Premier of Quebec
Charest's first two years as Premier of Quebec were marked by stiff and vocal opposition to his policies by Quebec labour unions. Indeed the Charest government has consistently sought new sources of revenue, increasing hydro rates, raising auto insurance premiums, increasing fees for various government services, and imposing a carbon tax on businesses. They did, however, refrain from raising the Provincial Sales Tax to make up for the loss of revenue caused by the decision of the federal government to reduce the Goods and Services Tax to 5%. They also continued the Parti Québécois drive to provide subsidies and tax breaks for families with children.
Much of the fiscal policy of the Charest government has been based upon the expectation that new revenues could be obtained from a resolution of the fiscal imbalance believed to exist between the federal and provincial governments. The Harper government is widely expected to address this issue through increased equalization payments, while falling short of Quebec's overall demands.
Charest also attempted to distinguish himself on the issue of the environment, with mixed success. His vocal opposition to the federal decision to opt out of the Kyoto Accord, and his insistence that Quebec would seek to meet its own Kyoto targets has earned him considerable support. But the decision of his government to allow private condominium development in the existing parking lot of Mont Orford became a flashpoint for environmental groups, and was widely criticized by the media and by his own former environment minister, Thomas Mulcair.
In the 2003 election, Charest had promised to allow the cities that had been forcibly merged by the Parti Québécois government to hold referendums which would allow to demerge and return to their previous situation. This promise was seen as key to his victory in many ridings, such as those in the suburbs around Longueuil and Quebec City and the continued support of the Anglophone community in the West Island of Montreal. In office however, Charest retreated from his promise. Municipalitites were allowed to hold demerger referendums, if at least 10 per cent of the electorate signed a petition calling for them, and only if more than 35 per cent participated in the voting process. In some former municipalities, such as Saint Laurent on the Island of Montreal, the turnout of the vote was of 75.2 per cent in favour of a demerger, but it was invalidated because the voter turnout was just 28.6 per cent.
The demerger process also resulted in the restructuring of the existing megacities, with both these and the demerged cities handing over massive powers over taxation and local services to the new "agglomeration councils". The makeup of these councils was based on the population of the municipalities involved, with the mayors having the right to unilaterally appoint all of the individuals who would represent their cities on the council. The resulting structure was seen by many to be less democratic than the one which had preceded it, as demerged municipalities were denied an effective voice, and the city councils of the major cities were substantially weakened by the power of the mayors to go over the heads of opposition councillors and exercise power through their appointees to the agglomeration body.
The Charest government was deeply unpopular during its first years in office, enjoying a public approval rating of below 50 per cent in most opinion polls and falling to the low twenties in voter support. In the first few weeks after André Boisclair was elected leader of the PQ, polls showed that Charest and the Liberals would be roundly defeated in the next election. Boisclair did not perform well as Leader of the Opposition, and Charest's numbers recovered somewhat. A poll conducted by Léger Marketing for Le Devoir placed the Liberals at 34 per cent against 32 per cent for the PQ and 24 per cent for the ADQ, with Charest obtaining a higher personal approval rating than the PQ leader. Liberal support, however remained heavily concentrated in Anglophone and Allophone ridings in the west of Montreal, meaning that the increase in support would not necessarily translate into seats.
Charest faced no real challenges to his leadership. There was, however, significant tension between himself and members of the party, most notably the former Bourassa cabinet minister Pierre Paradis (whom Charest excluded from his cabinet) and the resignations of several important members of his cabinet, notably Finance Minister Yves Seguin, Justice Minister Marc Bellemare, and Environment Minister Thomas Mulcair.
On December 6, 2007, the Opposition urged Charest to testify to the Canadian House of Commons Ethics Committee in its investigation of Karlheinz Schreiber. Schreiber told the committee he paid $30,000 in cash to Charest's brother to help fund the current Prime Minister's 1993 leadership bid for the federal Progressive Conservative party.
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