Québec s Economy and Public Finances

Transcription

1 Toronto, December 13 th 2018 Québec s Economy and Public Finances

2 Introduction Section 1 : Économie Section 2 : Finances publiques Section 3 : Financement Section 4 : Conclusion - Engagements du gouvernement 2

3 Québec Economic Growth Economic growth (real GDP, percentage change) Economy Compound annual growth rate Real GDP: + 1.4% - Potential labour pool: +0.3% - Employment rate: +0.7% - Productivity: +0.4%

4 A Modern and Diversified Economy Québec s real GDP by sector in 2017 Economy Unprocessed natural resources: 3.7% Construction: 6.5% Manufacturing: 13.6% Food, beverages and tobacco: 2.4% Metallic products and primary metal processing: 2.3% Chemical products and petroleum derivatives: 2.0% Transportation equipment: 1.9% Wood and paper: 1.4% Other: 3.6% Services: 76.2% Finance, insurance, real estate and leasing: 17.5% Education and health: 14.2% Trade: 11.4% Government services: 7.4% Professional, scientific and technical services: 6.1% Transportation and warehousing: 4.3% Utilities: 3.6% Other: 11.7% 4

5 Québec Household Consumption Household consumption expenditure in Québec (percentage change, in real terms) 3.2 Economy Wages and salaries (percentage change, in nominal terms) ,

6 Québec Labour Market Participation rate by sex in Québec (per cent) 82,8 86, ,7 91,4 Economy Unemployment rate in Québec (per cent) 8,6 8,0 7,9 7,7 7,6 7,7 7,6 7,1 28,5 24,7 40,5 35,2 6,1 5,5 5,4 Females Males Females Males 25 to 54 years old 55 years and over

7 Québec s Household Debt Decrease Favourably Household debt per disposable income (per cent) 214,2 Canada Québec Ontario B-C Economy Debt service ratio, interest only (per cent) ,3 9,1 167,2 201,6 185,0 178,5 8,4 7,4 6,6 7,2 6,5 5,8 8,5 7,5 7,1 7,3 162,1 157,3 154, Canada Québec Ontario B.C 7

8 Québec Housing Market Housing starts (thousands units) Economy 37,8 38,8 37,9 38,9 46,5 47,9 43,

9 Québec Housing Market (cont.) Foreign buyers in Montréal (per cent) Economy 3,3 2,9 2,5 1,7 1,4 1,3 1,1 0,9 1,0 1,1 1,4 1,7 1, (1) January to October (1)

10 Housing Prices are Lower in Québec CMAs Change in average housing price (thousands of dollars) Economy Change in average housing price (thousands of dollars) 800 (per cent) 600 Québec B.C Ontario Canada (per cent) 800 Montréal Ville de Québec Toronto Vancouver

11 Exports An Important Share of Québec s GDP Share of exports in Québec s GDP, by destination (percentage of nominal GDP, 2017) Economy ROC 7.7 ON ,9 Canada United States Europe Asia Other 11

12 Québec Imports of Oil Sources of Québec s crude oil supplies 2012 (per cent) Sources Québec s crude oil supplies 2016 (per cent) Economy Rest of Canada United 7.9% States Algeria 27.0% 24.9% Algeria 40.8% Other 51.4% Rest of Canada 36.5% Other 11.6% 12

13 Québec Business Investment Non-residential business investment per private-sector job 2017 (current dollars) Economy Investment in machinery and equipment per private-sector job 2017 (current dollars) Québec Canada Ontario Québec Canada Ontario 13

14 Measures to Increase Productivity Economy 14 In the Update on Québec s Economic and Financial Situation (Fall 2018), we announced that initiatives of nearly $1.6 billion over five years are being implemented to encourage businesses to invest in order to increase their productivity, namely: temporary measures to accelerate depreciation of capitalizable commercial property to spur greater businesses investment following the initiatives announced by the federal government; introduction of a permanent additional capital cost allowance of 30% for certain types of investments; extension of the electricity discount programs for large industrial businesses and for greenhouses, and their broadening to include large businesses served by Hydro-Québec's off-grid systems.

15 Standard of Living and Productivity Gaps to be Eliminated Standard of living and productivity 2017 (1) (in constant 2012 dollars, gap in per cent) Economy Québec Canada Ontario % 17.7% Gap % 17.2% Gap (1) Standard of living as measured by real GDP per capita and productivity as measured by real GDP per job. 15 Standard of living Productivity

16 Plan Nord Economy The Plan Nord territory accounts for 72% of Québec s geographic area. Over 25 years, approximately $2.7 billion to support large-scale strategic development projects (including roads and telecommunications), through the Société du Plan Nord. Rail and port facilities at Pointe-Noire manage and develop in a multi-user approach. Many actives mines, as well as numerous mining projects that can lead to about $7.3 billion investments over the next few years. 16 $1 billion, through the Capital Mines Hydrocarbures Fund, of which $500 million for projects carried out on the Plan Nord territory.

17 Fight Against Climate Change An integrated approach Economy Cap-and-trade system (CaT) Carbon market 117 subject businesses (1) (80% of emissions) Purchase of emission allowances Quantity of emission allowances Price of emission allowances = Carbon market revenues Green Fund Reduction of greenhouse gas emissions Measures of the Climate Change Action Plan Measures pertaining to transportation (2/3 of carbon market revenues) Other measures LTNF: Land Transportation Network Fund. (1) Number of businesses in Measures pertaining to public transit and alternative transportation LTNF Other measures pertaining to transportation 17 Sources: Ministère de l Environnement et de la Lutte contre les changements climatiques and ministère des Finances du Québec.

18 Maintaining a Balanced Budget Budgetary balance, (1) to (millions of dollars and as a percentage of GDP) Public Finances (0.6) (0.6) (0.6) (0.4) 0 (0.0) 150 (0.0) 400 (0.1) 650 (0.1) -725 (-0.2) (1) Budgetary balance within the meaning of the Balanced Budget Act. 18

19 Balanced Budgets Public Finances Consolidated financial framework (billions of dollars) Consolidated revenue % change Consolidated expenditure % change Contingency reserve Operating surplus (deficit) Deposits in the Generations Fund Budgetary Balance

20 Consolidated Expenditure by Mission Consolidated expenditure (1) by mission (per cent) Public Finances Administration and Justice 7.8% Economy and Environment 15.2% Health and Social Services 42.6% (1) Excluding debt service. 20 Support for Individuals and Families 10.3% Education and Culture 24.1%

21 Financial Situation of the Provinces and the Federal Government Total expenditures in (percentage of nominal GDP) Public Finances 29,4 Average: 20% 23,6 24,8 26,2 24,7 24,4 18,7 15,9 17,7 18,9 15,4 B.C. Alta. Sask. Man. Ont. Que. N.B. N.S. P.E.I. N.L. Federal Note: Based on provincial government expenditures, regardless of differences in public services funded by each province. 21

22 Margins of Prudence Margins of prudence (millions of dollars) Public Finances Total Contingency reserve Contingency Fund reserve Debt service reserve Subtotal - Reserves Stabilization reserve as at March 31, TOTAL

23 The Generations Fund Debt Reduction The Generations Fund was initially set up in 2006 By law, the sole purpose of the Fund is to repay down debt Imbedded in the law are dedicated revenues that are deposited in the Fund every year All income generated from the Fund must be reinvested $8 billion of the Generations Fund will be used in and $2 billion in to repay down debt 23

24 The Generations Fund (cont.) Debt Reduction Use of the Generations Fund to repay down debt (millions of dollars) Total Book value, beginning of year Dedicated revenues Use of the Generations Fund to repay down debt Book value, end of year

25 Debt Reduction Gross debt as at March 31 (as a percentage of GDP) Debt Reduction Debt representing accumulated deficits as at March 31 (as a percentage of GDP) Objective achieved Objective achieved Note: The gross debt excludes pre-financing and takes into account the sums accumulated in the Generations Fund. 25

26 Comparison of the Debt of Governments in Canada Debt Reduction Comparison of the net debt of governments in Canada as at March 31, 2018 (percentage of GDP) N.L. Qué. Ont. N.B. Fed. N.S. Man. P.E.I. B.C. Sask. Alta. 26

27 Financing Programs Government s financing program (1) (millions of dollars) Financing % (2) completed (1) Fiscal year starts April 1 st. (2) As at December 10, 2018.

28 Benchmarks in Canada Financing 28 Coupon (%) Date of issue Date of maturity Outstanding (1) (M$) year benchmark year benchmark year benchmark (1) As at December 10, 2018.

29 Benchmarks in Euros and in US Dollars Since 2001, 30 benchmarks in US dollars and in Euros US$ Euros B July 2018 (10Y) B Sept (3Y FRN) B April 2017 (10Y) B January 2017 (5Y) 1.00 B July 2016 (3Y FRN) 2.00 B April 2016 (10Y) 2.25 B May 2017 (10Y) Financing B Sept (3Y FRN) 1.10 B October 2015 (10Y) B October 2014 (10Y) 1.75 B January 2015 (10Y) B January 2014 (10Y) 1.00 B July 2013 (10Y)

30 Financing Québec has set up a Green Bond program in February 2017 Québec has issued three times under this program 500M $CAD with a 5-year maturity (March 3, 2022) 500M $CAD with a 5-year maturity (March 1, 2023) 500M $CAD with a 7-year maturity (July 6, 2025) All issues were done under a global documentation These Green Bond issues will finance public transit projects, mainly the purchase of new Azur métro cars in Montréal and the construction of an automated light rail network in the Greater Montréal area (REM) Québec is a regular issuer of Green Bonds CICERO: Awarded a dark green rating on the framework 30

31 Québec s Credit Ratings Credit Ratings Agency Credit Rating 2018 Outlook Moody s Aa2 Stable Standard & Poor s (S&P) AA Stable Fitch AA Stable DBRS A (high) Stable Japan Credit Rating Agency (JCR) AA+ Stable China Chengxin International (CCXI) AAA Stable 31

32 Conclusion The Update s main commitments: Good economics is the basis for good policies Stimulate business investment to increase Québec s productivity and wealth Give back to families and seniors nearly $1.7 billion over five years Accelerate the repayment of Québec s debt Maintain a balanced budget in and for the coming years Effective and efficient management of public finances 32

33 Conclusion Les principaux engagements du Point : Une économie forte est la base pour de bonnes politiques Stimuler l investissement des entreprises pour accroître la productivité et la richesse au Québec Remettre 1,7 milliard de dollars aux familles et aux aînés sur cinq ans Accélérer le remboursement de la dette du Québec Maintenir un Budget équilibré en et pour les années à venir Appliquer une gestion efficace et efficiente des finances publiques 33