In 2005, Legault calculated $17 billion in gains for an independent Quebec

Parti Quebecois Finance Critic explains a theoretical financial plan under a sovereign Quebec, Thursday May 5, 2005 in Quebec City. (CP PHOTO/ Jacques Boissinot)

François Legault has already painted a favourable picture of an independent Quebec's finances: in 2005, he estimated that a sovereign state would earn $17 billion over five years.

Parti Québécois (PQ) leader Paul St-Pierre Plamondon is scheduled to present his own version of this exercise on Monday.

In May 2005, when Legault was a PQ MNA, accountant and former businessman, he updated all the studies on a sovereign Quebec's debt sharing, overlaps and duplications, revenues and expenses, etc.

But it was an exercise fraught with problems and a total minefield for the PQ.

The first "Year 1 budget" presented by Jacques Parizeau in 1973 was discredited by his federalist opponents, undoubtedly contributing to the PQ's failure in that year's general election.

But François Legault, a resolute sovereignist at the time, believed in it. That was long before he abandoned the PQ in 2009 and founded the Coalition Avenir Québec in 2011.

Today, he brandishes the threat of job losses in the event of independence and repeats that Quebecers "don't want a referendum."

THE 'OLD FEARS'

The document Legault signed in 2005 "dispels old fears about the economic precariousness of a sovereign Quebec and calls into question arguments about the so-called profitability of federalism," he wrote in the preface.

"Not only is the sovereignty project relevant today, it has become urgent," he even declared in a televised segment that the modern PQ used to promote its Monday announcement.

At the time, Legault estimated that the financial effect of the revenues recovered from the federal government and the new expenses assumed would amount to a total surplus of $17 billion for a sovereign Quebec over five years, between 2005 and 2010, with figures to back it up "once the full effect of the savings generated by the elimination of overlapping costs has been realized."

On the other hand, he estimated that a provincial Quebec was heading for an accumulated deficit of $3.3 billion over five years due to a "fiscal imbalance" with the federal government and because spending was rising faster than revenues.

By cross-referencing this data, Legault concluded that a sovereign Quebec would ultimately have $13.8 billion in "leeway" after five years, assuming the same programs and services as the federal government.

Legault estimated Quebec would recover an average of 20 per cent of federal revenues, or $37 billion out of $185.7 billion at the time. He also estimated that Quebec would have to forgo $9.6 billion in federal transfers.

In addition, he stated that all Quebec civil servants employed by the federal government would be integrated into Quebec public service.

FEDERAL DEBT

Of course, Legault also dwelt on the federal debt, which was under control at the time, 10 years after Prime Minister Jean Chrétien had set the record straight: at the time, Ottawa was raking in a massive $9 billion budget surplus.

Quebec had to assume its share of the federal government's liabilities, estimated at $693 billion at the time, including debt, pension accounts, and other factors.

Based on various calculations and studies, this share was estimated at 18.2 per cent. Independent Quebec would therefore have inherited $126 billion in federal liabilities but would also have recovered $32 billion in federal assets, calculated Legault.

That was almost 20 years ago.

In a study cited by Legault in his exercise, the Conference Board of Canada forecasted that the federal government would amass a budget surplus of $80 billion a year by 2019-2020.

But that's clearly not what happened.

In eight years, the federal debt has doubled, from $628 billion to $1220 billion, and the size of the federal public service has increased by 40 per cent, deplored Paul St-Pierre Plamondon this week, who denounced Ottawa's squandering of Quebec public funds.

Sharing the federal debt will therefore be an essential part of the document to be submitted by the PQ leader on Monday.

In response, his CAQ opponent Legault stressed that Quebec is currently the beneficiary of a $13 billion annual equalization payment, far more than when he prepared his portrait of a sovereign Quebec's finances in 2005.

St-Pierre Plamondon estimates actual equalization at around $9.6 billion, since Quebec itself contributes to the equalization program.

"The leader of the Parti Québécois has just admitted, in front of everyone, that on net, Quebec receives $9.6 billion more than we send to Ottawa," attacked Legault at the national assembly this week.

The PQ's analysis also estimates $8 billion in savings from the end of duplication and overlap with the federal government.

But these savings would really be cuts, according to Legault, who questioned St-Pierre Plamondon in the House.

"Could he, on Monday, tell Quebecers how many Quebecers would lose their jobs with the $8 billion in cuts?" he asked.

The answer will come Monday.

Already, in an interview with the Journal de Québec, St-Pierre Plamondon has retorted that independence would generate an economic boom in Quebec.

That's what Legault might have believed in 2005 -- but not in 2023.

This report by The Canadian Press was first published in French on Oct. 21, 2023.