Quebec to post first deficit budget in a decade

Quebec Premier Jean Charest will take Quebec into its first deficit budget in a decade on Thursday as he tries to boost the sagging economy and help workers who find themselves without jobs.

As he prepared to present the first budget since the Liberal party was re-elected with a majority government in December, Charest said job creation, training and support for recently unemployed Quebecers will be among his key priorities.

'Yes, there will be a deficit. But if you go into deficit, you should also be able to say how you will come out of it.' Quebec Premier Jean Charest

"If there's an economic slowdown and jobs are lost, we want to support workers and stimulate the economy," Charest said on the eve of the budget.

Experts are predicting the budget will plunge the province into the red by several billion dollars. Desjardins Group economists indicate the provincial deficit could exceed $3 billion in 2009-2010 and even hit $5 billion if the government opts for a strong stimulus package.

Charest said he must take the province into the red in order to get the province's economy back on track again without having to resort to massive service cuts as the province saw in 1996.

"We will protect services. We are not going to repeat the mistake of the Parti Qubcois who cut drastically in services in health care and education," said Charest.

However, he warned that something will have to suffer, eventually. Charest has not ruled out rate hikes by Crown corporations and agencies. The government will also begin negotiating new contracts with public sector workers later this year.

"Yes, there will be a deficit. But if you go into deficit, you should also be able to say how you will come out of it,'' he said.

Thursday's budget will also update the province's economic growth forecast. The Conference Board of Canada estimates Quebec's gross domestic product will decline by 0.4 per cent in 2009.

The government has said lower revenues could result in temporary interruption in debt repayment and a halt in payments to the long-term Generations Fund.

Infrastructure, energy projects to create new jobs

In his economic statement in January, Charest gave the first hints of how he plans to turn around the Quebec economy, which has lost ten of thousands of jobs since the beginning of the year.

He said investments in infrastructure and energy development will reach $13.9 billion this year, creating jobs for more than 100,000 people.

The projects include the $5-billion Eastmain 1-A project on the Rupert River in the James Bay region. That project could create at 3,500 jobs alone this summer.

The government has already got a head start on some of the stimulus measures.

"Since our election, we've put $2 billion into supporting businesses either through loans or investment," said Charest.

Opposition wants 'strong' economic package

Opposition parties have criticized the government for waiting three months after the election to present all of the specifics of the economic plan. Expectations are as high as the stakes, said PQ finance critic Franois Legault.

"What we have to expect from Mr. Charest is a really strong plan to relaunch the economy," said Legault.

The PQ also wants to see help for the forestry industry, which has been hit particularly hard by the cooling of the economic climate.

However, Charest has tried to dampen expectations of a broad-ranging stimulus package such as the one introduced by United States President Barack Obama. Instead, he wants to avoid weighing down the province with a massive deficit that, he said, could get in the way of the province making a full recovery when the recession ends.

The Liberal government will table the budget at 4 p.m. ET at the national assembly in Quebec City.