Since 2018, the Legault government has significantly increased financial support for Quebec businesses, investing over $1.7 billion last year. While Quebec leads Canada in business aid with $193 per resident, Ontario is catching up, spending less overall but providing substantial subsidies to major companies. Quebec’s diverse support includes tax credits and fiscal measures, totaling nearly $17 billion in recent years, while indirect aids further enhance assistance. However, competition with U.S. states complicates the landscape due to opaque financial aid structures.
Legault Government’s Business Aid: An In-Depth Look at Quebec’s Financial Support
Since 2018, the Legault government has made significant strides in enhancing support for Quebec businesses, but are these efforts yielding the desired outcomes?
Quebec: The Leader in Business Aid
In terms of business assistance, Quebec proudly holds the title of the Canadian leader, although Ontario is rapidly closing the gap. Last year, the Quebec Ministry of Economy, Innovation, and Energy (MEIE) allocated over $1.7 billion to business support initiatives. In contrast, Ontario’s Ministry of Economic Development, which has similar responsibilities, spent less than $1.3 billion.
This translates to an investment of approximately $193 per resident in Quebec, significantly higher than Ontario’s expenditure of just $80 per person. “Quebec typically leads the provinces regarding business aid, but Ontario has markedly increased its funding in this area over time,” observes Jake Fuss, director of fiscal studies at the Fraser Institute.
Competitive Landscape: Ontario’s Growing Investment
Data from the Fraser Institute reveals that Ontario now surpasses other provinces in Canada regarding business subsidies across various ministries and agencies. In 2021, Ontario provided over $22 billion in business support, averaging $2,550 per taxpayer, while Quebec contributed nearly $9.9 billion, amounting to $2,035 per taxpayer.
Notably, this data does not account for low-interest loans and other forms of assistance that are more favored in Quebec. The increase in Ontario’s spending can also be attributed to the more generous support from Doug Ford’s government during the pandemic. Unlike Quebec, where large-scale subsidies are uncommon, Ontario is willing to provide substantial financial assistance, especially to automakers. Last year, for instance, Queen’s Park granted $80 million to General Motors, $28 million to Toyota, and $20 million to Honda.
Additionally, Ubisoft and the American food corporation Mondelez received over $14 million and $4.5 million, respectively.
Challenges of Transparency in the U.S.
For significant projects, such as Northvolt, Quebec has found itself in competition with U.S. states that offer substantial tax credits and federal support. Unfortunately, quantifying the financial aid provided by various government levels in the U.S. is often challenging due to the lack of reliable and comprehensive information.
The Extensive Scope of Business Support
The MEIE and Investissement Québec are not the only government bodies providing considerable financial assistance to businesses.
In the previous year, Quebec allocated nearly $6.6 billion in the form of tax credits and other fiscal measures to support businesses, with an average annual increase of nearly 10% since 2018. Additionally, subsidies are available to both businesses and non-profit organizations through nearly all ministries.
According to estimates from Le Journal, these subsidies have approached $17 billion over the last two years. The largest contributions come from the Ministry of Employment (focused on workforce training), the Ministry of Natural Resources (supporting the forestry industry), the Ministry of the Environment (addressing climate change), and the Ministry of Transportation.
It’s also crucial to consider indirect aids, such as preferential electricity rates for large industrial consumers, which result in the state forgoing hundreds of millions of dollars annually. Calculations from the Fraser Institute indicate that the total value of business subsidies represented about 68% of the taxes paid by these enterprises to the Quebec government in 2021, a significant decline from the period between 2007 and 2014, when this figure consistently exceeded 100%.