Business aid: Quebec still first, but Ontario is getting closer

Quebec’s Business Aid Spending Surges, But Results Remain Uncertain

Since 2018, the Quebec government under Premier François Legault has significantly increased aid to businesses, presenting it as a means to enrich Quebecers. However, as the province faces a looming record deficit, questions arise about the effectiveness of this spending.

Quebec remains the leader in business assistance in Canada, although Ontario is closing the gap rapidly.

Quebec Leads in Per Capita Spending

In 2023, Quebec’s Ministry of Economy, Innovation, and Energy (MEIE) spent over $1.7 billion, equating to $193 per resident. By comparison, Ontario’s Ministry of Economic Development spent less than $1.3 billion, or about $80 per resident.

"Quebec usually ranks at the top of the provinces in terms of business support, but Ontario has substantially increased its spending in this area over time," said Jake Fuss, director of fiscal studies at the Fraser Institute.

Ontario, for instance, has aggressively funded projects like Volkswagen’s proposed battery plant in St. Thomas with support from both provincial and federal levels.

Ontario’s Rising Subsidies

Ontario now leads Canada in total subsidies paid by provincial ministries and agencies. In 2021, it allocated more than $22 billion to businesses, or $2,550 per taxpayer, compared to Quebec’s $9.9 billion, or $2,035 per taxpayer.

While Quebec often relies on loans at advantageous rates and other forms of aid, Ontario opts for direct grants. For example, in 2023, Queen’s Park allocated $80 million to General Motors, $28 million to Toyota, and $20 million to Honda. Companies like Ubisoft and Mondelez also received millions in subsidies.

Competing with U.S. Incentives

Quebec faces stiff competition from U.S. states for major investments. American states frequently offer substantial tax credits and federal support, but a lack of reliable data makes it challenging to measure the full extent of this financial aid.

Broad and Growing Support

The MEIE and Investissement Québec provide billions in business aid annually, but nearly all Quebec ministries contribute to funding the private sector. Over the past two years, government subsidies to businesses and non-profits have totaled almost $17 billion.

Key contributors include the Ministry of Employment for workforce training, the Ministry of Natural Resources for forestry, the Ministry of the Environment for climate initiatives, and the Ministry of Transport.

Additionally, indirect aid, such as preferential electricity rates for large industrial consumers, costs the province hundreds of millions of dollars annually.

Tax Burden vs. Subsidies

In 2021, the total value of business subsidies equaled 68% of the taxes paid by businesses to the Quebec government, a sharp decline from 2007–2014, when subsidies often exceeded the total taxes collected.

The Question of Impact

As the government pours billions into business support, the critical question remains: who truly benefits from this aid, and are the expected economic gains being realized?