Sitting on a $2.5-billion surplus, the Coalition Avenir Québec government used its first budget to strike a delicate balance between expensive tax cuts and new money for the province's health and education systems.

The spending plan tabled Thursday by Finance Minister Eric Girard makes good on CAQ campaign promises to two of the party's key constituencies: young families and the elderly.

Thousands of households will see their school tax bill drop dramatically as part of a province-wide harmonization effort.

There will be a gradual return to a flat rate for daycare fees.

Nearly $400 million will be spent this year on improving health care for seniors.

In a speech to the National Assembly, Girard said his budget had a "winning formula" by finding a way to both invest in services and ease the tax burden.

"With this budget, we are addressing the immediate concerns of Quebecers and preparing for the future," he said.

But his budget also acknowledges that the showcase promises made by Premier François Legault on the campaign trail will cost millions more than initially estimated.

The CAQ unveiled its new budget Thursday. 4:45

Arguably the most ambitious of these promises is the creation of a network of free kindergarten classes for four-year-olds.

When he first pitched the idea to Quebecers, Legault said it would cost around $250 million a year. It is now slated to cost $436 million annually by the time it is set to be completely rolled out in 2023-2024.

That comes in addition to the cost of building the necessary classroom space, which will come from a $1.9-billion investment in Quebec's school infrastructure.

The harmonization of school taxes will end up costing the government nearly $800 million in lost revenues — roughly $100 million more than Legault said it would.

Girard, though, said Quebec could afford the tax cuts and funding increases without tilting the province back into deficit territory in the coming years.

"I affirm to all Quebecers: we will ensure that public finances are managed responsibly," he said.

Education the priority

Education spending will increase 5.1 per cent in 2019 and health spending will go up 5.4 per cent over last year. (CBC News Graphics)

The two biggest budget items remain education and health care. Both ministries will see their budgets increase significantly this year.

Calling education "the government's top priority," Girard announced $230 million in new measures, equivalent to a 5.1 per cent increase over last year.

The most expensive of those measures are the initial start-up costs for the pre-K program ($36 million) and support services for elementary and high school students ($47 million).

Quebec's Health Ministry will see its budget jump by just over $800 million, or 5.4 per cent.

Health services for seniors are the chief beneficiary. The government will invest $280 million in increasing the number of hours of available home care, as well as $70 million in more beds for long-term care institutions.

The government will also spend $200 million to address recurring labour shortages in the health care system, promising to hire more nurses, nursing assistants and patient care attendants.

"A great source of frustration for Quebecers is not having rapid access to frontline health services," Girard said in his budget speech.

"In fact, instead of frustration, I ought to say exasperation. Quebecers are fed up with waiting for basic care."

So acute is the nursing shortage, that in 2018 the CHUM went to France to recruit nurse practitioners. In 2019, the government will spend more money to hire more nurses, nursing assistants and patient care attendants. (Radio-Canada)

Finding more workers

Of course, being able to deliver more education and health services depends on the government being able to find enough workers to fill these new positions.

And indeed, the Quebec economy as a whole is facing a labour shortage that is beginning to constrain its ability to keep growing.

A help wanted sign at a trucking industry event in Quebec. (Radio-Canada)

The budget contains a number of measures aimed at boosting Quebec's pool of workers.

First, the government is offering a number of tax credits aimed at encouraging workers aged 60 and over to stay on the job. It believes there is an untapped pool of 89,000 Quebecers who could be tempted back into the labour market.

Second, $146 million will be invested annually to smooth the integration of immigrants into the labour market, including providing more of them with French lessons.

While business groups welcomed the funding, they questioned whether it would be enough to compensate for the government's decision to cut immigration levels this year. That has further thinned the supply of workers.

"What we're looking for is really measures to increase the number of workers that will go through immigration," said Véronique Proulx, head of the Quebec manufacturers and exporters association.

"So that's a good measure, but we need more workers if we want to be able to address the labour shortage."

A wasted surplus, Liberals say

Quebec Liberal finance critic Carlos Leitão addresses the National Assembly after Finance Minister Eric Girard presented his budget Thursday. He said there is little in the CAQ budget to help the middle class. (Jacques Boissinot/Canadian Press)

The province's opposition parties, for their part, criticized the budget for offering tax cuts that benefited only a narrow range of Quebecers.

Carlos Leitão, the Liberal party's finance critic, pointed out the reduction in the school tax won't benefit renters.

"Where is the middle class in this budget?" asked Leitão, who served as finance minister under the previous Liberal government.

He also said the spending commitments in the budget don't leave the government much breathing room in future years, when economic growth is expected to slow.

"They've squandered the surplus we left them with," he said.

'Catastrophe' for environment: Québec Solidaire

Québec Solidaire's parliamentary leader, Manon Massé, says there is almost nothing in the budget to grapple with climate change. (Paul Chiasson/The Canadian Press)

For the left-leaning Québec Solidaire, now the second-largest opposition party, the budget contained too little to address climate change.

While the CAQ's long-term infrastructure plans include $5.3 billion in additional investments for Quebec's road networks, only $1.6 billion was set aside in new money for public transit.

"It is a veritable catastrophe for the environment," said Québec Solidaire's Manon Massé, the party's parliamentary leader.

"This is not nearly enough to deal with the climate crisis."

Montreal Mayor Valérie Plante said the lack of investment in public transit shows Quebec is headed in the wrong direction in the fight to reduce greenhouse gas emissions.

She pointed out that the province's share of new investment in public transit dropped from 31 per cent in the last budget to 27 per cent.

"The choices made today are contrary to what we must do," Plante said Thursday evening at City Hall. "If we don't reverse the ratio of investment between public transit and cars, it's impossible to move ahead."

In its 10-year infrastructure program, which was also released Thursday, the government does commit itself to studying the extension of the Yellow Metro line in Longueuil and tram lines on Taschereau Boulevard on the South Shore and in east-end Montreal. There are no dollar figures attached to those projects, for now.

A number of legislative committees will study the budget over the coming weeks before it comes up for a vote.