The Board of Trade of Metropolitan Montreal is concerned by the lack of subtlety and nuance in the Séguin budget
Montreal, June 12, 2003 - The Board of Trade of Metropolitan Montreal is very concerned with how the budget unveiled today by Quebec's Minister of Finance, Yves Séguin, will impact the Greater Montreal economy, especially at a time when unity, strength and momentum are what the City of Montreal needs to set itself apart on the international stage.
While it understands that the Quebec government needs to refocus its resources on its priority missions such as health and education, the Board of Trade is concerned by the fact that this budget fails to recognize the key role the Montreal region and its businesses both SMEs and large businesses play in Quebec's economic prosperity and vitality, stated Board of Trade president Benoit Labonté.
Quebec's competitiveness hinges on that of the Montreal urban agglomeration, which accounts for 50% of Quebec's GDP ands 70% of its exports. The City's competitiveness is intimately tied to that of all its businesses, from the smallest to the largest. By introducing cuts, that in some cases are draconian, and will be implemented without due regard and without an appropriate transition period, the Board of Trade fears that instead of boosting our competitiveness, the Séguin budget is jeopardizing it. This is the case with, among others, the tax credits aimed at culture and R&D that the government has seen fit to reduce by 12.5% when it is widely known that these credits definitely contribute to Greater Montreal's competitiveness and innovation potential.
The Board of Trade fully agrees with the idea that businesses themselves must stand on their own two feet when it comes to developing entrepreneurship, innovation and productivity in Quebec. Therefore, we would be hard pressed to oppose the government's shift away from heavy state interventionism in the economy. Still, the government must avoid correcting certain excesses by committing others: why seal the fate of a program before analyzing its validity? Insofar as this budget is intended to be a balancing act, to quote the government, we are surprised that, without any consultation, Mr. Séguin was so quick to make such far-reaching cuts. We hope that when it brings down its first real budget in March 2004, the government will this time take into account the value and effectiveness of each government program and the tax spending it has seen fit to challenge, added Benoit Labonté.
In its pre-budget submission presented on behalf of its 7,000 members to the Minister of Finance, the Board of Trade identified two key issues for the city and the provincial economy: business competitiveness and the financing of large cities.
On the first point, the Board of Trade deplores a certain lack of coherence in the decisions made in this budget. On the one hand, by making the capital tax exemption available to 70% of Quebec enterprises, the government is clearly doing something positive for the Quebec economy. On the other, by deferring the planned rate reduction of this same tax for large business, it is making Quebec less attractive for capital investments by these companies, which by definition, are more mobile and more likely to move their operations. Considering that the multinationals and other large businesses are located chiefly in the metropolitan area, this decision directly strikes at Quebec's economic engine and also affects SMEs that provide them with goods and services, underscored Mr. Labonté.
On the matter of exports, even though the Minister immediately recognizes that the loony's gain will slow down export development, translating into slower growth for the Quebec economy, he neglected to propose concrete measures to support export development and answer the very real needs of Quebec businesses, continued Benoit Labonté.
The Board of Trade believes that the economic vitality of the metropolitan region, and by extension, all of Quebec, depends on a united and strong City of Montreal, equipped with all the economic and fiscal tools required to ensure its development and international visibility, hence the Board of Trade's insistence in its pre-budget submission on the need to boost large city revenues.
By opening the door to abandoning the commitments made in the city contract between the government and the City of Montreal and by not making a commitment to substantially reinvest in the urban infrastructures, the government is weakening this vitality. The only positive sign on the horizon is Minister Séguin's promise to conduct, with the Minister of Municipal Affairs, Sports and Recreation, Jean-Marc Fournier, an in-depth analysis of the financial situation of Quebec's municipalities. Although we have little doubt that this exercise will show that Quebec's large cities are in dire need of new, increased, foreseeable and diversified revenue sources, it will be especially urgent to respond with concrete action. The application of the government's desired agglomeration fiscal policy will only really have meaning if it is accompanied by appropriate revenue sources, insisted the Board of Trade's president.
The Board of Trade of Metropolitan Montreal has nearly 7,000 members. Its mission is to be the leading group representing the interests of the Greater Montreal business community. Its objectives are to maintain, at all times, relevance to its membership, credibility towards the public and influence towards government and decision-makers.
Vice-president, Strategies and communications
Board of Trade of Metropolitan Montreal
Tel.: (514) 871-4000, extension 4010