In the last few months, serious setbacks afflicting Quebec’s pork industry have been making headlines: the closing of slaughterhouses and processing plants, layoffs, and financial losses. A number of causes have been used to explain this crisis, in particular the rise of the Canadian dollar, industry cycles, high sickness levels, a lack of competitiveness among slaughterhouses, added costs to meet environmental standards, rigidities in collective marketing, and so on. A moratorium decreed by the provincial government on increases in pork production from 2002 to 2005 also stalled the rapid growth that the industry had experienced for more than a decade and stymied numerous investment projects.

A sharp rise in municipal tax rolls has led school boards in many regions in Quebec to announce exorbitant increases in the school tax for 2006-07, exceeding 50% in some places. The Quebec government has intervened to limit the increase to about 4%. This controversy has nonetheless revived debate on the value and legitimacy of the school tax as a means of complementary financing for school boards – and of school boards themselves as institutions. More than a century-and-a-half after they were created, do school boards still play a necessary role in managing the education system? Can a fairer and more efficient arrangement be devised?

Despite significant increases in public spending on primary and secondary education in OECD countries, concerns linger about both the efficiency and effectiveness of the school sector. In response to these concerns, governments around the world have introduced a range of strategies aimed at improving the financing and delivery of school-level education. These strategies have included reductions in class sizes, increases in teacher salaries, curriculum reforms and market-based reforms that involve the decentralization of education decision-making and encourage choice and competition.

In the past dozen years, the number of people on social assistance has fallen sharply across North America. In Quebec, the number of recipients went from 813,200 in March 1996 to 492,941 in October 2006, or 6.4% of the population, the lowest level since the late 1970s. Despite this, the province has the continent’s highest proportion of people on social assistance apart from Newfoundland and the District of Columbia. This reflects both a traditionally higher level and a lower reduction than elsewhere.

The labour market is of fundamental importance in an economy, allocating human capital to its most productive uses. With the aim of protecting workers, however, governments have instituted various institutional constraints over the years, making this market less flexible. These rigidities have the effect of slowing job creation and pushing up unemployment. This is especially true of Quebec, with a labour market that is more highly regulated than elsewhere in North America – and with an unemployment rate that has consistently stood above the Canadian and American averages for the last 30 years.

The airline industry has gone through plenty of turbulence over the last few years. Following a period of crisis caused by an economic slowdown in the United States and amplified by the attacks of 9/11, the SARS epidemic and the war in Iraq, air traffic began growing again in 2004. The airline sector remains fragile, however, and a jump in oil prices or new terrorist attacks could set things back again. Moreover, the high tax burden that Canadian air carriers are forced to bear compared to their U.S. rivals threatens their competitive position in a context of growing liberalization of airline markets.

What balance between our public and private sectors will induce the best performance from Canada’s economy? What division of effort and resources among our three levels of government will deliver the peace, order, and public services essential to our quality of life at the least cost and greatest responsiveness to our desires? What balance between “perfect” freedom and the constraints necessary in a complex society will generate the highest levels of wealth and job-creating economic performance? In this report, we have provided our best answers to these questions along with recommendations for action based upon those answers.

The Report Card on Quebec’s Secondary Schools provides an annual, independent measurement of the extent to which each school meets basic needs. The Report Card thus serves several purposes. For one thing, it facilitates school improvement, and for parents who have a choice between several educational institutions, it can help them make an enlightened decision.

With the stated aim of preventing “two-tier” childcare from emerging, the Quebec government recently blocked subsidized private daycare centres from engaging in extra-billing for supplementary activities. This coercive measure is a logical outcome of the centralization and standardization process that began a decade ago. Although the Quebec childcare model is seen by many as being among the most advanced in Canada or even the world in terms of family policy, the perverse effects of government management are being felt increasingly. Does this policy really suit the parents it was meant to help?

April 2007 will mark the fourth anniversary of Jean Charest’s election as premier of Quebec. In the autumn prior to the election, a Quebec Liberal party congress had adopted an “Action Plan for the Next Liberal Government.” A year after the election, the new government published a “Modernization Plan.” Has the Liberal government kept the promises it made in those proposals? This Economic Note presents a summary of its achievements, with a particular focus on its promises to provide tax relief and to reduce the role of the state.