For Quebec’s 2011-2012 fiscal budget, the federal government estimates that 26% of the province’s revenues will come in the form of federal transfer payments amounting to $17.4 billion. Since its inception in 1957, the federal transfer payments program has had its fair share of criticism. A notable argument is that this fiscal equalization program encourages dependency on the best economically performing provinces – like oil-rich Alberta – and gives the “poorer” provinces a lack of incentive to try and prop up their own provincial economies. Quebec has long been the source of such criticism. It is typically portrayed as the older, more static economy with a bloated public service sector that hinders any real economic progress. However, even with the highest provincial taxes in Canada and the highest provincial debt, Quebec still remains an immensely important province for the Canadian economy as a whole. It represents the second largest economy in Canada (19.80% share of national GDP) and is home to immensely successful industries like pulp, aerospace, IT and mining. Some say Quebec’s economy is struggling due to its expensive public services and protectionist attitude; others argue that the province is still crucial to Canada’s well being. Either way, both sides can agree that seeking more economic independence is a positive goal. Quebec intends to do just that.
Quieting all the critics, the province has presented a bold, ambitious, and most importantly, exciting project called the Plan Nord. This massive 25 year, $80 billion economic development project will not be centered on metropolises like Montreal or Quebec City. Instead, all the investments will flow to the north of the province. That is, higher than the 49th parallel, which covers an astounding 1.2 million km2 of land. Naturally, one could ask what can benefits could possibly be derived from an area that has only 120,000 inhabitants – not to mention the frigid weather conditions? Quebec officials view the Plan Nord in a similar fashion to the 19th century US expansion out West: new, untapped economic opportunity, without the gun-slinging cowboys and lawless towns of course.
Looking over the facts gathered and published by the Quebec government, the economic potential is enormous. The province is home to one of the largest fresh water reserves in the world (perfect for hydroelectricity), has extensive concentrations of crucial rare-earth metals (of which China currently controls 97% of the world market) and boasts vast forests (lumber production). An even more exciting economic prospect in the Plan Nord is its plan for 1.5 million hectares (~3.7 million acres) of arable land for bio-food production. This would create one of the largest reserves in North America that would effectively increase Quebec’s current cultivated land of about 2 million hectares by 75%. Furthermore, northern Quebec’s lithium deposits are significant, a major benefit in the increasingly lucrative battery market (laptops and hybrids). The best way to summarize all of this economic potential is in Quebec’s Premier Jean Charest short statement at the unveiling of the plan in May: “We have every resource imaginable up North”.
Maybe the day will come when Quebeckers will hear a little less (or no more?) criticism about transfer payments from those Albertans whose primary source of revenue comes from the oil industry. Perhaps the day will come when Quebec’s already more diversified economy will see a major boost in revenues from mining to hydroelectricity and furthermore, perhaps Quebec will be seen as the most economically important province in Canada. Whatever the future holds, it can be certain that this ambitious plan will put Quebec as an investment magnet “on the map” for many years to come.
Quebec’s minister of Native Affairs Geoffrey Kelley graciously agreed to an interview about the Plan Nord explaining his responsibilities and opinions, and the stance of the Liberal party. With the announcement of the Plan Nord, it was only natural that there arose some issues regarding the protection of the environment, aboriginals, and economic as well as political consequences. Along with the full audio interview, here are selected excerpts of Mr. Kelley’s responses:
How the Plan Nord timeline is being approached with respect to the aboriginal community:
“The Plan Nord is a process […] It is not as if it’s one big plan that everything is going to happen over 25 years has already been determined but it’s a big discussion table where we’ll work together to try to identify priorities and try to look at the various projects […] that respect the rights and interests of the First Nations but also become an opportunity for the First Nations for creating jobs, creating training and economic development.”
Regarding sovereignty claims that the Plan Nord covers:
“There is an interest in the Quebec government as much as the Canadian government to occupy the North […] There’s an opportunity here that if we don’t seize it maybe other people [ex/ Russia] will seize it in our place.”
The role of the Plan Nord for Quebec’s international trade:
“For example, the North American Free Trade Agreement, the Canadian government and EU are looking to opening up trade, so I think we are moving into an era where there is going to be freer trade anyway and the Plan Nord will create possibilities for many countries. The Premier [Jean Charest] did go to France, did go to Europe and there was great enthusiasm. He has also gone to China and to Japan to talk about the Plan Nord as well as the United States.”
The Plan Nord is a “provincial” economic development plan. Will this boost the PQ as more of the economy will be based within its territory?
“Because we are talking about development over a generation, yes it could be good if one day a long time from now there is an eventual PQ government. But, I see it much more assisting, very good for Quebec […] and I see it less in a partisan way. We know the North will be developed, as there is a lot of interest throughout the world. So we can either just let happen [without the Plan Nord] or try and organize these projects to make sure they bring a maximum benefit for all Quebeckers but also for those living on the Plan Nord.”
An example about the economic and social efforts the Quebec government is making to the Native community:
“Part of the engagement for the Inuit who live in Northern Quebec, where the Quebec government has responsibility for housing, is that we will accelerate our construction of housing and build 500 new houses over the next 5 years…A $65 million commitment.”
Regarding tax breaks for certain industries like mining in order to attract investments:
“For the mining and hydroelectric area [of the Plan Nord], the potential is great and these are all projects where people will be making money so they don’t need tax breaks […] we changed our royalties scheme last year so now Quebec will be getting a greater part of the profits from the mining companies. With that we will be able to build roads. With that we will be able to build schools. With that we will be able to continue to create beautiful parkland in Northern Quebec.”
Regarding some concerns the hydroelectricity is not the “greenest” source of renewable energy:
“Any system that generates power will have a consequence on the environment but when you look at the alternatives and look at the power sources from all of our neighbors, they’re burning coal, oil or natural gas to generate electricity. So are we better to live with the consequences of greenhouse gases by being surrounded by people generating electricity by fossil fuels? Or are we better off to increase our sales of [hydroelectric] power to Ontario, to New England and get our neighbors off of much dirtier power sources?”
Due to hydroelectricity in the province, “Quebeckers consumes about half of what Canadians consume every year.”
– Alexander Gardinier
Featured image source: http://inuitofmontreal.blogspot.com/2011/03/le-plan-nord-une-demarche-unique-les.html