Unilateral separation
Landry's Plan B: Unilateral secession
Audet dismisses projected financial benefits of independence as 'Alice in Wonderland'
KEVIN DOUGHERTY
The Gazette
Friday, May 06, 2005
CREDIT: JACQUES BOISSINOT, CP
Flanked by finance critic Francois Legault, Parti Quebecois leader Bernard Landry responds to questions after his party unveiled a theoretical financial plan under a sovereign Quebec.
Quebec could declare independence unilaterally and withhold its federal taxes from Ottawa if negotiations with Canada drag on after a vote for secession, Parti Quebecois leader Bernard Landry said yesterday.
"Yes," Landry told reporters, when asked if he would go that far. "That is a plausible scenario."
Landry revealed his Plan B after PQ finance critic Francois Legault presented projections that Quebec would be better off without Canada.
"There is no question that money would be an obstacle to independence," Landry said.
Before Quebec's 1995 sovereignty referendum, then premier Jacques Parizeau characterized as a "lobster trap" the process set in motion by a Yes vote, suggesting that Quebecers could never turn back once a Yes vote had been cast.
But Parizeau denied columnist Michel Vastel's 1997 affirmation that he planned a unilateral declaration of independence within 10 days of a Yes vote.
In August 1998, the Supreme Court of Canada ruled that if Quebecers gave a clear answer to a clear referendum question, the rest of Canada would have to negotiate, adding that while the constitution does not recognize unilateral secession, it does not rule out "the possibility of a unilateral declaration of independence leading to de facto secession."
In his presentation yesterday, which he called a "very conservative" projection, Legault said by taking back its federal taxes, Quebec would get $31.6 billion more a year, even after losing $9.6 billion in federal transfers.
But a sovereign Quebec would also have new responsibilities, paying $8 billion a year in Old Age Security pensions, another $5 billion in Employment Insurance benefits, plus another $13 billion for its new jurisdictions, including $2 billion for defence.
Quebec generates about 21.2 per cent of Canada's wealth, but Legault assumes a sovereign Quebec would shoulder only 18.2 per cent of the national debt, or $6.4 billion a year in added interest charges.
And he estimates Quebec could save $900 million by ending duplication of services between Quebec and Ottawa, while putting all the federal civil servants in the province on Quebec's payroll.
This would leave a sovereign Quebec with a $1.3-billion surplus this year, rising to $2.4 billion in 2006-2007 and $5.3 billion in 2009-2010.
"A sovereign Quebec will be in better financial shape than the province of Quebec," Landry added.
^^[
]
Legault said that Finance Minister Michel Audet will have a $937-million deficit in 2006-2007 and total deficits of $3.3 billion for the years 2005-2010. But a sovereign Quebec would have $17.1 billion in surpluses for 2005-2010.
Audet said he "jumped" when he saw Legault's rosy projections of surpluses, noting that Legault did not take into account the transition costs of sovereignty, which economists estimate would add between 1 and 4 per cent to expenses.
"There is no reserve, nothing," Audet said, dismissing what he called Legault's "Alice in Wonderland" view.
The minister said while Quebec benefits financially from federalism, the fiscal imbalance deprives it of revenues needed for health care and other responsibilities.
"It isn't by separating Quebec from Canada that we are going to correct this situation," Audet said.
Legault said he was willing to debate Audet on his conclusions "anywhere, any time." Without agreeing to a formal debate, Audet said,"We will cross swords in the National Assembly."
Legault's study is an update of a 1991 report for the Belanger-Campeau Commission.
But a 2002 update of the same Belanger-Campeau study - ordered by Landry when he was premier - found that a sovereign Quebec would start out with a deficit because it would pay 21.3 per cent of the federal debt.
Interest on that higher debt would be $7.8 billion, eliminating Legault's projected 2005-2006 surplus.
Billions better off: forecast
By taking back its federal taxes in the event of separation, Quebec would get $31.6 billion more a year, even after losing $9.6 billion in federal transfers, said PQ finance critic Francois Legault. He called his projection "very conservative."