Quebec billed taxpayers nearly $100 million for consultant contracts over the past five years

Québec taxpayers have given nearly $100 million in contracts to consulting firms in recent years, according to the Caisse de dépôt et placement du Québec (CDPQ).

Spanning a period of five years, CDPQ — Québec’s manager of pension funds — and other state operated companies invested more than $52 million into Deloitte, PwC, EY, KPMG and McKinsey.

In a request for access at Caisse, Le Journal de Montréal learned the Ministry of the Executive Council (MCE) of Premier François Legault spent over $24 million on these consulting giants. Nearly $14 million went to KPMG for their studies on high-speed internet.

Investissement Québec (IQ) billed taxpayers more than $13 million on financial services, including audits, diligent reviews, technological support and sales evaluation services.

In addition, Revenu Québec penned $5 million in contracts to these large firms, including three Deloitte contracts worth $3.7 million last year for an identity management and administration solution.

Loto-Québec spent over $5 million on these large firms, reported Le Journal.

According to the Fraser Institute, all levels of government in Canada spent $352.1 billion (inflation-adjusted) subsidizing businesses over 13 years.

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The publication reached Caisse for details on the contracts, but they refused to disclose "confidential information" concerning the provincial economy.

"Rather than give preferential treatment to certain companies and industries, governments could reduce business income taxes and help foster a pro-economic growth environment that gives all businesses the opportunity and incentives to succeed," claimed Tegan Hill, an economist with the Fraser Institute.

"Such spending might be justified if it led to widespread economic benefits. However, there's little evidence that corporate welfare generates widespread economic growth or creates jobs," she said, suggesting "government interference in the market distorts private decision-making and misallocates resources."

According to the Fraser Institute, Québec spent more on corporate welfare between 2007 and 2019 than any other government in Canada, including the feds. In decreasing order, Québec spent $79.6 billion on corporate welfare — more than the federal government ($76.7 billion), Ontario ($73.4 billion) and British Columbia ($22.9 billion). These excluded loan guarantees and direct investment.

"These subsidies for businesses — also known as corporate welfare — come with huge costs to government budgets and taxpayers while doing little if anything to stimulate economic growth," said Hill, co-author of The Cost of Business Subsidies in Canada.

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In particular, Québec has bailed out businesses more feverishly each year from $6.3 billion in 2007 to $7.2 billion in 2019 — angering local union members.

"We need to get out of this vicious circle that is costing taxpayers more and more and where the lack of personnel leads to the weakening of the government's internal expertise, which then becomes more and more dependent on external resources," Christian Daigle, the general president of the Syndicat de la fonction publique et parapublique du Québec (SFPQ) told Le Journal. 

"The reflex of government agencies and elected officials to turn to firms and outsourcing is insulting to competent and experienced public service personnel," he added.

Between 2007 and 2019, the province spent more to subsidize businesses than it received in provincial corporate income tax revenue annually. Its government could also have eliminated its business income taxes if it had ended corporate welfare, reads Business Subsidies.

However, François Dauphin, CEO of the Institute on Governance (IGOPP), says the government values the 'world-class competence' of these large firms, citing access to their global network of expertise. "There can be quite important advantages to using them," he said.

Nevertheless, all federal, provincial and local governments spent more on corporate welfare in Québec ($18,334) than any other province, minus Saskatchewan, according to the Fraser Institute.

"The government's attempt to select winners and losers in the economy generally makes the economy less efficient than if those decisions were left to individuals. Indeed, the better option is to let [taxpayers] decide where to spend their money and determine what businesses will succeed," added Hill.