Federal Government Releases Fall Economic Statement

With the governing Liberals slumping poll numbers and housing and affordability issues front and centre, this afternoon Deputy Prime Minister and Finance Minister, Chrystia Freeland, tabled the government’s Fall Economic Statement in the House of Commons. Generally, the Fall Statement is a supplement and update to last spring’s Budget and this one certainly isn’t any different.

The government is attempting to walk a fine line between resisting calls for increased spending, while addressing the issues of housing and affordability. The Statement increases net new spending by $13.7 billion over the coming years and comes on the heels of Statistic Canada’s announcement this morning that the annual inflation rate has fallen to 3.1%, which is approaching their target of between 1% and 3%.

Some of the new measures in the Statement include:

• A new “Canadian Mortgage Housing Charter” which will be designed to ease the stresses of renewing a mortgage in Canada and put more emphasis on financial institutions to provide better services and supports to borrowers at risk; and also allow for easier transitions between lending institutions.
• An additional $15 billion in low interest loans through the Apartment Construction Loan Program starting in 2025/26 to build 30,000 new rental homes.
• $1 billion over three years for the Affordable Housing Fund starting in 2025/26 designed to support non-profit, co-operative and public housing and create 7000 more units by 2028. In addition, there will be $309.3 million for the Co-operative Housing Development Program.
• Denying short-stay property rental tax deductions on rental expenses where short-term rental restrictions are in place (eg. Toronto, Vancouver, Montreal) to come into effect on January 1, 2024.

The Statement also highlighted, and in some cases updated, promises recently made to strengthen the Competition Act to give the Commissioner additional authorities on non-competitive practices; and crack-down on junk fees (e.g. excess roaming, banking and airline fees).

Overall, the government announced the deficit projection from Budget 2023 in the spring for this fiscal year hasn’t changed and will remain roughly $40 billion, with some of the new measures offset by unexpected increases in revenues. The federal government also projects the deficit to continue to decline to $18.4 billion by 2027/28 and highlighted that Canada has the best debt to GDP ratio in the G7 and a AAA credit rating. It is also worth nothing private sector forecasts now indicate the Canadian economy will avoid a recession next year.

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2023 Fall Economic Statement

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