this system put in place by Quebec to ensure that the debt remains bearable for young people
In what financial context did you set up the Generations Fund?
When I became Quebec Minister of Finance in 2004, I met with the rating agencies every year. At that time, the province's debt represented around 40% of Quebec's GDP. Even if this was a lower debt ratio than that of a large part of developed countries, it was still significant. The young activists of the Liberal Party, a movement of which I was a part, were very sensitive to this question. They told me: “Your generation leaves us a debt which risks being even more unsustainable given the demographic state of the country.” I replied that I would think about it and come back with suggestions.
What have you done?
A Generations Fund system already existed in Alberta and we took inspiration from it. This province made money from its oil revenues and put part of this revenue aside. In Quebec, we also have income, thanks to our hydroelectricity, our forests and mines. We have therefore required different companies to contribute to our own Generations Fund. In the first years, we chose to only tax exports, so as not to create a price shock for consumers. There have been no major debates on this issue. In any case, we were in the majority in the local Parliament.
Which ?
In 2022, the party that won the election promised a tax cut of around two billion Canadian dollars and financed it by dipping into this kitty. Somehow, they returned this money to the taxpayers, so even if that is not the original meaning of this mechanism, I prefer it to seeing this money spent elsewhere.
Did the fund's results meet your expectations?
The year after the fund was created, I went to the rating agencies and they re-evaluated our rating. It was not just a question of the amounts saved, it also showed the attention paid to debt in our policy. In 2024, the fund should be supplemented with an additional four billion Canadian dollars. In total, we have put twenty billion aside knowing that ten billion are “missing” used directly to reduce the debt.
When it comes to debt, do you think that seniors have a moral responsibility?
Yes and that is why this mechanism is called the Generations Fund. We launched this idea with the hope that the debt would remain bearable for young people. As their proportion would decrease in our society due to the aging of the population, the debt risked being even higher. It was therefore necessary to act. There were still criticisms. For some, we could have directly invested this money in education for example, but the project still received general consensus. It is all the more effective since this measure is combined with a balanced budget law, which pushes the government not to run too much of a deficit.
Do we not ultimately run the risk of fueling resentment between generations by letting the debt get out of control?
This is exactly the reasoning that led me to carry out this project. Why should a generation pay off a debt they didn't really benefit from? I took the lead because the analyzes showed that we were going to have an aging population and therefore fewer assets to pay an increasingly high debt. It's not even a debate within the parties today, because we know that we are partly protected by the fund. If we are hit by a major crisis tomorrow, we will be able to use it instead of borrowing at very high interest rates. It is a pot to avoid the worst in the future, a mechanism guaranteeing financial security. It allows you to anticipate crises.
Other countries such as Australia have implemented systems similar to yours. Is it necessary to have rents linked to natural resources to achieve this?
Several nations have chosen to invest in the future instead of spending their immense oil revenues. For us, it is mainly a renewable resource that allows us this mechanism. It’s thanks to our blue gold, hydroelectricity. Without this flexibility, I have to admit that it is difficult. I know that you are facing an enormous challenge in France and I am well aware that it is complex. You cannot rely on a situational pension like us.
