Finance Minister Chrystia Freeland has tabled new legislation to implement the promised elimination of GST from new rental developments, and to reform Canada’s competition laws, framing the bill as a package that will result in more affordable housing and markets, eventually.
Facing pressure at the polls and from within his own Liberal caucus, Prime Minister Justin Trudeau last week pledged this set of measures in an effort to address persistent cost-of-living concerns of Canadians.
Speaking from New York City as he wrapped up his trip to the UN, Trudeau called on other parties—some of which are trying to advance similar bills of their own—to get behind the government bill.
“I encourage opposition leaders to come home to help us pass real solutions today. We are committed to making life more affordable for Canadians, and we will continue this work in the coming days and weeks ,” Trudeau said.
Bill C-56, titled “The Affordable Housing and Groceries Act,” is the first piece of government legislation introduced in the fall sitting.
“More competition will ease sticker shock at the grocery checkout line. Eliminating the GST will build more housing faster so more Canadians have an affordable place to call home,” Freeland said. at an afternoon press conference with several ministers, vowing the Liberals will have “more to say and announce in the coming weeks.”
GST RENTAL REBATE
Through the bill, the federal government aims to incentivize the construction of more apartment buildings, student housing, and senior living spaces by offering a 100 percent rental rebate from on GST paid on new purpose-built housing, up from the current 36 per cent and the existing GST rebate phase-out limits for new housing projects.
This reform will apply to new residential units that meet the conditions for the current GST leasing rebate: buildings of at least four private apartment units with private kitchens, bathrooms and living areas, or at least 10 private rooms or suites, with at least 90 percent of the units designated for long-term rental.
The measure is estimated to provide $25,000 in tax relief for two-bedroom rental apartments valued at $500,000, according to Finance Canada, and is expected to cost $4.5 billion over the program’s fiscal year.
Declaring her plans to oversee the implementation of Bill C-56, Treasury Board President Anita Anand vowed to ensure that legislative initiatives taken “will ensure value for taxpayer dollars.”
As for timing, eligible builds are those that begin construction in the next six and a half years—specifically between Sept. 14, 2023 and Dec. 31, 2030—and complete construction by December 31, 2035, according to senior government officials who briefed reporters on the new law on a non-attribution basis.
According to officials, Bill C-56 also allows municipalities, universities, charities and other entities that receive current rebate for public services to choose whether to continue receiving that, or the new upcoming GST rental rebate, allowing them to choose a preferred rate for their projects.
However, officials warned that “further legislative changes, including regulations” are required to fully implement the GST rebate.
Housing Minister Sean Fraser said the seven-year timeframe was designed to allow developers to “plan meaningfully ahead”. He also reiterated Freeland’s promise that this was the first of many affordable housing announcements to come.
CHANGES TO THE COMPETITION ACT
Regarding changes to the Competition Act, Bill C-56 proposes to amend the law to strengthen protections for Canadians in relation to competition in Canada’s grocery sector, which is dominated by a few companies.
The government is pushing for amendments that if passed, officials said, would give the Competition Bureau more powers to investigate and take enforcement action on unfair behavior in the sector, such as fixing of price or price increase.
The bureau will also be empowered to compel information from companies through court orders, to conduct market studies, and “block collaborations that restrict competition and consumer choice, especially in situations where large grocers prevent smaller competitors from establishing operations nearby,” Finance Canada said.
Noting what one official described as “increasing corporate concentration,” the changes would also end “anti-competitive” mergers that would exacerbate the high costs and limited choices facing Canadian consumers.
The update to Canada’s Competition Act follows a review and consultation held last year, and the changes in this bill are just a few minor tweaks, with the government vowing a more comprehensive legislative reform package “in the coming months.”
“These changes have been prioritized because they are the most directly related to the issues identified in Canada’s retail grocery sector,” said an official, citing similar talks the government is having with grocery giants. in a plan to stabilize prices through Thanksgiving.
In response to the bill’s competition measures, the Business Council of Canada warned that they “create an additional chill for business investment” and will “negatively affect competition and ultimately harm consumers.”
In response, Industry Minister Francois-Philippe Champagne welcomed the comment, but said what Canadians want is “less consolidation, more competition, and lower prices.”
“Our competition law is really about driving integration. And I think what we’re saying now with this historic legislation, is that Canada is a strong and self-confident economy. We’re confident enough that to have legislation, to have a legal framework, that really encourages competition in our economy. We believe our businesses are strong enough to compete,” Freeland added.
As part of Trudeau’s initial announcement, he also promised to give Canadian small businesses more time to repay emergency loans offered during the COVID-19 pandemic. Those changes are made through regulations and will not require legislative change to implement.
— In the Chamber (@HoCChamber) September 21, 2023