Competing accounts of Quebec's finances
After meeting with Finance Minister Nicolas Marceau, St-Pierre Plamondon blamed the CAQ for the condition of the province's finances. "The previous government left the house in a mess," he said. In a social media post Tuesday evening, he wrote: "We are facing a significant budget deficit and we will have to take bold decisions to reduce it." He gave no figure for the shortfall.
That assessment contrasts with the outgoing government's account at the final meeting of the Fréchette cabinet on Oct. 14, after the election. Deputy Premier Ian Lafrenière said, "We are leaving the house in a better state than before." Outgoing finance minister Eric Girard said, "We have the second or third smallest deficit in Canada."
The CAQ had maintained that it would leave finances in the condition it inherited from the Liberals in 2018, when Quebec had an $8 billion surplus. Girard also pointed to the pandemic the CAQ had faced during its time in office.
The last pre-election fiscal report, released Aug. 17, projected a $5.2 billion accounting deficit for 2026-27, equivalent to 0.8% of GDP. That forecast was $1.1 billion lower than the March budget projection. Once the payment to the Generations Fund was included, however, the projected deficit was $8.6 billion.
The savings behind the PQ's budget pledge
The PQ campaigned on balancing the budget in 2028-29, a year ahead of the deadline under the Balanced Budget Act. Its proposed approach includes reducing bureaucracy and limiting growth in the public sector wage bill.
Bloomberg reported on Oct. 21 that the party's four-year fiscal plan projected a C$6.5 billion deficit for the fiscal year ending March 31. Reaching balance within two years would require more than C$1.8 billion in savings. The strategy assumes spending will rise by an average of just 1.9% annually, below inflation, and calls for thousands of civil service layoffs representing 2.5% of the government's payroll.
Marceau has previously faced a budget-balancing challenge in the same portfolio, which he held from 2012 to 2014. According to CBC News, he inherited a $1.6 billion deficit in 2012 and promised to eliminate it by 2013-14. By November 2013, the PQ government had dropped that commitment as the projected shortfall reached $2.5 billion.
An Oct. 19 study by the Institut du Québec cautioned that spending cuts alone would not provide a lasting solution. It found that restraint was needed to reach balance by 2030, but that deficits could soon return because spending, particularly on health, was rising faster than revenue. The institute recommended increasing the employment rate, immigration and productivity.
Tax cuts and spending commitments
Several of St-Pierre Plamondon's first-100-days promises would also affect the budget. He has pledged to remove the Quebec sales tax, or QST, from used goods and cut the gasoline tax by the equivalent of seven cents per liter. A Capital Hill Group analysis expects both measures in the fall update, estimating the gasoline tax cut at $700 million over two years and the used-goods exemption at about $600 million annually.
The premier has already authorized $28 million in emergency homelessness aid as part of a promise to spend $1 billion over four years. He has also committed $100 million to address food insecurity. Capital Hill Group expects the update to provide an additional $100 million a year for food banks.
The PQ's fiscal framework includes a 20% tax reduction for small and medium-sized businesses, as well as other tax cuts and targeted credits for individuals. Separately, Bloomberg reported that the party promised to gradually lower the corporate income tax rate from 11.5% to 9.5%. It proposed fully offsetting that reduction by cutting business grants and financial support, although Bloomberg said it was unclear how that would be accomplished.
Another potential revenue loss is absent from the party's plan, according to Bloomberg. Prime Minister Mark Carney expanded a major investment tax write-off in September 2026. Provinces typically match federal deductions, and Quebec estimates the change will cost it about C$1 billion in revenue each year.
A minority government faces a weak economy
The PQ formed a minority government on Oct. 5 with 59 of the National Assembly's 127 seats, five short of a majority. Bloomberg reported that its 28% share of the vote was the lowest popular support for a government in Quebec's history.
Capital Hill Group estimates that Quebec's economy will grow by 0.3% to 0.5% in 2026, with growth possibly reaching 1% in 2027. Its analysis describes Quebec as the province most affected by U.S. tariffs, facing an effective rate of 11.5%, compared with 8.5% for Ontario and 1.5% for Alberta.
Quebec's exports to the United States declined 6.3% during the first seven months of 2026, according to the same analysis. Exports to other markets increased 15% over that period.
Advisers assigned to fiscal and policy priorities
St-Pierre Plamondon announced two appointments Tuesday to support his government's work. Isabelle Garon, formerly Desjardins Group's senior vice-president of marketing, communications and partnerships and chief of staff to its president, will oversee the Summit on Homelessness and the National Consultation on Education. Both are priorities for the government's first 100 days.
Garon will also track the Commission on Regulatory and Bureaucratic Relief's progress and guide the government's main strategic objectives. The premier cited her more than 30 years of experience in major organizations. Her move into politics comes days after former Desjardins head Guy Cormier became the Liberal Party of Canada candidate for the Laurier-Sainte-Marie by-election on Sunday.
Laurent Desbois was named the premier's economic adviser. His background includes currency risk management at the Caisse de dépôt et placement, work with Merrill Lynch Citibank and the Bank of Canada's Foreign Exchange Committee, and service as mayor of Outremont and vice-chair of Montreal's Finance and Administration Committee.
The premier said Desbois would help repair public finances and identify economic growth opportunities amid the U.S. trade dispute. He will also help Treasury Board President Alain Therrien review "all ineffective subsidies ... and sources of waste within the state apparatus."
