Quebec deserves its have-not label

How do the living standards of people in Quebec compare with those elsewhere in the country? In Quebec, this issue stirs up a profusion of emotional reactions from diverse standpoints. Some indicators suggest that living standards in Quebec may be comparable to those in Ontario, while other, more objective, data show that Quebec is relatively poor compared with other Canadian provinces.

In 2004, Quebec’s GDP per capita, the most widely used measure of the living standards of a territory’s residents, stood at $35,117. This is 13% less than Canada as a whole ($40,351) and 16% less than Ontario ($41,703). It also falls below the numbers for Alberta ($58,394), Saskatchewan ($40,240), Newfoundland and Labrador ($37,588) and British Columbia ($37,421). The gap with Ontario is the same as it was in the early 1980s.

These data should, ideally, be made more accurate by adjusting them for the cost of living. Unfortunately, even if this concept seems simple, it is impossible to find complete and trustworthy data. Statistics Canada published data only for the largest city in each province, along with Ottawa, for 2003.

Prices in these cities are not necessarily representative, however, of prices throughout a province. But using the number for Montreal and the average of the two Ontario cities, the cost of living in Quebec is approximately 12% lower than in Ontario. On this imperfect basis, the negative gap between the GDP per inhabitant in Quebec and the Canadian average drops from 13% to 6%, while the gap with Ontario falls from 16% to only 4%, leaving Ontario at only a slight advantage.

Another indicator of the standard of living is disposable personal income per capita (all sources of individual income minus personal direct taxes). In 2004, disposable per capita income in Quebec was $21,631, 7% below the Canadian average and 12% below Ontario. If we adjust this for the cost of living, we come up again with a depiction that is more favourable to Quebec in relative terms since the gap with Ontario seems to disappear completely.

These general indicators should be taken with a grain of salt since they are offset by other, more objective, data that put Quebec in a less favourable light:

• Quebec still has the highest unemployment rate among the Canadian provinces, apart from three of the Atlantic provinces. It stood at 8.5% in March, 2006, compared with 6.3% in Canada as a whole and 6.1% in Ontario.

• In 2005, 6.8% of the Quebec population lived on social assistance, while the Canadian average was 5.2% and the Ontario level was 5.4%.

• The median household net worth (their assets minus their debts) of $61,300 per Quebec family unit in 1999 is considerably lower than the same figure for Ontario families ($101,400). The proportion of households that own their dwelling has a strong influence on net worth, and people in Quebec are far likelier to rent than to own their homes.

All these indicators reflect a relatively weak economic performance and demonstrate that living standards in general are lower than in the other provinces.

Moreover, labour productivity is an important indicator of economic performance and a crucial determinant of growth in living standards. Without higher productivity, there can be no increase in per capita wealth. Quebec’s productivity per worker is below the Canadian average and is exceeded by productivity in Alberta, Newfoundland and Labrador, Saskatchewan, Ontario and British Columbia. Productivity per hour worked also comes in below the Canadian average and below Ontario.

Some groups insists that these indicators do not take account of the fact that Quebec, or so they argue, is a more egalitarian society and that wealth is better distributed, with fewer poor people.

In this regard, the poverty rate shown by the Market Basket Measure (MBM, which gives the ratio of persons in the general population with incomes that are inadequate to meet essential needs) is 12% in Quebec, slightly below the Canadian average of 13% but a little above the Ontario rate of 11%. The argument that Quebec is a more egalitarian society than the rest of Canada thus does not hold water.

Moreover, Quebec has relatively few wealthy people, with the proportion of taxpayers earning $100,000 or more at just 2.2%, compared with 4% in Ontario. Whether or not people in Quebec show greater solidarity with the poor, having fewer wealthy people means in any case that there is less wealth to be redistributed.

Economics isn’t everything and Quebec remains one of the most highly favoured places in the world. There obviously exist other reasons to want to remain in Quebec or to set up residence there, reasons related to culture and quality of life, for example. But these advantages risk dwindling away unless a pace of wealth creation comparable to that of its neighbours is maintained.

Norma Kozhaya est économiste à l’Institut économique de Montréal.