On Wednesday, Quebec Finance Minister Eric Girard will table a budget that he insists is "sober and targeted," a description that feels almost like a defensive crouch in the face of a looming $12.4 billion deficit. This is the eighth budget from the Coalition Avenir Québec (CAQ), but it is the first to be delivered while the party is essentially headless. With Premier François Legault having announced his resignation and a leadership race set to conclude in April, Girard is attempting a delicate fiscal balancing act. He must fund the province’s core missions—health and education—while signaling to the bond markets that Quebec hasn't completely lost its grip on the purse strings ahead of the October 5 general election.
The primary query for every Quebecer is simple: Will there be relief for the cost of living? The answer, buried in Girard’s recent rhetoric, is a firm "not likely." Unlike previous years where "bouclier fiscal" (tax shields) and direct checks were the tools of choice, the government is now pivoting toward infrastructure and "adequate" service funding. The goal is to survive a year that Girard himself warns could be "difficult," particularly with the instability of the North American trade landscape and a sluggish 1.1% GDP growth projection.
The Deficit Trap and the Generations Fund
Quebec's fiscal reality is starker than the "sober" label suggests. The province is staring down a $12.4 billion budgetary deficit, a figure that represents nearly 2% of its GDP. While Girard points to a "contingency reserve" of $2 billion as a safety net, the underlying math shows a government spending significantly faster than it is earning.
A major point of contention remains the Generations Fund. This is a dedicated pot of money used to pay down the provincial debt, fueled by water-power royalties and other specific revenues. For the 2026-2027 fiscal year, the government plans to tip $4.2 billion into this fund—a move that actually deepens the reported deficit in the short term. Critics argue that in a year of high interest rates and crumbling schools, funneling billions into a long-term debt-reduction vehicle is a luxury Quebec can no longer afford. Girard, however, views it as a non-negotiable anchor for the province’s credit rating.
The tension here is palpable. If Girard pauses the payments, he risks a credit downgrade and higher borrowing costs. If he keeps them, he has less money to fix the "road infrastructure" he admits needs urgent repair. He has chosen the latter, betting that fiscal discipline will play better with the silent majority than another round of inflationary cash transfers.
The Leadership Shadow
Writing a budget for a premier who is leaving is an exercise in political ghostwriting. Girard has confirmed he consulted with the two CAQ leadership frontrunners, Christine Fréchette and Bernard Drainville. This budget is as much a platform for the next leader as it is a government document.
Fréchette, known for her pragmatic approach to the economy, likely pushed for the "targeted" measures aimed at business productivity. Drainville, meanwhile, has been vocal about reimbursing the carbon tax to farmers, signaling a populist streak that the CAQ needs to regain its footing in rural ridings. The resulting document will likely be a hybrid: fiscally conservative enough for the business class, but with enough "infrastructure" spending to provide ribbon-cutting opportunities for MNAs during the summer campaign.
Protectionism and the American Threat
Beyond the provincial borders, a larger shadow looms. Girard has been uncharacteristically blunt about the threat posed by the potential termination of the Canada-United States-Mexico Agreement (CUSMA). Quebec’s economy is deeply integrated with the U.S., particularly in timber, steel, and aluminum.
The budget's economic projections are built on a "baseline" assumption of 10% tariffs. If those tariffs go higher, or if the U.S. retreats further into protectionism, the 1.1% growth forecast will evaporate. This explains why the "sober" approach isn't just a choice—it’s a necessity. The government is hoarding its remaining fiscal capacity to act as a "counterweight" should a trade war break out.
The Healthcare and Education Squeeze
For the average citizen, the "missions of the state" mean shorter wait times in ERs and more teachers in classrooms. The 2025-2026 expenditure budget already signaled a recruitment freeze in the public service, with exceptions only for "direct services."
- Healthcare: The government is struggling with the "cap on independent labor rates." They are trying to force nurses back into the public system by making private agency work less lucrative, but the transition is messy. Expect the budget to highlight $3.9 billion in five-year healthcare "investments" that are mostly just keeping up with inflation and an aging population.
- Education: With $1.1 billion earmarked over five years, the focus is on "school success" and integrating newcomers. However, with demographic growth slowing, the government is shifting away from building new schools toward maintaining the existing, often dilapidated, stock.
A Precarious Path to 2030
The CAQ’s "Plan to Restore Fiscal Balance" targets 2029-2030 for a balanced budget. It is an ambitious timeline that relies on two things: sustained 2% annual expenditure growth and no major global shocks.
History suggests this is optimistic. In 2025, the government had to review 277 tax expenditures to "free up" $3 billion. They are now cutting tax credits for municipal political contributions and narrowing the eligibility for the childcare tax credit. These are small, politically risky cuts that indicate the "low-hanging fruit" of fiscal management is gone.
Quebecers are increasingly skeptical. Polling shows over 60% of the population wants a change in government. The Parti Québécois (PQ) and the Liberals are gaining ground, particularly as the CAQ's "third way"—nationalism without sovereignty and business-friendly social spending—shows signs of structural fatigue.
This budget won't win the election. It is designed to prevent the government from losing it before the campaign even begins. By refusing to play the "Santa Claus" role, Girard is attempting to project an image of the "adult in the room." Whether voters prefer an adult or a savior remains to be seen.
Investigate the specific infrastructure projects listed for your region in the accompanying "Plan québécois des infrastructures" (PQI) to see if the promised funding matches the local needs.
