Deputy Prime Minister and Finance Minister Chrystia Freeland presented the federal government’s fiscal update on Tuesday, outlining substantial spending and targeted policy measures to tackle Canada’s housing challenges. The fall economic statement forecasts a deficit of $40 billion in 2023-24, with a focus on affordability and the acceleration of home building. Canadians grappling with inflation and high interest rates, coupled with concerns about mortgage renewals, are central considerations in the economic plan.
The economic statement, reflecting a degree of fiscal restraint amid ongoing spending reduction efforts, earmarks significant financial commitments set to roll out in 2025, coinciding with the next federal election. Over the next six years, $15.7 billion in new spending is allocated, partially offset by projected savings of $2.5 billion in the public sector, resulting in net new spending of $13.2 billion.
Freeland’s proposal introduces a series of cost-free policy and legislative pledges, including the creation of a new Department of Housing, Infrastructure, and Communities. The government commits to investing billions in building new homes, expanding the construction workforce, addressing short-term rentals, and implementing green investment tax credits.
On the housing front, the economic statement unveils a $15 billion Apartment Construction Loan Program to incentivize rental housing construction, aiming to build over 30,000 new rental units. An additional $1 billion is designated for an affordability-focused housing fund supporting non-profit, co-op, and public housing, with a goal of 7,000 new homes by 2028. Freeland also pledges $309.3 million for the Co-operative Housing Development Program.
To alleviate concerns about mortgage renegotiations at higher interest rates, a new Canadian Mortgage Charter is introduced, outlining relief measures such as temporary extensions of amortization periods, waiving fees, and providing advanced contact with renewal options.
Addressing grocery price concerns, the economic update promises collaboration with major retailers to stabilize prices and establish a Grocery Task Force. Amendments to the Competition Act and related laws are outlined to strengthen the Competition Bureau’s powers against anti-competitive practices. Efforts to reduce “hidden junk fees” are also reiterated.
Despite a forecasted deficit in each upcoming year, Freeland emphasizes Canada’s economic strength, citing private sector economists’ expectations of avoiding a potential recession. The fall economic statement showcases Canada’s responsible fiscal plan, with a focus on reducing the deficit amidst global inflation. The update also highlights Canada’s lowest deficit and net debt-to-GDP ratios in the G7, and a AAA credit rating. Downside scenarios caution about challenges, including a potential rise in the unemployment rate and an increase in public debt charges.
While Freeland strikes an optimistic tone about the economy’s current state and trajectory, challenges and uncertainties are acknowledged. The fiscal update signals ongoing commitment to reducing the federal debt as a share of the economy over the medium term.