PM Justin Trudeau’s Budget 2016 Report Card

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Prime Minister Justin Trudeau unveiled Budget 2016 this week, his inaugural budget, so YPNextHome took a closer look at it from the housing perspective.

ECONOMY & JOB CREATION

Though perhaps not specifically related to housing, everything evolves around the economy and jobs. After all, a strong economy begets job and wage growth, which begets consumer confidence and the ability to rent or buy – to live.

What was promised:

To get the economy growing again, Trudeau said we need to immediately invest in helping our businesses and entrepreneurs – including those in manufacturing – become more innovative, competitive and successful.

What was delivered:

Something equally ambiguous. Budget 2016 “puts people first,” directing billions toward helping the middle class and those less fortunate, with the idea that this will boost economic growth. The hope is that more than 100,000 jobs will be created and the economy will grow by an additional one per cent over existing predictions.

The government acknowledges that economic challenges persist in oil and commodities, and is extending Employment Insurance benefits in the hardest hit regions, such as Alberta and Saskatchewan.

INFRASTRUCTURE SPENDING

Leading up to the budget, speculation was that where would be less than what was promised during last fall’s election campaign, and the focus would be on repairs instead of capital projects.

What was promised:

To invest in public transit to shorten commute times, cut air pollution, strengthen our communities and grow our economy.

“Over the next decade, we will quadruple federal investment in public transit, investing almost $20 billion more in transit infrastructure.”

What was delivered:

Phase 1 of the government’s infrastructure plan proposes to provide $11.9 billion over five years, beginning immediately:

• $3.4 billion over three years to upgrade and improve public transit systems across Canada;
• $5 billion over five years for investments in water, wastewater and green infrastructure projects across Canada; and
• $3.4 billion over five years for social infrastructure, including affordable housing, early learning and child care, cultural and recreational infrastructure, and community health care facilities on reserve.

HOME BUYERS’ PLAN (HBP)

The plan as it stands now allows first-time buyers to withdraw up to $25,000 from their RRSP to put toward a down payment on a home. They have up to 15 years to repay the funds.

What was promised:

To modernize the existing HBP to allow Canadians impacted by sudden and significant life changes to buy a house without tax penalty. Trudeau said this will ease the burden on Canadians facing job relocation, the death of a spouse, marital breakdown or a decision to accommodate an elderly family member.

What was delivered:

Nothing. Any update or revision to the HBP is nowhere to be found in Budget 2016. Through other measures, however, it is clear he’s keeping an eye on the housing market, which is increasingly important given economic and affordability challenges in some areas.

RENTAL/AFFORDABLE HOUSING

What was promised:

To encourage the construction of new rental housing by removing all GST on new capital investments in affordable rental housing. This will provide an estimated $125 million per year in tax incentives to grow and renovate the supply of rental housing.

What was delivered:

Budget 2016 proposes to invest $2.3 billion over two years, starting in 2016-17. Of this amount, $2.2 billion reflects the government’s commitment to invest in social infrastructure, including $739 million for First Nations, Inuit and northern housing. A significant portion of the $2.3 billion will be allocated to provinces and territories, which can identify communities where the need for affordable housing is greatest.

To encourage the construction of affordable rental housing, Budget 2016 proposes to invest $208.3 million over five years, starting in 2016-17, in an Affordable Rental Housing Innovation Fund administered by Canada Mortgage and Housing Corp. (CMHC). Funding would be used to test innovative business approaches – such as housing models with a mix of rental and homeownership – to lower the costs and risks of financing affordable rental housing projects. The investment is expected to support the construction of up to 4,000 new affordable housing rental units over five years.

CMHC is also to consult with stakeholders on an Affordable Rental Housing Financing Initiative to provide low-cost loans to municipalities and housing developers to build new affordable rental housing projects. Up to $500 million in loans would be available each year for five years, supporting the construction of more than 10,000 new rental units over this period.

HOUSING POLICY

What was promised:

To direct CMHC and the new Canada Infrastructure Bank to provide financing to support the construction of new, affordable rental housing for middle and low income Canadians.

To review escalating home prices in high-priced markets such as Toronto and Vancouver, and consider policy tools that could keep homeownership within reach for more Canadians.

What was delivered:

Budget 2016 proposes to address this data gap by allocating $500,000 to Statistics Canada in 2016-17 to gather data on Canadian housing purchases by foreign buyers. This initiative could involve collaboration with the provinces, such as BC, which recently announced its intention to have homebuyers disclose whether they are citizens or permanent residents of Canada or another country.

Also promised to consult with the provinces and territories, Indigenous and other communities, and key stakeholders in the coming year to develop a National Housing Strategy.

Sources: Ventures, Feminist current, Inquistr, Boom 99.7, BCIT

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