5 things you should know about the Fall Economic Statement

The Trudeau government released its fall economic statement, which focuses on housing, affordability, and the green economy and includes a potential path back to balanced budgets.

Here are five things you need to know.

Housing

The Federal government is announcing $15 billion in new loan funding to build more than 30,000 new rental units in Canada. An additional $1 billion over three years will go to the affordable housing fund.

The catch is neither of these actions will kick in until 2025, the expected year of the next federal election.

Beginning Jan. 1, 2024, the government intends to deny income tax deductions for expenses on short-term rental units, like Airbnb’s, in provinces and municipalities that have prohibited short-term rentals. It is also proposing $50 million over three years, starting in 2024, to support municipal enforcement efforts on short-term rentals.

The government is also going to rename Infrastructure Canada to the Department of Housing, Infrastructure, and Communities and clarify its powers and duties to better connect housing to infrastructure needs in Canada.

No plan back to balance

Despite demands from the federal Conservatives to produce a plan back to balance, the Trudeau government has presented a fiscal blueprint that increases deficit spending by $20.8 billion over the next five years. The deficit this year is expected to be $40 billion and by 2028-29 it will be down to $18.4 billion.

However, the economic outlook is better than previously thought. Private sector economists say the economy is slowing heading into the new year. They now predict Canada will avoid a recession and expect a gradual return to stronger growth throughout 2024.

Mortgage renewals

The Fall Economic Statement revealed a new Canadian Mortgage Charter which builds on existing guidelines for financial institutions to ensure fair treatment for people renewing their mortgages.

It outlines expectations such as lenders providing extensions to current terms for mortgage holders at risk, and contacting homeowners in advance to provide options for their renewal.

However, government officials confirm that while many of these practices are already being followed, the new Charter is not mandatory and not enforceable by the federal government.

Affordability

The Fall Economic Statement includes measures to crack down on so-called Junk Fees, to ensure airlines seat all children under the age of 14 next to their accompanying adult at no extra cost, to start a CRTC investigation into international mobile roaming charges, and take steps to reduce the fees charged by banks for non-sufficient funds.

The feds are also eliminating the GST/HST on psychotherapy and counselling. The FES also introduces a new 15-week shareable EI adoption benefit for parents who adopt a child.

The economic update highlights measures being taken already through Bill C-56 to improve competition in the grocery chain sector, establish a Grocery Task Force, and seek commitments from the top five grocery chains to reduce prices.

The FES notes food inflation has been steadily decreasing from 11.4 per cent in January to 5.8 per cent in September.

Green Industrial Strategy

In order to spur activity in the clean economy and support jobs, the Fall Economic Statement will expand eligibility for the 30 per cent Clean Technology investment tax credit, and the 15 per cent Clean Electricity investment tax credit to include systems that produce electricity, heat, or both electricity and heat from waste biomass.

The feds also announced the Canada Growth Fund will be the principal federal entity issuing carbon contracts for difference. The Canada Growth Fund will allocate up to $7 billion of its current $15 billion in capital to issue all forms of contracts for difference and offtake agreements on a priority basis.