Ottawa, April 7: From moving to make it illegal for foreigners to buy any residential properties in Canada for the next two years, to rolling out a tax-free savings account for first-time buyers, the government is looking to make good on a series of 2021 Liberal campaign commitments in the 2022 budget.
Coming at a time of considerable economic and international instability, Deputy Prime Minister and Finance Minister Chrystia Freeland appears to have focused considerably in this budget on what the government can do to counter the housing crunch, the lack of inventory, and the skyrocketing prices.
While spending an estimated $10 billion over the next five years on the overall housing package, the government will also be implementing new policies meant to help increase the inventory and help those being dramatically outbid, including shutting foreign buyers out of the market.
The foreign buyers ban will apply to condos, apartments, and single residential units. Permanent residents, foreign workers, and students will be excluded from this new measure. Foreigners who are purchasing their primary residence here in Canada will be exempt.
The policy change will be legislated, giving the government powers to prescribe penalties and potential judicial powers to address instances of non-compliance, according to a government source. There is no cost attached to this foreign buyers measure yet.
Among the several housing-focused promises in the party’s platform, the Liberals promised to work with the provinces and territories “to better regulate the role of foreign buyers in the Canadian housing market.”
In the budget, the Liberals will also be moving to implement a new “Tax-Free First Home Savings Account” that, if it mirrors the Liberal platform promise, will allow Canadians under 40 to save up to $40,000 towards their first home.
With the aim of shortening the time it’ll take to afford a down payment, first-time home buyers would be able to withdraw this money tax-free to put towards their first home purchase, with no requirement to repay it, per the Liberal platform.
Also included in the sizable housing section of Thursday’s budget will be:
- $4 billion to help municipalities update their zoning and permit systems to allow for speedier construction of residential properties;
- $1 billion for the construction of affordable housing units; and
- $1.5 billion in loans and funding for co-op housing.
The $4 billion for municipalities appears to be addressing one of the housing elements from the Liberal-NDP deal. The confidence-and-supply agreement included a pledge to move ahead with “launching a Housing Accelerator Fund.”
$8B for defence:
As allied countries face continued pressure to respond to Russia’s deadly and destructive attacks on Ukraine, while shoring up North American defence systems, the federal budget is set to include increased defence spending.
The push to considerably increase defence spending was given an eleventh-hour but not accounting-alerting nudge on Wednesday, when the House of Commons passed a Conservative motion calling for the government to “at least” meet the NATO spending target.
This coming military spending increase alone will not satisfy those pushing Canada to fulfill their NATO commitment to spend two per cent of its gross domestic product (GDP) on defence, setting the Liberals up for an interesting political conversation post-budget.
In order to reach two per cent—Canada spent 1.36 per cent of its GDP last year according to the latest figures—the Parliamentary Budget Officer has estimated the government would have to set aside between $20 to $25 billion per year.
It’s not the only element of the budget in which the Liberals are facing pressure from other parties. Freeland’s second budget, and the first since the last federal election sent Prime Minister Justin Trudeau back to Ottawa with another minority government, has also had to factor in a series of considerations outside of what they campaigned on.