MONTREAL – Quebec’s new Liberal majority government must work to revive the province’s economy and create jobs, business leaders said Tuesday.
Francoise Bertrand, president of the Quebec chamber of commerce, said the election is a “favourable condition” that Quebec needs to redress the serious situation of public finances.
“We think now that we’ll have more predictability, that we’ll have a government now that will go back to business and go back to (making) economic development the focus of their actions,” she said.
Bertrand said minority governments have not been conducive to economic growth as tough government decisions are often put on hold, creating a ripple effect on investor confidence and investment spending.
Philippe Couillard led the Quebec Liberals to victory in Monday’s election, winning 70 of the 125 seats in the legislature as the separatist Parti Quebecois garnered its lowest percentage of votes since 1970.
In his first news conference since the election, Couillard pledged Tuesday that his first actions will be focused on restoring the economy and creating jobs.
Michel Leblanc of the Montreal board of trade said the new government must act immediately to create wealth and jobs and give new economic impetus to his city, Quebec’s financial engine.
He said some companies have delayed investments in the province over concerns that the election of a Parti Quebecois government would lead to sustained tensions between Quebec and Ottawa and public turmoil over a debate on the charter of values.
“I think that given the majority government, given the Liberal government that clearly made the economy and prosperity its main objective, I suspect boards that delayed decisions will now feel that they can move ahead.”
Leblanc called on the new government to give Montreal the financial levers to set its own priorities and be less dependent on property taxes. That could involve transferring to the city part of the provincial sales tax, a larger share of the fuel tax or adopting powers in place in Toronto.
Meanwhile, Bank of Montreal (TSX:BMO) chief economist Doug Porter said the Liberal victory is “a clear positive” for the flagging economy.
Porter said the election results should “only further temper concerns in the bond markets” as the focus turns to a Liberal budget that is expected to rein in spending as the new government attempts to balance the budget and target a surplus by 2015-16.
John Aiken of Barclays Capital says the Liberal majority is positive for the share valuations of National Bank (TSX:NA) and Laurentian Bank (TSX:LB) as the risk of a referendum has been put off at least until the next election in four years.
“The lift of a relative overhang on the Quebec-based banks could result in outperformance against their Ontario-based peers over the next month,” he wrote in a report.
After analyzing the banks’ shares following several Quebec elections, Aiken said a Liberal majority was the “best-case scenario” for National.
“While Laurentian Bank’s outperformance has not been as strong historically, it too has outperformed in each of the previous three Liberal majorities,” he added.
Meanwhile, the head of the employers’ group Conseil du patronat du Quebec urged the Liberals not to dismiss good features of the PQ and Coalition platforms and not to address the financial shortfalls by raising taxes.
“This is clearly a tough job,” Yves-Thomas Dorval said in an interview. “The next government will have to be courageous and to take tough decisions in order to cut spending, because we are facing a huge debt and we are facing also increasing demand in public infrastructure.”
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Note to readers: This is a corrected story: A previous version misstated the name Francois Bertrand as Francoise David