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Adrien D. Pouliot

Adrien D. Pouliot is former owner of CFCF inc. and founder of Télévision Quatre Saisons (TQS). Lawyer by profession, he has directed CFCF and TQS then been the owner of several companies and from 1999 to 2007 was chairman of the board of directors of the Montreal Economic Institute, a free-market think tank. He is the leader of the Conservative Party of Quebec

The SGF and the failure of economic nationalism

The election of Jean Lesage in June of 1960 coincided with a rise of economic nationalism in the province.  At the time, between 5% and 20% of the Quebec economy was owned by Francophone Quebeckers[1].  In the National Assembly, Premier Lesage argued that economic colonialism was no longer acceptable.  The creation of the Société générale de financement (“SGF”), he argued, would allow the people of Quebec to begin their own economic liberation[2].   The mission of the SGF was therefore to support Quebec businesses in difficulty, to acquire shares of Quebec businesses, buy Quebec government and institutional bonds; in short to act as Quebec’s financial arm so as to reduce Quebec’s dependence on “foreign” capital (meant to include investment from English Canada).The first version of the SGF was a public/private partnership.  It launched a public offering to finance itself, raising over 45M$.  Capital subscriptions of $16.2 million were accepted from the Caisses populaires Desjardins, from other financial institutions and from a certain number of private investors.  Premier Lesage decided that the government would initially contribute 5M$ but that this could go up to 25M$.  The first board of directors included three government representatives, three from the Caisses populaires and six from the private investors.  But the private shareholders soon found out that investing side-by-side with the government in a company where the State controlled half of the shares and half of the board was not the best way to make money.  After having accumulated 4M$ of losses in ten years, the government bailed out the private investors in 1972 by buying back their stock at the original issue price.The role of the SGF evolved over time with the loftiness of its president’s ideals for the corporation... and the colour of the government in power.  While it initially concentrated on helping Quebec… Read More

Québec’s deficit is twice as large as predicted

My friend Louis Charbonneau, a chartered accountant who closely follows government finances, recently brought to my attention that the deficit of the Québec government had reached $1.4 billion after only two months of operation even though the provincial budget projected a total deficit of $1.5 billion for the entire fiscal year. That is what was effectively revealed by the Department of Finance publication entitled “Le rapport mensuel des opérations financières au 31 mai 2012” covering the first two months of the year (April and May 2012). The current fiscal year ends on March 31st 2013. In order to establish a realistic projection of the annual deficit, Mr. Charbonneau calculated the relationship over the course of the last four years between the deficit in the first two months and that of the entire year. He thus obtained a ratio of around 43.68%, which indicates that, on average, the deficit for the first two months will represent 43.68% of the annual deficit. On the basis of this ratio, we can already predict a deficit of $3.2 billion. That amount is twice as large as the $1.5 billion deficit projected in the budget. The Finance Ministry still maintains that it can restrict the deficit to $1.5 billion and provides questionable explanations of how it will do so. But several key indicators would serve to undermine the assumptions behind the budget. 1. Despite the 1% increase in the provincial sales tax, total revenues are in decline, while the budget projects revenue growth of 5.9%. 2. Corporate tax revenues have declined by 24% and there is no economic recovery in sight. 3.Over the course of the last five years, total government expenditures (not just program spending) have increased by nearly 5% per year on average and nothing would permit us to believe that this rhythm… Read More