Transfer payments is not sustainable over the long term

Cahier spécial : Québec frappe son mur dans moins de 10 ans.

As high as taxes are in Québec, they would likely be even higher if not for the large transfer payments that province receives annually from the Government of Canada.

In 2011-12, the Government of Québec will receive $17.4 billion in transfer payments out of a total $58.4 billion for all of the provinces and territories.

Québec represent an increase of $5.3 billion from 2005-06, when they accounted for about 26% of the Québec government’s revenue.

During the same period, Ottawa saw a mere 19% of its revenues come from Québec, compared to 41.5% from Ontario.

“So Québec gains more in transfers and pays less in taxes,”

explain economists François Vaillancourt and Mathieu Laberge.

So we’re talking serious money here, which has made a significant difference in the lives of many Québecers—as underlined again by Vaillancourt and Laberge. They note that

“Québec’s disposable income per capita is higher than it would be if Québec were to finance its present social spending without equalization payments and other transfers received from the federal government.”

Transfert fédéraux et péréquation - 2

Federal transfers is not sustainable

Ottawa and the provinces need to close an ongoing, combined budget gap of $46-billion through tax hikes, spending cuts or a mix of both in order to put government finances on a solid footing, the Parliamentary Budget Officer warns in a new report.

Focusing on the sharp demographic shift on the horizon as the number of retirees rises and the percentage of Canadians who are of working age shrinks, Kevin Page’s 2011 Fiscal Sustainability Report looks at federal and provincial finances over the next 75 years.

“The fiscal structure at the federal and provincial-territorial level
is not sustainable over the long term,”

the report states.

     Population aging will put downward pressure on revenues, as growth in economic activity, and therefore the tax base, slows. At the same time, aging will put upward pressure on programs whose benefits are mostly realized by Canadians in older age groups.”

Governments have focused on the short term during three years of turmoil in the global economy, which triggered stimulus spending and increased government debt. But Mr. Page said government leaders must also focus on the long-term cost of this higher debt burden.

     “Policy makers will need to address the aging demographic issue. We feel it should be part of the discussion leading up to the 2012 budget,”

Mr. Page said in an email to the Globe prior to the report’s release.

The dependency ratio – a measure of the number of Canadians 65 years of age or higher in contrast to the population who are 15 to 64 – is projected to rise as much this decade as it did over the past 40 years. Mr. Page said demographics and the cost of health care clearly should be a big part of negotiations to renew transfer deals with the provinces that expire in 2014.

The report focuses on the “fiscal gap” – a measurement of the added revenue or lower spending that would be needed to make government finances sustainable over the long term. The PBO estimates this gap at 2.7 per cent of GDP annually, or $46-billion…

1.         It assumes that federal transfers to the provinces will continue to grow at current rates.

2.         Ottawa and the provinces must renew the current arrangement before it expires in 2014.

That deal allowed:

Health transfers to grow by six per cent a year,

While social transfers and equalization grew by about three per cent a year.

The PBO report notes that if federal transfers were instead reduced to grow only in line with growth in the economy at large, it would simply transfer the fiscal gap onto the shoulders of the provinces…

The Globe and Mail reported earlier this year that while the Conservative government is saying little about its plans to renew transfers or address the demographic challenge, internal documents show the issue is creating a great deal of activity behind the scenes in terms of high-level meetings and briefings.

Documents obtained by The Globe under an Access to Information request highlighted a string of statistical warnings, including the fact that Canada will move from the 27th oldest to the 11th oldest country in the Organization for Economic Co-operation within 20 years.

Demographic change leads to debate on a wide range of potential policy options, from raising the retirement age, encouraging higher fertility rates, boosting immigration, tackling health care costs or future levels of taxation and government services for younger workers.

Source: Find $46-billion to pay for aging population, budget watchdog says

Transfert fédéraux - Provinces12 milliards à l’avantage du Québec          

Alberta is a large net contributor to the federation - Albertans paid an estimated $14.1 billion ($3,785/person) more to the federal government than they got back in the form of services in 2010.

For 2010, Albertans paid an estimated $35.6 billion to the federal government in taxes and other payments, while getting back $21.5 billion in federal services.

That’s a difference of $14.1 billion (or $3,785 per Albertan). The net contribution estimate is lower than in prior years due to the impact of the recession which has lowered tax revenue while increasing federal spending in areas such as Employment Insurance.

Alberta contributes relatively more to Confederation than any other province. On a per capita basis, the federal government collects the most revenue from Alberta and spends the least here. In 2008, the last year for which data is available for all provinces, Albertans contributed a net of $5,577 per person to the federal government, compared to $1,113 for Ontario and $1,003 for British Columbia. All other provinces were net recipients. The four Atlantic Provinces are the biggest fiscal beneficiaries of Confederation.

Source : Transferts fédéraux - provinciaux

Ce que les Anglais pensent du Québec :

C'est que le Québec est une province de quêteux.

·         Le Québec ne compte que 23% de la population canadienne, mais retire 55% des paiements de péréquation.

·         Les Québécois se gâtent avec des programmes sociaux inaccessibles aux autres Canadiens: régime public d'assurance médicaments, dont les coûts n'arrêtent pas d'exploser, garderies subventionnées, qui coûtent 2 milliards par année...

Le Québec a des revenus budgétaires totaux de 62 milliards.

·         De cette somme, 47 milliards proviennent des revenus autonomes.

·         15 milliards des transferts fédéraux (y compris la péréquation).

·         C'est donc dire que 25% des recettes du gouvernement québécois proviennent d'Ottawa.

Provincial Net Contributions

Source : Transferts fédéraux - provinciaux et Le Québec une province de Quêteux

Table des matières

A Québec family portrait

Indice de fécondité et qualité de l’éducation

Positive trends

Québec’s fertility rate is increasing – INDICE DE FÉCONDITÉ

Québec’s education outcomes – QUALITÉ DE L’ÉDUCATION

Croissance par endettement

Québec weathered the recent recession better than other provinces:

Croissance par endettement

Les taux d’impôts et de taxes sont élevés

Worrisome trends

Tax rates are high:

Marriage rates are low:

Cohabitation rates are high relative to other provinces and countries:

A “demographic winter” is coming - Une démographie catastrophique

A “demographic winter” is coming:

Personne active du Québec

Québec Droite sans lunette rose

Solde migratoire

Les québécois prennent leurs retraites plus tôt,

Seuil critique, peut-être 2020 ?

Building Québec’s welfare state

Building Québec’s welfare state – the historical background

Economic and tax issues: Funding the system

The Québec tax system

Transfer payments is not sustainable over the long term

Transfer payments

Ce que les Anglais pensent du Québec


La contestation

1. Programmes trop généreux

2. Ne règle pas les problèmes économiques

3. La crise économique, elle est de plus en plus contestée

Québec’s growing public debt

Québec - Budget 2011 : Dette publique

Family policy overview

The initial phase: Pre-1997

1997 and beyond

Une politique familiale inefficace et coûteuse.

The addition of parental insurance in 2006 – Congés parentaux

Les congés parentaux un programme ruineux

Les coûts :

Les résultats :

Qui en profite ?

Les conséquences :

Examining the impact of Québec family policy Fertility – Politique familliale

Universal childcare program might wish to avoid

Daycare quality – Garderies - CPE

Historique des CPE

2006, Étude sur les Garderies Universels

Les CPE ont échoué sur le plan pédagogique... comportemental et démographique

Les motivations et conséquences économiques des garderies à 7 $

Working in Québec

La liberté économique de plus en plus restreinte

High school dropout rates

Relationships and family form


The situation facing Québec society and families

The Québec story: Short term gain/long term pain?


La source du problème

Politiciens ayant un sens moral douteux

Acheter des votes

Le cancer de la démocratie : les groupes d’intérêts

L’historique Québécoise

L’immobilisme du Québec

A quand le mur?

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