Tabled Tuesday, Finance Minister Chrystia Freeland's fall economic statement focuses on two key challenges: supporting middle class finances and making housing more affordable.
On Nov. 21, deputy prime minister and minister of finance Chrystia Freeland released the federal government’s 2023 Fall Fiscal Statement, a report card on where your money is going.
The document is cautious, offering two scenarios: a downside scenario that sees the arrival of a shallow recession, or the upside scenario, which sees the Canadian inflation falling and interest rates stable. They’re predicting a middle ground between the two.
After growing by 3.8 per cent in 2022 and 2.6 per cent in the first quarter of 2023, the Canadian economy contracted modestly in the second quarter. Inflation for groceries eased after peaking at 11.4 per cent in January 2023, but remains high at 5.8 per cent as of September 2023. Headline inflation in Canada fell from its June 2022 peak of 8.1 per cent to 3.8 per cent in September. Private sector economists surveyed expected the Consumer Price Index inflation to remain at or above 3 per cent through the first quarter of 2024, with an annual average of 3.8 per cent in 2023.
The document boasts that Canada maintains both the lowest deficit- and net debt-to-GDP ratios in the G7. It says inflation is coming down, wages are going up, the unemployment rate is falling, and private sector economists expect Canada to avoid the recession that many had predicted. Canada maintains its AAA credit rating.
The government will keep trying to refocus government spending, with departments and agencies generating additional savings of $345.6 million in 2025-26, and $691 million ongoing.
The federal debt is expected to increase from $41.7 billion in 2022-2023 to $42.4 billion in 2023-2024. But Canada’s federal debt-to-GDP ratio will decline from 2024-25 onwards.
In a political jab at Opposition leader Pierre Poilievre’s “Canada is broken” messaging, Freeland writes in her intro that “Canada is not and has never been broken…better is always possible.”
The statement focuses on two key challenges: helping the middle class financially and making housing more affordable across the country.
Seniors are mentioned 17 times in this document, though there are few direct programs aimed right at them. The biggest indirect program affecting seniors is the consideration of removing the “30 per cent rule” from pension fund investments in Canada, which restricts Canadian pension funds from holding more than 30 per cent of the voting shares of most corporations and making them publicly disclose said investments.
Seniors, and all Canadians, will see some protection from financial crimes with new legislation that will target money laundering and fraud in the real estate sector.
Housing is an issue top of mind for many Canadians. Canada’s population has grown by more than double its pre-pandemic pace, a significant economic advantage when compared to the demographic challenges being experienced by many peer countries, but also feeds demand for new housing. Seniors had a higher incidence of core housing need (8.9 per cent), as did Indigenous people (13.2 per cent).
The Fall Economic Statement announces the new Canadian Mortgage Charter, which details the relief that Canadians can expect from their banks if they are in financial difficulty. It’s codifying some practices that are becoming more common in the industry these days, such as allowing people to switch to longer amortization periods to lower monthly mortgage payments, and to shop around for a new mortgage without penalties, potentially getting a better deal for consumers.
There is an additional investment of $15 billion in home building, expected to deliver more than 30,000 additional new homes across Canada, bringing the program’s total contribution to over 101,000 new homes supported by 2031-32. The Affordable Housing Fund will get an additional $1 billion over three years, starting in 2025-26, which supports non-profit, co-op, and public housing providers with building more than 7,000 new homes by 2028. This top-up is to be supported by $631 million previously intended for the one-time top-up to the Canada Housing Benefit.
Managing this issue will be the new Department of Housing, Infrastructure and Communities replacing the department formerly known as Infrastructure Canada.
These housing investments will be enabled by use of surplus federal lands for building, initiatives to help construction tradespeople to work across Canadian jurisdictions and to help others gain permanent residency in Canada, as well as direct deals with municipalities for infrastructure spending to support these new homes. Co-op housing boards will be able to apply for the removal of GST on construction of new rental housing. Short-term rentals like Air BnB’s will be curbed with restrictions on income tax deductions
In terms of protecting consumers, the government will crack down on predatory pricing, amend the Competition Act to prevent manufacturers from refusing to provide the means to repair their products and work with grocers to lower prices and investigating other practices in the grocery sector, such as “shrinkflation.”
They’ve also instructed the Canadian Radio-television and Telecommunications Commission to conduct a prompt investigation of international mobile roaming charges and will provide updated and concrete next steps in 2024.
The government will provide an update by Budget 2024 on the steps that it is taking to reduce the non-sufficient funds fees charged by banks. These fees, which can currently be as high as $50, disproportionately impact low-income Canadians or those who may not have access to overdraft protection due to their credit history.
To support Canadians with the upfront costs of buying and installing a heat pump, the federal government has proposed to allocate $500 million over four years, starting 2023-24, to enhance the Oil to Heat Pump Affordability Program. They’ll raise the grants from $10,000 to $15,000, plus the available provincial supports, along with $250 as an incentive payment to make the switch. They claim, “this level of support will make the cost of switching to a heat pump free for most Canadians who need one.”
This goes along with the temporary pause on federal fuel charges for heating oil which lasts from Nov. 9, 2023, to March 31, 2027.
When it comes to health care, the federal government plans to make mental health more accessible by exempting professional services rendered by psychotherapists and counselling therapists from the GST/HST.
Pharmacare? They’re committed to continuing to work on it, said Freeland at her press conference.
In terms of the NDP-coalition-demanded Canadian Dental Care Plan, “further information on the plan, which is expected to begin rolling out by the end of 2023, will be communicated by Health Canada in the coming weeks.”
Significant new investments in green energy projects will help build on more than 90 clean growth projects valued at more than $40 billion, including private investment, that are underway or will soon move forward into construction across Canada. There is more than $1 trillion in private capital ready to be invested in the sector, they claim.