Budgets and Elections – Part One
The Charest-Harper Plan to Betray Quebec Labour

The cynical collusion of Conservative Prime Minister Stephen Harper and Liberal Premier Jean Charest of Quebec, pledging mutual political favors, rigging budgets and plotting wins in the March 26th Quebec and spring Federal election is a new low in using taxpayer’s money to retain political power.
Quebec workers and farmers should have no illusions; the Harper Conservatives and the Charest Liberals are cut from the same cloth, big business servility. Charest, with Harper’s help is tasked by the corporate bosses to engineer a speedy election victory on March 26th before a stagnant Quebec economy slides into a recession. If he is elected Charest will return the favour and back the Harper Conservatives in Quebec in the federal election and for the same reasons. The Bay Street and St. James Street investor upper crust wants any disruptions in the Quebec economy to be managed exclusively to preserve the profit interests of big business. Economic reforms that benefit working people are to be token and relegated dead last in future Liberals plans for Quebec.
Big Business Mismanagement Threatens Quebec Economy
The Quebec Liberal Government Budget Plan 2007-2008, a document the average worker will not likely read but every labour leader and rank and militant should so Charest can be hit with his own data,
details the economic crisis factors menacing the Quebec economy. Quebec has been hard hit by the global capitalist market crisis. According to the Quebec Finance Minister’s Michel Audet’s supporting data, Canada’s share of global exports slid from a surplus of $59 billion in 2002 to a deficit of $19 billion 2006. (Chart B.15). The stat contradicts other Stats Canada data that places Canada’s trade surplus at $59 billion in 2002 falling to $5 billion in 2005. Whatever is the exact number, Canada’s export over import position is deteriorating and rapidly. The trade deficit is attributed to a combination of a rise in the CDN dollar, the hike in the price of oil to $66 a barrel and rising prices of other raw materials which drove up the cost of Canadian manufactures.
The February 2007 5th report of the Federal Government Standing Committee of Industry, Science and Technology headed by James Rajotte MP, rates manufacturing as accounting for 18% of all Canada’s economic activity or $611.5 billion in 2005 and employing 2.1 million workers. The report states the sector suffered a 9.2% drop since its last report resulting in employment loss of 233, 900 jobs that continues to this day.
Quebec manufacturing accounts for $137,038.3 million or 23 % of the Canadian total. The practical result of the decline in manufacturing for workers is a Quebec unemployment rate of 7.7% the highest among the largest provincial economies, Quebec, BC, Alberta and Ontario.
The seriousness of a loss of export markets for Quebec cannot be overstated. Quebec exports 50% of its total production of $292,225 million or put another way, 25.8% of Quebec’s real GDP of $246,624 million. A minor fall off of Quebec exports triggers a major economic crisis for working class families who lose their jobs. Textiles, soft wood lumber and pulp and paper jobs have been hard hit. Worsening the threat to the economy is the fact that 81% of all Quebec exports go to the US market. Quebec accounts for 3.1% of total US imports. China in comparison accounts for 17.6% of all US imports. The US economy could dispense with Quebec imports, except hydro electric power, but not with Chinese manufactured imports which due to their low price is a major factor in sustaining consumer purchasing power in the USA.

No Future for a Quebec Dependent on the US Market
Quebec has been led into this precarious situation by business compliant governments both Liberal and PQ that embraced the Mulroney FTA and NAFTA agreements that placed all of Canada’s manufacturing exports in one US market basket. The difference between the position of China and Quebec is that China has a policy of selling to the world while Quebec sells almost exclusively to the USA. Quebec Hydro sells close to $1 billion annually of hydro production to the US market. Charest boasts that profits from Quebec Hydro were $1,114 million but admits that $900 million came from the sale of assets, Transelec Chile, a one time event. Transelec, the largest electricity transmission company in Chile was owned by Hydro Quebec International Inc and bought by a consortium head by Brookfield Asset Management Inc that marshaled funds from the Canadian Pension Plan Investment Board and the BC Investment Management Corporation an arms length investment tool of the BC Government that uses government pension funds for foreign investment plays. Brookfield handed over $1.55B to Quebec Hydro for the acquisition. What the Charest Government has done with the remaining $600 million from the sale is not explained. What Canadian public pension funds are doing buying up foreign utilities is another matter ripe for study.

The US Economy – Economic Crisis in the Making
Charest has chosen to ignore the warning in his own budget backgrounder of the threat posed to Quebec by the developing residential housing crisis in the USA that is sliding to a disaster for millions of Americans who borrowed heavily against inflated equity in their homes only to see the equity evaporate as housing prices slide. US residential investment peaked at +10% in 2004 and has declined to – 13% in 2007 with signs that it is approaching free fall. In dollar terms what that means is that US homeowners refinanced $740 billion of mortgages in 2004 and removed $300 billion of that amount from equity in homes to spend on consumer good and services. That money sustained the US consumer market but is now gone. The slump in housing prices means foreclosures and economic disaster for millions of US homeowners and a flight of private capital from the housing market that in time will impact Canada. The fallout for Quebec is a fall off in demand for Canadian construction materials including Quebec soft wood lumber and a decline in demand in the US for Quebec products.
Premier Charest has no plans to lessen Quebec dependency on the US economy. In fact he bases all of his hopes on a US recovery. That is not likely to happen soon. Both the Quebec Budget backgrounder and the Federal Government Standing Committee on Industry, Science and Technology point to a US current account deficit of $850 billion while China and Japan have trade surpluses with the USA of $160 billion and $180 billion respectively. The war in Iraq has led the US economy into a chronic deficit crisis and so long as the Bush Administration retains power and expands the war in Iraq the dependency on deficit financing will continue with unforeseen consequences. The credit card economy of the USA is in deep trouble.

Prime Minister Harper is No Friend of the People of Quebec
Charest’s other hope is Prime Minister Harper who is promising to cover the Quebec budget shortfall with an anticipated increase of 11.7% in federal government transfers. It is doubtful if Quebecers will see a penny of that money in real social benefits. The Quebec deficit stands at 41.6% of GDP and Charest has allocated $1,747 million to debt reduction while at the same time boasting that government spending as a percentage of GDP has declined from 23.2% in 1985-86 to projected 18.1% in 2009. It is not rocket science to see that people’s needs have been sacrificed by both Liberal and PQ regimes to pay down the deficit and will continue to be if Charest is re-elected. As Marx quipped, “the only thing the capitalists share with the workers is the national debt.”

Tax Cuts – Taking and Giving the Taxpayers Money
Charest is attempting to sell the Quebec budget to voters with a minor tax reduction after reneging on a promise in 2003 to cut personal income taxes by $1 billion. Personal income taxes generate $18,081 million of Quebec government revenue while corporate taxes contribute $4,558 million. Federal transfers account for over $12,000 million. Personal income taxes have increased by $719 million since 2003 and Charest has magnanimously decided to give back $250 million in tax cuts in 2008. That pittance won’t come close to covering the loss to family incomes by increased hydro rates and day care costs over the past four years. Under Charest workers have had a budgetary induced wage cut. ydro

The slick media pitching of tax cuts to cover up a big business budget will appeal to the gullible but to wage earners and the poor they will see it for what it is, giving with one hand and taking with the other.
The Challenge to Labour and the Left
The left social democrats in the PQ, the Federation des Travailleurs et Travailleuses du Quebec (the QFL), the Parti Communiste du Quebec and the entire Quebec left face some tough challenges to help voters focus on class, peace and democratic issues and prevent Charest from distracting the working people with talk of non-existent tax cuts and mock battles with the Andre Boisclair PQ over sovereignty.
The Charest Liberals and the Andre Boisclair PQ leadership and the Mario Dumont Action Democratique du Quebec will engage in sham battles over sovereignty the so-called “fiscal imbalance” and the Parliamentary motion declaring Quebec a nation. There will be much hand wringing about which party will do more for the environment etc. With the help of the media Charest, Boisclair and Dumont will descend into unseemly personal attacks that will provide theatre but not serious politics.
The Boisclair PQ leadership elected in 2005 has proven to be a disaster for labour supporters of the PQ. He has trivialized the vital class economic issues confronting labour focusing on a barren and classless appeal for a “Yes” vote for a referendum on sovereignty. Boisclair does not merit the support of labour. Labour can and must step into the election with its own economic program and if necessary field its own candidates and support only those PQ members pledged to fight for the working people and a new progressive people’s democratic direction for Quebec.
A labour economic program has not been clearly articulated by the QFL that comes to grips with the decline in manufacturing, the sell-out of resources to the USA and rising unemployment. A clear working class alternative to Charest’s unholy alliance with the Federal Harper Conservatives that exposes the disastrous results for Quebec of dependency on NAFTA and the US market and the war policy of the Harper Conservatives must be outlined and quickly.
The Parti Communiste du Quebec
Organized labour will move more independently into the campaign if the Parti Communiste du Quebec can break into the election struggle with a clear labour-peace program that sees beyond the election and into the post election struggle for a new direction for Quebec.
The Communist candidates must explain to voters that if Quebec manufacturing and exports are to be pulled out of its current slump, it will not be as a result of counting on a rebound of the war ridden US economy. It can only be the result of a new made-in-Quebec solution that places the interests of Quebec labour first, and is part of a new direction for the Quebec economy that expands its home market and trades extensively with all of Canada and the world.
The TILMA agreement to be signed by the right-wing governments of Alberta and British Columbia on April 1, 2007 and the proposed Atlantica Agreement exposed by the Nova Scotia Federation of Labour (www.nsfl.ns.ca) are big business schemes of inter-provincial trade that are rejected by organized labour as a model for developing the Canadian home market. Such agreements are designed to reduce social programs to the lowest common denominator, promote privatization and remove restrictions on big investors. At the heart of these schemes is so-called “labour mobility” that will enable employers to force workers to fill labour shortages in Alberta and BC and to accept the lowest safety, wages, working conditions and trade standards. (Read CPBC Leader George Gidora’s analysis in March 1-15 issue of People’s Voice) (www.communist-party.ca)
What is urgently needed is a labour plan for the economic development of Canada. The Quebec election is an opportunity for the left to go beyond exposing TILMA and Atlantica and to advance its own plan for promoting the growth of the Quebec and Canadian economies that places the interests of labour at the top of the country’s agenda. Such a plan will have to challenge all of the assumptions about NAFTA and come to grips with both the PQ and NDP reticence to reject its profoundly anti-working class essence and demand its abrogation.
The Quebec Communist candidates are called upon to outline the utmost urgency the need for more public ownership and control of the key sectors of the Quebec economy as the only way to compel reinvestment of corporate profits in expanding the job creating manufacturing sector. The Communists can help move the whole debate to the left, if they openly challenge the tyranny of the investor classes who are prepared to see Quebec workers jobs disappear so long as their “portfolios” bulge with rising energy prices, soaring bank and real estate profits and dividends from armament stocks.
The Communists must demand an end to the Harper Government’s plunder of the $51 billion Employment Insurance Fund and demand that it be taken out of general revenue and returned to its original purpose to sustain working class families for the full duration of their unemployment. The Communists must demand the restoration of all funding cuts to day care and expose the fallacy of tax cuts as a substitute for fully funded universal health, education and pension programs.
Expose and Defeat the Charest-Harper Alliance
Jean Charest’s invitation to working class voters to follow his lead and vote for the Harper Conservatives in the federal election must be exposed and repudiated as the worst sell out of the interests of Quebec. Every Quebec working class voter should consider the fact that Prime Minister Harper has only two economic priorities and both are to protect big business; prolonging an unpopular war in Afghanistan that generates massive profits for arms supplier insiders, and perpetuating the sell out of western Canadian energy resources to the U.S.A, neither of which will help Quebec workers and their families.
What has the Harper Conservative big oil pro-war policies done for Quebec? The Alberta economy has been growing at about 7% year over year while Quebec, all other provinces and territories stagnated at 0.6% growth. Harper has poured $17 billion into the pockets of the arms merchants to wage a US-NATO war in Afghanistan The Harper Conservatives have no plan or inclination to change that reality. The regional imbalance such a skewed and anarchic economic situation perpetuates is the cause of the decline of manufacturing and high unemployment rates outside of the energy rich provinces. Prime Minister Harper has abandoned the vision of the peaceful, balanced and planned development of the economy.
The Charest-Harper Liberal-Conservative plan is a betrayal of the hopes of all Quebecers and with them of all Canadians who want peace and democratic and progressive economic development of our country. Their plotting must be exposed and repudiated. The Quebec election is the opportunity for the Communists, for organized labour for militant PQ activists, for the peace movement to join together and defeat the Harper-Charest agenda for Quebec and promote a genuine people’s democratic economic program for wage earners, the urban and rural poor and the unemployed.