Canada's Finance Minister Chrystia Freeland is set to reveal a highly anticipated fall economic update on Tuesday, with a focus on addressing housing challenges across the country. CTV News has learned that the update will feature significant measures aimed at boosting the housing supply, along with tax reforms targeting short-term rentals, all while emphasizing fiscal responsibility.
In light of recent concerns about a slowing economy amid high inflation and the government's commitment to finding federal savings, the fall economic update is not anticipated to be a large-scale spending package. Instead, insiders suggest that the presentation will be a "very focused" and "slim" overview of Canada's finances and the government's strategy for job creation and economic growth.
The update is seen as a continuation of the Liberal government's dedication to tackling affordability issues. Sources reveal that it reflects a conscious effort to make strategic choices about spending, emphasizing the need to prioritize areas that will have a meaningful impact on Canadians. Prime Minister Justin Trudeau, speaking ahead of the cabinet meeting, acknowledged the challenges Canadians are facing and promised announcements to address these issues.
What to Expect
As of Tuesday morning, CTV News has confirmed several key measures that will be included in the fall economic update:
$15 Billion in Low-Interest Loans: The plan includes opening up $15 billion in 10-year, low-interest loans through the Canada Mortgage Housing Corp. (CMHC) to build 30,000 additional rental housing units nationwide.
Crackdown on Short-term Rentals: Starting in 2024, property owners will no longer be able to claim income tax deductions on rental expenses for their short-stay properties in regions with short-term rental restrictions.
$1 Billion Affordability-Focused Housing Fund: A housing fund will be established with a focus on affordability, supporting the construction of more homes.
New Mortgage Guidance: There will be new guidance for lenders, setting expectations for homeowners regarding mortgage renewals.
Update on Clean Technology Measures: An update on pre-committed clean technology measures, including the investment tax credit for carbon capture.
Bigger Political, Economic Picture
The timing of Freeland's update is critical, given the current political landscape with Prime Minister Trudeau trailing in polls and a widespread sentiment of economic dissatisfaction. The fall economic update is expected to play a crucial role in convincing Canadians that the Liberal government understands and is addressing their economic concerns.
However, Freeland faces challenges, including housing shortages, pressure for a pharmacare program from the NDP, and increasing interest rates. Balancing these factors while demonstrating fiscal restraint will be a tough task, according to former federal finance minister John Manley.
As the federal NDP signals a desire for affordability-centric spending and the Conservatives call for a path back to balanced books, Freeland may opt to incorporate policy-based and promised legislative changes in lieu of major spending announcements. The emphasis on Canada's low debt-to-GDP ratio in the G7 is likely to play a role in the government's messaging.
In the face of these challenges, all eyes will be on Freeland as she navigates the delicate balance between addressing pressing economic issues and maintaining fiscal responsibility. The fall economic update is poised to provide a glimpse into the government's strategy for navigating uncertain economic times while prioritizing the needs of Canadians.
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