What the 2023 Budget Means for Quebec’s Digital Economy

This policy brief highlights what the 2023 budget means for Quebec’s digital economy. The province’s annual budget is published in the spring of each year and outlines the government’s main spending priorities.

Economic Update

The Quebc government tabled it’s 2023 Budget on March 21st, highlighting new investment in five priority areas: economic development, youth, healthcare, affordability, and the green economy. The Budget was released against a backdrop of inflation, high interest rates, and ongoing economic recovery from the COVID-19 pandemic. The Quebec Government expects the province’s economy to moderate in 2023, with real GDP growth slowing from 2.8% in 2022 to 0.6%. However, the province is also optimistic that efforts to control inflation and create better credit conditions will bring GDP back up to 1.4% by 2024. With an eye to setting Quebec up for a strong economic recovery in the coming years, the province has allocated substantial funding to creating wealth, increasing Quebec’s economic potential, and developing the potential of Quebec’s youth: in total, the Budget earmarks $24.5 billion worth of investments, which the province indicates will be spent by 2028. All the while, Budget 2023 sets a new debt reduction objective for the province. Net debt, which as of March 31, 2023 is equal to 37.4% of GDP will be reduced slowly over the next 15 years by approximately five to 10 percentage points.

Policy and Programs to Support Quebec’s Digital Economy

The digital economy is integrated throughout Budget 2023, highlighting the provincial government’s deep commitment to innovation, digitalization, and the information and communications technology and clean technology supply chains. The Budget allocates approximately $888 million over six years to “increase productivity,” including $413 worth of investments aimed at simulating private investment, $272 million to improve research, innovation and commercialization, and $201 million to support digitalization and exports. Of this, notable measures include:

• The expansion of the province’s tax holiday for large investment projects to include projects in the agriculture, manufacturing, and professional scientific and technical services sectors, with a particular focus on projects involving ICT, AI, and critical and strategic mineral extraction
• New funding to help prepare land for large scale industrial projects, which the government notes is paritcularly important for its burgeoning battery sector
• The expansion of Quebec’s quantum and digital technologies innovation zones
• New funding to promote innovation in clean transportation, clean technologies, and the circular economy, and to assist with commercialization and adoption
• New funding to support key organizations in Quebec’s digital industries, including BioMed Propulsion and FinTech Station
• The expansion of Quebec’s Digital Shift Offensive, which helps businesses take on digital transformation projects
• New funding to promote the digitalization of Quebec’s construction industry, including the adoption of building information modelling practices

A second major focus of the Quebec budget is regional development, including economic development for rural and remote areas. To support this goal, Budget 2023 proposes a number of initiatives worth over $1.5 billion over six years. Of these, several relate to Quebec’s digital economy:

• - New funding for existing agri-food programs that help Quebec’s agri-food sector conduct research and innovation, adopt sustainable practices, and adopt automation and robotization
• - An additional $108.7 million over six years to expand Quebec’s high-speed internet network and cellular coverage, including a new call for projets to convert the cellular network to 5G
• - The launch of new initiatives to responsibly develop Quebec’s critical minerals sector

Finally, a number of iniatitives in 2023 Budget will provide procurement opportunities for technology companies, including iniatitives focused on the digitalization of government services, iniatitives to help Quebec’s education system adopt modern technologies, and iniatitives to assist with the digitalization of Quebec healthcare.

Supporting EDI and Workforce Development

Budget 2023 proposes a number of new and existing programs to help address Quebec’s labour shortage, including programs to help newcomers settle, businesses find workers, students attend university, and workers transition into new roles. While some of these programs are included under the provincial government’s economic productivity, regional development, and youth development initiatives, most of the labour-focused programs are earmarked under a dedicated, labour market funding bucket, worth $615 million over six years.

Notably, the government proposes to provide $509.6 million over six years to help newcomers integrate into the Quebec Economy. This includes increasing support for French language learning, expediting credential recognition for immigrants, promoting immigration to regions with acute labour market needs, fostering the attraction and retention of workers, and supporting the labour-market integration of refugees. In addition to this, Budget 2023 proposes to provide $105.6 million over six years to support in-company training and offer a specialized support service focused on productivity and labour.

Small to medium sized businesses are more severely impacted by labour market shortages than large organizations. In order to help small to medium sized businesses find workers, the province has proposed to adapt the functions of Quebec’s Tax Advantage to help businesses find new workers and ensure a fair transition for workers who are negatively impacted by digitalization and production process automation

In terms of training and education, the budget proposes to expand and enhance the province’s merit scholarships for graduate students to help attract and retain highly-skilled talent. A second set of programs porpose to provide $200 million over six years to modernize vocational training, ensure training centres have access to modern, industry-relevant technological equipment, and expand free access to part-time and accelerated training programs.

Protecting the Environment

In December 2022, Quebec hosted the United Nation’s Biodiversity Conference (COP 15), whereby ambitiouos biodiversity pledges were signed. Budget 2023 explicitly states that Quebec will be honouring commitments made at COP 15, including approximately $1 billion in funding allocated to protecting water resources and natural resources. This includes $500 million in funding to support the creation and implementation of Fonds blue, a plan aimed at enhancing sustainable water management initiatives, prioritizing fair and efficient use of water resources, strengthening flood control, and conserving aquatic ecosystems. Fonds blue will also support the acquisition and analysis of water quality data to identify the state of water resources and align efforts (e.g. protection, remediation, flood control) where need be. Further to this, $475 million will be allocated to protecting biodiversity and promoting access to nature. This includes $443 million to implement Plan nature 2030, which will work to protect 30% of natural areas in Quebec by 2030 — a target set at COP 15.

In addition to protecting natural resources, budget 2023 is investing $9 billion over six years (about $1.8 billion / year) toward climate adaptation, mitigation, and accelerating a green Quebec economy. Much of this funding will be allocated to the 2030 Plan for a Green Economy, which has a broader goal of reducing greenhouse gas emissions by 37.5% below 1990 levels by 2030. In addition to this, $23 million will be used to accelerate responsible “agri-environmental” practices, of which will help Quebec to become a leader in sustainable food production. Other efforts will be allocated to circular economy initiatives, such as the Quebec Integrated Used Tire management program.

Investments in protecting the environment and accelerating the green economy will have ripple positive ripple effects across the Quebec economy. New green economy roles in nature-based solutions, water resource management, sustainable agriculture, and recycling are expected to emerge.

Cybersecurity

Budget 2023 announces enhanced financial support for a number of previously announced cybersecurity initiatives.The budget includes an additional $50 million in funding for the Ministère de la Cybersécurité et Numérique increasing the department’s budget to $173 million from $134 million last year. Cybersécurité et du Numérique will also receive $5 million over two years to work with scientists and experts at universities and research institutes to help the ministry develop leading expertise in automation and artificial intelligence.

The government also announced additional funding for the $100 million Cybersecurity Enhancement Program (PRC), providing the PRC with an additional $70 million in funding over three years, beginning in 2024. Québec’s primary and secondary education system will also receive funding to enhance the security of its networks as part of the province’s digital transformation efforts.

This brief is part of ICTC’s policy updates series. ICTC provides timely updates on policy and political developments in Canada, including federal, provincial, and territorial elections campaigns, fall economic updates, annual budgets, and other major updates to policy and programs. Written by Allison Clark, Erik Henningsmoen, Mairead Matthews, Mansharn Toor, Justin Ratcliffe, and Todd Legere, with generous support from the ICTC Research and Policy Team.