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The Canadian Press
QUEBEC – The Quebec government is banking on a royalty bonanza from its natural-resources sector to help Canada’s most indebted province begin its long climb out of the red.
In releasing its 2012-13 budget Tuesday, Quebec revealed that its path to prosperity hinges on whether it can cash in on its abundance of minerals, forests and hydroelectricity.
The document calls for a $1.5-billion deficit in 2012-13, but says the government remains on track to fulfil its long-held pledge to balance the budget by 2013-14.
The budget, possibly the last for an unpopular Premier Jean Charest before the next election, also tries to strike a positive populist tone for voters: no new tax hikes or user fees.
In the next election — which must be called before the end of 2013 — Charest will likely portray himself as a sound economic manager, while at the same time hammering away at the uncertainty of sovereignty.
While this budget attempts to highlight economic improvements in Quebec under his watch, it also acknowledges the province remains Canada’s most heavily indebted. A year ago, Quebec had a gross debt of $173 billion, which represented 54.3 per cent of gross domestic product.
But Charest’s Liberals predict things are turning around.
The party is counting on the promise it sees in the province’s natural resources sector and, in particular, the expansion of the province’s mining industry under Quebec’s sweeping northern development plan.
“We’re building the future and taking all the opportunities that lie before us,” Finance Minister Raymond Bachand said in Quebec City before tabling the budget in the legislature.
The government expects the mining sector alone to grow nearly 10-fold over a half-dozen years — from an average of $42 million in royalties per year between 2006-07 and 2009-10 to $415 million in 2016-17.
Bachand estimates that existing mining operations — and those currently being built — will funnel $4 billion in royalties into public coffers over the next 10 years.
Even though some mines are still being constructed, he’s confident his forecast is a reliable one.
“In finance, we usually don’t count our eggs before they’re hatched,” Bachand said.
“Of course, if the hen is there, the eggs are going to be laid tomorrow.”
He said cash from the province’s natural-resources sectors has already started to flow. Bachand predicted total royalties in 2011-12 to hit nearly $1.2 billion, and climb to $1.5 billion by 2016-17.
The province even wants to get in on some of the anticipated action.
Bachand’s budget announced the creation of a new government branch that will invest public money in mining, oil and gas initiatives. He said it will eventually manage an equity portfolio of up to $1.2 billion.
He added that a team of financial experts will ensure the government makes only the soundest investments.
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