Reassign the generations Fund to the green stimulus

Photo: Jacques Nadeau Le Devoir
In the economic recovery post-COVID-19 desired “green” and giving priority to the energy transition, the idea was launched to align the generations Fund on this other crisis, ecological, just as real.

Even if it is keenly felt, the shock of the health crisis does not cause drift of québec’s public finances. In the economic recovery post-COVID-19 desired “green” and giving priority to the energy transition, the idea was launched to align the generations Fund on this other crisis, ecological, just as real.

The economist François Delorme, a professor at the University of Sherbrooke, and the lawyer Sarah-Maude Belleville-Chenard, phd candidate in law at McGill University, signed a letter claiming a change of direction and vocation to give to the generations Fund. “The economic update and financial requirements of the government of Québec published on 19 June confirmed the significant impact of the recession on economic activity, employment and the public finances. In this perspective, the choice of sources of financing becomes critical. In particular, it is necessary to reflect on the role that could play the generations Fund in the context of simultaneous challenges that we are facing the economic crisis associated with the pandemic, on the one hand, and the ecological crisis, on the other hand “, they write.

Born of a law passed in 2006, the generations Fund is devoted exclusively to the repayment of the debt of Quebec. During a conference held in January, the minister of Finance, Eric Girard, launched consultations on the use of the generations Fund once the target debt ratio is reached, he foresaw then from 2024. The pandemic came in all upset and force the minister to revise his targets.

But if the shock is brutal, it does not grow Québec’s public finances to the edge of the precipice. “From a historical perspective, the financial situation of the government of Quebec at the present time remains under control “, say the authors. Before the pandemic, the ratio of gross debt to GDP ratio was heading to the 42 % in 2020-2021. The data, published Friday, show rather that it will be of 50.4 % for 2020-2021. “It will, however, remain below levels reached following the recession of 2008-2009 and the one that still prevailed in 2017. “

The Fund has annual ticket of more than $ 3 billion. Its current value, to $ 8.3 billion, could reach 30.3 billion in 2025-2026, $ 100 billion in 2035-2036, projections that do not take into account the effect of the COVID-19. “In order to respect the principle of intergenerational equity, a recovery plan would necessarily have to take account of the challenges related to the ecological transition and the inequalities created by environmental crises […] Although the law that created the Fund provides that it is assigned exclusively to the repayment of gross debt, the government could introduce a bill to amend the principal allocation of the Fund in favour of a use which would correspond better to the needs of young people and future generations “, do they offer.

In order to respect the principle of intergenerational equity, a recovery plan should take into account the challenges of the ecological transition

— François Delorme and Sarah-Maude Belleville-Chenard

They add that the green Fund ” has neither the governance nor the necessary funds to serve as important leverage to a recovery plan which is meant to be the least bit effective “. And to a question, they answer, ” the notion of externalities is already inherent to the damage inflicted to the environment, and therefore naturally included in the debt between generations in regards to the fight against climate change. Therefore, in this sense, yes, the ecological debt, which includes the negative externalities of GHG emissions. And every debt has a dimension of intertemporal and therefore intergenerational “.

To see the video