Montreal, March 11, 2015 –“In Quebec, the issue is not so much the size of the government’s debt, although there is cause for concern, but the context in which it has taken on that level of debt,” says Robert Gagné, Director of the HEC Montréal Centre for Productivity and Prosperity. In a study analyzing the Quebec government’s debt, researchers have shown that recurring budget deficits are creating a major debt spiral, with a particularly negative impact on the province’s public finances.
“Beyond the debate surrounding the concepts used to determine the size of the debt, it must be understood that the real problem is budget deficits. The Quebec government has been accumulating deficits since the early 1970s, and continuing to drive itself further into debt. The end result is that the ‘good debt’ taken on by the government, that is the debt contracted to finance its investments, is gradually being converted to finance consumption,” explains Gagné, co-author of the study. This situation has become even more problematic since the Balanced Budget Act was weakened in 2008.
