Billions to be announced for housing construction in federal fiscal update, says source | CBC News

Billions to be announced for housing construction in federal fiscal update, says source | CBC News

The fall fiscal update, to be presented Tuesday by the federal finance minister, will include billions of dollars in loans and direct funding for the construction of affordable housing, a senior government source has told CBC News.

New measures will include $15 billion for 10-year loans for new rental housing construction, a $1-billion fund dedicated to getting more affordable housing built, and new mortgage rules for lenders dealing with homeowners at risk, according to the source, who is not authorized to speak publicly about the fall economic statement before it is tabled.

The measures are part of a restrained fiscal update focused on mitigating the housing crisis and easing cost-of-living challenges while still trying to grow the economy and create jobs, the source said.

The Canada Mortgage and Housing Corporation (CMHC) will facilitate the lending to builders and the loans will have “favourable terms,” said the source, who would not discuss the rate to be charged.

The money, which the government estimates will help build 30,000 new homes across Canada, is for rental construction projects with five or more units.

“This funding gives builders a lot of certainty during the riskiest phases of a housing project,” said the source. “It helps ensure buildings and construction happens, which we need.”

WATCH | Chrystia Freeland discusses upcoming economic update:

Housing, affordability top priorities in upcoming fall economic statement, Freeland says

Featured VideoSpeaking at a housing announcement alongside Toronto Mayor Olivia Chow, Canada’s Deputy Prime Minister Chrystia Freeland said the fall economic statement, which will be presented on Nov. 21, will be focused on making housing — and life in general — more affordable for Canadians.

The new mortgage rules are about “codifying the government’s expectations around mortgage relief for homeowners at risk, and how they are treated by their financial institution,” said the source.

The rules will be part of a six-point charter that builds on the Financial Consumer Agency of Canada’s existing guidelines that include allowing for extensions of amortization periods and the waiving of fees related to delayed payments. The charter will include a new requirement that mortgage lenders proactively contact homeowners four to six months before they are set to renew their mortgage to assess their options, especially as many homeowners will be facing much higher interest rates at renewal time in the next two years.

As well, for those with insured mortgages, there will no longer be a requirement to pass a financial stress test if they want to switch lenders when their mortgage is up for renewal.

The Office of the Superintendent of Financial Institutions and the Financial Consumer Agency of Canada will be the principal enforcers of the new rules.

“This is about supporting Canadians through temporary financial stress caused by an environment that we’re living in with elevated interest rates, to help people stay in their homes,” said the source.

The $1 billion earmarked for affordable housing is aimed at building more non-profit and public housing. It will take the form of direct funding, rather than loans for builders.

New measures for short-term rentals

These new measures are in addition to a number of housing and affordability announcements the Liberal government has made recently, including those in the yet-to-be passed Bill C-56, which would remove the GST for construction of new rental housing and give more powers to the Competition Bureau, particularly to go after unfair competition in the grocery sector.

Tuesday’s fiscal update will include additional Competition Act changes, different but complementary to what is proposed in Bill C-56.

Radio-Canada confirms what the Toronto Star first reportedthat Ottawa intends to prevent owners from making tax deductions for short-term rental properties when they are located in areas where this practice is prohibited.

Under this new proposal, it would be impossible for owners of short-term rental properties to deduct rental expenses such as interest costs, property taxes or repairs. This would require legislative changes and would come into force on Jan. 1.

It would also penalize owners who find themselves in violation of provincial or municipal regulations by having the Canada Revenue Agency refuse their request for tax deductions. The fiscal update will also include money for municipalities to enforce their own rules on short-term rentals.

The aim is to make short-term rental properties less lucrative, to discourage landlords who break the rules, and to ultimately make existing housing available for long-term tenancy, opposed to short-term rentals.

WATCH | Premiers push back on federal housing approach:

Premiers call housing a ‘massive issue’ that requires collaboration

Featured VideoAfter meeting with provincial and territorial partners, Ontario Premier Doug Ford and Alberta Premier Danielle Smith both say housing is a top priority for collaboration with the federal government.

While these new measures will be in Tuesday’s announcement, accompanied by some other affordability relief measures that the government source declined to detail, this year’s fiscal update is expected to be just that: an update. It is expected to be narrowly focused document, rather than a mini budget, that will provide an up-to-date snapshot of the economic numbers for the country, including how announcements made since the spring budget factor into the financial picture.

It will also provide an update on measures committed to in the last budget but that have not rolled out yet, such as the handful of much touted clean tech tax credits meant to compete with the U.S.’s Inflation Reduction Act. As well, there should be an accounting of where the government is at in trimming $15 billion from government department budgets.

The fiscal picture is even tighter now than it was in March.

“I think it’s fair to say that compared to the spring, the private sector outlook is certainly one with softer growth in the next 12 months than previously projected,” said the government source. “And with elevated interest rates, that really constrains government space, government revenues.”

Finance Minister and Deputy Prime Minister Chrystia Freeland is trying to manage expectations.

“It’s a hard balance … on one hand, supporting Canadians as we need to do and at the same time being fiscally responsible. But it’s a balance that we’re committed to striking,” she said Thursday at a news conference.

“We won’t be able to do everything.”

Conservatives push for balanced budget

Complicating matters, the Liberals need to take into account the demands of the NDP, who have been supporting the government through a supply and confidence agreement.

NDP Leader Jagmeet Singh outlined his expectations for the fiscal update last week: more action on affordable housing and bringing down grocery prices. But they do not include pharmacare, which he says is an “ongoing negotiation.”

Conservative Leader Pierre Poilievre has very different expectations, namely for the government to return to a balanced budget, arguing that ongoing deficits are contributing to inflation. He is also calling for the government to stop the planned carbon tax increases, as well as to adopt Poilievre’s private member’s bill on housing.

Conservative Leader Pierre Poilievre is pictured in Vancouver at a housing announcement.
Conservative Leader Pierre Poilievre points at his message at a press event in Vancouver. B.C., Thursday, Sept. 14, 2023. (Ethan Cairns/Canadian Press)

He’s not alone in calling for a plan to balance the budget.

“We have been warning about this day and the day has come,” said Goldy Hyder, president and CEO of the Business Council of Canada. “There’s no sense of how we’re ever going to get back to a balanced budget. How it is that we’re going to be able to control our interest costs? Canadians have debts; they know if you’re borrowing, costs go up, something has to give.”

Hyder acknowledges that Ottawa has some good policies on the books, ones the business council even supports. But he says the Liberal government lacks a talent for execution.

“We need a government that doesn’t move on to the next shiny object before it implements the policies. It seems to feel the work is done as soon as you put out the press release. And the reality is that governing is hard.”

There are other stakeholders also looking for progress on existing promises.

“Right now the federal government has so much on its plate around implementing all the measures in budget 2023 plus all of the climate and clean economy measures it’s been announcing over the last couple of years,” said Mark Zacharias, executive director of the think tank Clean Energy Canada.

“We would really first and foremost like to see movement on finishing what they started.”

Some stakeholders with specific hopes for Tuesday’s update might be disappointed. While the government source says there could be language supporting the idea of some measures, such as open banking, Indigenous equity loan guarantees, heat pump co-delivery agreements and the recapitalization of the popular home retrofit program, there is no money committed to them yet.

#Billions #announced #housing #construction #federal #fiscal #update #source #CBC #News

What’s your Reaction?