost quite a bit of value. And I know for a fact that some Anglo-Australian investors were discouraged from investing in Quebec and developing this company as a result of certain actions and statements by a member of the Marois cabinet.
Third story: An investment specialist had a small office in Montreal, three employees (all very high-income individuals) whose clientele consisted entirely of wealthy families from the U.S. Northeast. He’s an anglophone Montrealer from the Greek community. As he once told me, “I have no objective reason to be in Quebec, except for my attachment to Montreal.” Recently, he transferred his office to a New York City suburb. During our most recent lunch, he said, “I’m sick of all this s—.” This “s—,” as he put it, is all of our interminable societal debates, including those over independence, identity and language, the student crisis and the incessant anti-capitalist talk.
Fourth story: A company in the service sector — a global leader in its field, 98 per cent of whose clientele is located outside of Canada — has had its head office in Montreal for 50 years. It employs dozens of highly specialized and very well-paid people. But since the election of the current Marois government, its management staff is now entirely made up of non-residents of Quebec for tax purposes. The president of this company told me last summer: “Our presence here is basically the result of a historical accident, because the founder of the company was a Montrealer. But I’m feeling more and more pressure from my people to correct this historical anomaly and move out of the province.” The president is a Christian from the Middle East.
Fifth story: One of my good friends was trying to start a business in a highly specialized field. He had succeeded in finding some potential investors: Americans. But they had the misfortune of paying my friend a visit for a business dinner right in the middle of the student crisis last year. He related how the noise of police helicopters, the riot squad, the shouting and the general chaos clearly discouraged his investors. The business in question never saw the light of day.
My point? Trying to help the economy is fine. But not hurting it in the first place is even better. And cheaper too.
Michel Kelly-Gagnon est président et directeur général de l'Institut économique de Montréal. Il signe ce texte à titre personnel.