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Quebec’s new government takes power on Thursday with the aim of transforming the province from a proverbial have-not into a French-Canadian tigre that no longer relies on federal equalization payments to pay the bills.

Needless to say, it’s a tall order for premier-designate François Legault and his cohort of Coalition Avenir Québec (CAQ) newbies, most of whom have never before sat in the National Assembly, much less the provincial cabinet.

While most analysts doubt Quebec can wean itself off equalization payments any time soon, if ever, Mr. Legault gets high marks at least for vowing to try. No Quebec premier in recent memory has set the economic bar as high. And as a businessman at heart, he demands results.

Luckily, the Liberal government that Mr. Legault’s seven-year-old CAQ defeated in the Oct. 1 provincial election did much of the heavy lifting in cleaning up Quebec’s public finances. And thanks to a pre-election review of the books by the provincial auditor-general, there should be no nasty surprises awaiting Mr. Legault and whomever he chooses to be his finance minister.

That hardly means that Mr. Legault won’t face huge economic challenges as he aims to raise Quebec’s growth potential in the face of a shrinking workforce, aging population and growing global protectionism. But he aims to overcome those hurdles by boosting entrepreneurship, more aggressively courting foreign investors and wringing efficiencies out of government.

Quebec experienced above-average economic growth in 2017, with gross domestic product (GDP) expanding by a heady 3 per cent. Over all, however, the province’s economy has been a laggard in recent decades and it has continued to rely heavily on equalization payments from Ottawa.

Quebec is set to receive $11.7-billion in equalization payments this fiscal year, or about 62 per cent of the total sum Ottawa will dole out to the six have-not provinces. By comparison, the “richest" have-not province – Ontario – will pocket $963-million in equalization payments, according to the federal Finance department.

At $24.3-billion, overall federal transfer payments, including cash for health-care and social programs, will account for about 22 per cent of the Quebec government’s revenues in the 2018-19 fiscal year. The CAQ’s fiscal framework, tabled during the election campaign, projected federal transfers of $25.6-billion in 2022-23, the final year of a CAQ government’s first mandate.

That suggests Mr. Legault is not counting on realizing much concrete progress in reducing Quebec’s dependence on equalization payments in his first term. At best, he has promised structural reforms to boost the province’s long-term growth potential. The CAQ framework projects these measures increase annual GDP by 0.5 per cent by 2022.

It is hard to overstate the headwinds Mr. Legault faces. While Quebec is the only province with “sustainable” public finances, according to Ottawa’s Parliamentary Budget Officer, it is also on track to grow more slowly than the overall Canadian economy in coming decades. Without a serious course correction, that means the province is set to rely even more on federal transfer payments than it does now. The PBO projects that equalization payments are set to double to about 4 per cent of Quebec’s GDP by 2047.

Quebec’s demographic challenge is particularly acute. Its unemployment rate sat at a record low of 5.3 per cent in September, in large part because its labour force has been shrinking. While the employment rate among 25- to 64-year-old Quebeckers in the labour force stands at a robust 85 per cent, the province’s participation rate has been on the decline as baby boomers opt for early or semi-retirement. This has left the province with a serious skills and labour shortage.

The CAQ’s plan to temporarily reduce immigration levels by 20 per cent, to 40,000 newcomers annually, could exacerbate that shortage in the near term. But Mr. Legault insists the plan will pay off economically in the long term by better integrating immigrants and matching their skills to labour market needs. Analysts are dubious that the plan will work, however, since the vast majority of immigrants continue to settle in Montreal, while jobs in several depopulating regions go unfilled.

Mr. Legault has also promised to “put money back into Quebeckers' wallets.” But other than a $700-million reduction in school board taxes and a similar sum in tax credits for families with more than one child, the incoming CAQ government has promised no major tax relief in its first term. At best, it has vowed not to increase any taxes or fees on Quebeckers.

Mr. Legault will need to come up with more than that to make the Québécois tiger roar.

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