Quebec Taps Former National Bank Treasurer as Finance Minister

(Bloomberg) -- Quebec’s new finance minister wants to unlock the province’s economic potential by improving graduation rates and persuading companies to invest in more productive equipment.

Eric Girard was named to the post Thursday by newly elected Premier Francois Legault, whose Coalition Avenir Quebec won a majority government in the Oct. 1 provincial election. Girard, a former treasurer at National Bank of Canada, the country’s sixth-largest lender by assets, replaces Carlos Leitao, who had been in charge since 2014.

Long one of Canada’s economic laggards, Quebec is enjoying a renaissance of sorts, with unemployment hovering near four-decade lows and gross domestic product set to outpace that of neighboring Ontario in 2018 for a second straight year. Still, with growth forecast to slow through 2021, Girard and the CAQ recognize Canada’s second-most populous province must find ways to boost output and create more wealth in the long term.

“Quebec’s economic potential is not what it could be, and we want to take it higher,” Girard said in an interview last month during the election campaign. “How do we get there? By favoring corporate investment, education, graduation rates, better training for experienced workers -- all of which will help productivity. These are structural changes that will take time, but we think we can start having an impact in the third or fourth years of our mandate.”

Reached by telephone Wednesday, Girard referred questions to Coalition Avenir Quebec officials. A spokeswoman for the party didn’t respond to an emailed request for an interview Wednesday.

Spending Review

In the September interview, Girard insisted a CAQ government would make the state more efficient by targeting annual savings of about C$1.2 billion ($920 million) by 2022-2023 on a total budget of about C$124 billion. About 5,000 government jobs -- out of about 466,000 -- would be eliminated through attrition, and budget items such as information technology and procurement would be reviewed to cut costs, he said.

“What we are proposing is very realistic,” Girard said. “Companies routinely review their processes, their culture, their technology. Savings of 1 percent over four years are quite achievable.”

Though the former Liberal government announced plans in its March budget to pay down C$2 billion of debt annually over five years, Legault and his team have an even more aggressive timeline in mind -- targeting a one-time payment of C$10 billion by the end of March 2019. Such a move could reduce annual interest payments by about C$300 million, according to Girard.

Debt Payment

The money would come from the C$13 billion Generations Fund, which the Liberal government created in 2006 with a view to earning more than the cost of the province’s debt. In the five-year period through 2017, the fund has done just that -- returning an average 9.5 percent a year.

“After several years of excellent returns for the Generations Fund, we want to take profits and use them to pay down part of the debt,” Girard said. “Interest payments will decline, which will free up some money to help improve services in healthcare and education, and leave some money that we can give back to families.”

As finance minister, Girard will be responsible for the Caisse de Depot et Placement du Quebec, the C$308 billion asset manager that runs the Generations Fund. As far as he is concerned, the Caisse’s dual mandate of maximizing returns while contributing to the economic development of Quebec is here to stay.

“Clearly, the first goal takes precedence over the second,” Girard said of the Caisse’s twin objectives. “My reading of the situation is that they are doing a good job on both counts, so I see no reason to make changes.”

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