EDITORIAL PAGE Quebec’s faint support is welcome

If Quebec had announced its 1991-92 budget a few weeks ago, it would have been damned as irresponsibly extravagant. Finance Minister Gerard Levesque would be pilloried for projecting a deficit this year of $3.5 billion, the second largest such deficit in the province’s history surpassed only by the Parti Quebecois’ $3.8-billion deficit in 1984-85.

What’s more, Levesque expects government spending for the next three years to increase by 1% more than consumer prices.

If Levesque had brought down such a budget in early April rather than early May, he would have faced blunt criticism. But everything in politics is relative, and in relation to Ontario’s recent budget, Quebec’s is a model of restraint and common sense.

Ontario had no qualms about tripling its deficit from $3 billion in 1990-91 and is forecasting a deficit this year of $9.7 billion. It expects the cumulative deficit of the next three years alone to be $27 billion.

We doubt Ontario Finance Minister Floyd Laughren honestly believes that the people of Ontario will pay back that staggering level of public debt. There is certainly no indication that the province has any intention of paying it back.

So, in the wake of Ontario’s total disregard for fiscal responsibility, we take some comfort in Quebec’s faint support for mining and mineral exploration in the face of what by comparison is a remarkably restrained budget.

In particular, the 2-year extension for deductions on flow-through shares is welcome. In 1990 about $45 million was spent on flow-through shares in Quebec, and the extension will help to at least maintain that level of financing. And, as Quebec’s Deputy Premier Lise Bacon has pointed out, flow-through financing results in a net benefit to the province.

Prior to the budget, the Quebec Mining Association had sought a program of road building in the north as one way of helping bring costs down for the exploration sector. The immediate benefits of such a program would have been to create construction jobs in more remote areas, but such improvements in infrastructure would also provide spinoff benefits to industries not directly involved with mining at all tourism, trucking and forestry would all gain.

The QMA says the benefit to mining and mineral exploration of northern roads would have been significant simply by reducing costs of doing business. For example, within a 10-km distance of roads, diamond drilling costs average about half of the cost beyond that distance.

Levesque also announced in his budget a $5-million program to finance mining exploration for junior companies, but the details of that program are not clear. We believe that direct funding from government is a poor way to stimulate activity compared with a system, such as flow-through, that merely invites private investment.

But perhaps the biggest benefit for Quebec will simply come from comparison of its budget to that of its prosperous neighbor to the west. Mine finding and development is simply not welcome in Ontario any longer, and efforts that might have been spent to tap Ontario’s natural wealth will go elsewhere.

Certainly British Columbia will benefit from Ontario’s shortsighted policies, and so will the U.S. Perhaps Quebec will also attract more investors’ interest as Ontario’s once proud mining industry slowly winds down.