Ontario Construction News staff writer
Finance Minister Chrystia Freeland tabled a federal budget Tuesday with a one-time GST rebate for low-income Canadians, but no new major commitments for housing construction.
Budget highlights include:
- One-time “grocery rebate,” up to $467 for families and $234 for individuals.
- $13-billion plan to expand dental care to families earning less than $90,000 a year.
- New 15 per cent refundable tax credit for clean electricity investments.
- Refundable 30 per cent tax credit for investments in clean tech manufacturing.
Kevin Page, former parliamentary budget officer, told CBC News the budget shows the government has grown “more pessimistic” about Canada’s economic outlook since the fall mini-budget.
“We’re looking at flat real growth in 2023. The unemployment rate is going to tick up. You really can’t make the case that they’ve loosened the purse strings all that much in this budget,” he said, adding the planned spending increases are relatively “modest.”
To encourage clean technology manufacturing, the budget proposes a refundable tax credit equal to 30 per cent of the cost of investments in new machinery and equipment. That credit will cost an expected $4.5 billion over five years.
However, the construction industry is concerned that there were no major new initiatives in the budget to tackle the housing crisis after Canada added more than a million people last year and housing starts aren’t keeping pace.
“We have a crisis on our hands and need to build more homes quickly and make them affordable,” said Richard Lyall, president at the Residential Construction Council of Ontario (RESCON). “The budget is nibbling around the edges of the problem and doesn’t fully address the systemic problems that are delaying construction of much-needed housing.
“We need to get more housing underway quickly as demand is expected to continue.”
The Canada Mortgage and Housing Corporation (CMHC) estimates that an additional 3.5 million housing units must be built by 2030 to achieve affordable housing for everyone living in Canada. However, the trend in housing starts was 255,735 in February, down slightly from January figures. With immigration on the rise, demand for housing is expected to increase substantially.
The government signaled it intends to move funding from the National Housing Co-Investment Fund’s repair stream to a new construction stream, as needed, to boost the construction of new affordable homes. It also proposes to commit an additional $4 billion over seven years, starting in 2024-25, to implement a co-developed Urban, Rural and Northern Indigenous Housing Strategy.
To help tradespeople invest in equipment, the budget proposes to double the maximum employment deduction for their tool expenses to $1,000 from $500. This change takes effect for the 2023 taxation year.
However, there was no mention in the budget of providing HST relief for new housing projects as RESCON had suggested in its pre-budget submission. The idea was also proposed by the Ontario government in its recent budget.