Quebec's economic update focuses on helping seniors with inflation as recession looms
More seniors to be eligible for aid, maximum amounts paid will rise
The Quebec government is beefing up financial assistance for low-income seniors by $8 billion over five years, with the first payments coming after they file their 2022 tax returns.
That's the key measure announced in an economic update by Finance Minister Eric Girard, who also warned of a potential recession looming and announced the Quebec government has built an $8-billion cushion into its financial framework to cope with potentially deteriorating economic conditions.
The new measure for seniors comes on the heels of the CAQ's re-election on October 3 — following an election campaign marked by concerns surrounding the increased cost of living in Quebec.
Inflation has increased the province's revenues by about $14 billion since March, reducing the expected deficit for 2022-2023 to $5.2 billion. That is below the forecast from earlier this year, which predicted a deficit of $6.5 billion. Girard said he expects Quebec to return to a balanced budget in 2027-28.
Girard says the government decided to return some of that extra revenue to Quebecers.
For seniors who have been hit hard by inflation, the maximum refundable senior assistance tax credit will rise from $411 to $2,000.
This will increase the aid provided to seniors who already receive this credit, with 65 per cent of the assistance going to seniors whose annual income is less than $25,000.
Assistance will be provided primarily to low-income seniors, but the government is also changing the eligibility criteria. Before, seniors making $32,415 or more did not receive any assistance. That cap will be raised to $64,195.
This means almost 400,000 more seniors will be getting the credit — for a total of 1.1 million seniors as of spring 2023.
"The significant increase in the cost of living is impacting the lives of Quebecers, particularly seniors and low-income individuals," said Girard.
"The government has chosen to help them quickly by protecting their purchasing power," he said.
WATCH: Finance Minister Eric Girard discusses Quebec's economic prospects:
Economic growth slowing: 2023 'will be more difficult'
Girard says the economic outlook for Quebec and Canada for 2023 has deteriorated and is uncertain.
At the beginning of the year, demand remained strong while supply was limited by numerous economic shocks, including lockdowns in China as well as Russia's invasion of Ukraine.
This imbalance added to inflation, which in recent months, has reached levels not seen in decades.
Quebec's economic growth is expected to drastically slow from 3.1 per cent in 2022 to 0.7 per cent in 2023 — significantly lower than March 2022 expectations.
With this, job creation will likely slow down and cause the unemployment rate to rise temporarily, the minister said.
Following a historic low in 2022, the government expects the unemployment rate to increase to an average of five per cent in 2023.
As a precaution, the government developed an alternative scenario in which the Quebec economy would enter a recession and has earmarked $8 billion to offset this.
"We say that the recession is in the magnitude of more or less a 50 per cent probability," said Girard. "We've produced an alternate scenario and we're showing that the impact on the financial framework is within what we have provisioned."
Girard says Quebec "will not be spared" the economic forces that are hurting economies around the world.
"It's undeniable that 2023 is going to be a year that is going to be more difficult than 2022," said Girard.
Inflation slowing but remains high
The Consumer price index (CPI) over the past year has risen in Quebec, the minister said — going from 1.3 per cent in January 2021 to a peak of eight per cent in June 2022.
Since July, the annual increase in inflation has been slowing, with the CPI at 6.4 per cent in October.
Partly to blame are external factors, including the gradual easing of disruptions in the supply chain and the rise in oil prices, which slowed after peaking in June 2022.
Still, inflation remains high — above the Bank of Canada's target range of one to three per cent.
New tax on vaping products
A new initiative announced by the government will target the vaping industry.
With one in five teenagers vaping, the government said it is concerned for young people's health.
The federal government announced in its 2022 budget that it was introducing a duty on vaping products — and invited provincial governments to participate in taxing the products.
As part of this initiative, the total revenue generated would be divided into two equal parts between the federal government and the provincial and territorial governments.
As of Thursday, the ministry announced Girard sent a letter to Canada's finance minister, expressing Quebec's interest in participating in the co-ordinated approach.
Quebec officials expect it will generate revenues of about $40 million a year for the province.
Girard says this tax will be added at the production level and can be expected in the fall of 2023.
"It would be 50 per cent federal, 50 per cent provincial, just like what we have for cannabis," said Girard. He said the tax will likely be about two dollars for two millilitres of vaping product.
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