The Legault government is increasingly relying on Investissement Québec (IQ), but this is accompanied by an ever-increasing bill. It has just crossed the 100 million mark and is not yet done rising, admits the Minister of Economy and Innovation, Pierre Fitzgibbon.
Posted at 06:00 am
To carry out the mandates entrusted by the government of Quebec, the state financial arm will receive an amount of 108 million in compensation for the fiscal year ended March 31, according to a recent decree published in the Official Gazette† This is an annual increase of 37%.
“The answer is yes, I expect to see an increase next year [exercice 2022-2023], explains Mr Fitzgibbon in an interview. There were transfers to IQ and additional hires for certain mandates. There will be more raises. †
IQ wears a lot of hats. The Crown Corporation intervenes with its own resources – where decisions are approved by the board of directors – but also acts as an agent for the Quebec government when it comes time to allocate funding.
The government’s financial arm plays this second role in implementing interventions through the Economic Development Fund (FDE), the Natural Resources and Energy Capital Fund (CRNE), and the Fund for the Growth of Quebec Enterprises (FCEQ). able to intervene directly in the economy. It is at this point that Quebec pays him an annual amount in fees.
Since coming to power, the Legault government has expanded Investissement Québec’s role with the aim of accelerating business investment, attracting more foreign investment and increasing Québec’s exports.
Bigger, more expensive
Mr. Fitzgibbon explains the marked increase in fees paid to IQ for his role as an agent by three factors: the transfer of employees from the Ministère de l’Économie et de l’Innovation and other entities to IQ, the addition of resources for certain “targeted mandates” and an increase in employee benefits.
“Let’s take the battery sector, we hired seven or eight more people,” he said. I think in the coming years we will certainly conclude that it has been a good investment. †
According to the most recent annual report, IQ had 1,022 permanent employees as of March 31, 2021, an increase of 80% from the same time last year. Since the Legault government has strengthened the activities of the Crown Corporation, it has welcomed 168 employees of the Ministry of Economy and 210 employees of the Center de recherche industrielle du Québec, whose management is entrusted to IQ.
When asked about the increase in fees, Luc Bernier, a professor in the Graduate School of Public and International Affairs at the University of Ottawa, admits that this is a “medium jump.”
“Should we entrust all this economic management to an independent body and stop doing it through the ministry? [de l’Économie] who should do it? he wonders.
According to the expert, it is currently difficult to analyze the significant increase in fees that the Legault government pays to IQ. The portrait of the coming years follows. Even if the bill is expected to rise, it won’t go so far as to double, assures Mr. Fitzgibbon.
While IQ is doing more for Quebec, the management expense ratio (cost as a percentage of assets under management) continues to rise for FDE, CRNE and FCEQ. This indicator increased by 16 hundredths of a percentage point to 0.41% between 2019 and 2021. However, the trend is downward on the stock side of the Crown Corporation.
When asked about the subject, the Minister of Economic Affairs wanted to temper the rise in the indicator by saying that it should not be analyzed annually. He took the example of the battery sector.
“We have been working on this for a year and a half and we are starting to reap the benefits,” said the minister. During this period you have costs, but no investments. The nature of operations makes it necessary to pay attention to these statistics. †
The increase in the management expense ratio for IQ’s agent business should eventually stabilize, Fitzgibbon agrees. However, he did not specify how much the administrative expense ratio would continue to rise.
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- Investissement Québec’s portfolio was valued at $6 billion as of March 31, 2021.
Source: Quebec Investment