Tuesday April 20th, 2021 Newsletter

Housing

Budget 2021 proposes to:

• Invest $2.5 billion, and reallocate $1.3 billion in existing funding to speed up the construction, repair, or support of 35,000 affordable housing units
• Introduce Canada’s a 1% tax on vacant or underused residential property owned by foreign non-residents as of January 1, 2022.
• Provide an additional $2.5 billion over seven years to Canada Mortgage and Housing Corporation, including:
  • An additional $1.5 billion for the Rapid Housing Initiative to address the urgent housing needs of vulnerable Canadians by providing them with adequate affordable housing in short order. At least 25 per cent of this funding would go towards women-focused housing projects. Overall, this new funding will add a minimum of 4,500 new affordable units to Canada’s housing supply, building on the 4,700 units already funded in the 2020 Fall Economic Statement through its $1 billion investment.
  • $600 million over seven years to renew and expand the Affordable Housing Innovation Fund. To date, this program has committed funding to support the creation of over 17,600 units, including more than 16,300 affordable housing units and units for persons with accessibility challenges. This new funding would support the creation of up to 12,700 more units.
  • $315.4 million over seven years through the Canada Housing Benefit, to increase direct financial assistance for low-income women and children fleeing violence to help with their rent payments.
  • $118.2 million over seven years through the Federal Community Housing Initiative, to support community housing providers that deliver long-term housing to many of our most vulnerable.
• Advance and reallocate $1.3 billion, on a cash basis, of previously announced funding, including:
  • $750 million in funding under the National Housing Co-Investment Fund, which is proposed to be advanced to 2021-22 and 2022-23. This will accelerate the creation of 3,400 new units, and the repair of 13,700 units.
  • $250 million in funding under the National Housing Co-Investment Fund to support the construction, repair, and operating costs of an estimated 560 units of transitional housing and shelter spaces for women and children fleeing violence. This targeted funding is being reallocated to make sure the government delivers on its commitments, and reinforces the government’s efforts to address gender-based violence.
  • $300 million in funding in 2021-22 and 2022-23 from the Rental Construction Financing Initiative, which will be allocated to support the conversion of vacant commercial property into housing. This funding will target the conversion of excess commercial property space into 800 units of market-based rental housing.

Workers

Budget 2021 proposes to:

• Introduce legislation that will establish a federal minimum wage of $15 per hour, rising with inflation, with provisions to ensure that where provincial or territorial minimum wages are higher, that wage will prevail. Click here to see a list of federally-regulated employers to which this legislation would apply.
• Expand the Canada Workers Benefit to support about 1 million additional Canadians in low-wage jobs, helping them return to work and increasing benefits for Canada’s most vulnerable. The government would raise the income level at which the benefit starts being reduced to $22,944 for single individuals without children and to $26,177 for families.
• Allow secondary earners in couples to exclude up to $14,000 of their working income when income-testing the Canada Workers Benefit.
• Provide up to 12 additional weeks of Canada Recovery Benefit to a maximum of 50 weeks. The first four of these additional 12 weeks will be paid at $500 per week. As the economy reopens over the coming months, the government intends that the remaining 8 weeks of this extension will be paid at a lower amount of $300 per week claimed.
• Extend the Canada Recovery Caregiving Benefit an additional 4 weeks, to a maximum of 42 weeks, at $500 per week, in the event that caregiving options, particularly for those supporting children, are not sufficiently available in the interim as the economy begins to safely reopen.
• Introduce legislative amendments to provide authority for additional potential extensions of the Canada Recovery Benefit and its associated suite of sickness and caregiving benefits, as well as regular EI benefits until no later than November 20, 2021, should they be needed.
• Allocate $3.9 billion over three years, starting in 2021-22, for a suite of legislative changes to make EI more accessible and simple for Canadians over the coming year while the job market begins to improve. The changes would:
  • Maintain uniform access to EI benefits across all regions, including through a 420-hour entrance requirement for regular and special benefits, with a 14-week minimum entitlement for regular benefits, and a new common earnings threshold for fishing benefits.
  • Support multiple job holders and those who switch jobs to improve their situation as the recovery firms up, by ensuring that all insurable hours and employment count towards a claimant’s eligibility, as long as the last job separation is found to be valid.
  • Allow claimants to start receiving EI benefits sooner by simplifying rules around the treatment of severance, vacation pay, and other monies paid on separation.
  • Extend the temporary enhancements to the Work-Sharing program such as the possibility to establish longer work-sharing agreements and a streamlined application process, which will continue to help employers and workers avoid layoffs.
• Hold forthcoming consultations on future, long-term reforms to EI. To support this effort, the government proposes to provide $5 million over two years, starting in 2021-22, to conduct targeted consultations with Canadians, employers, and other stakeholders from across the country.
• Invest $298 million over three years, beginning in 2021-22, in a new Skills for Success program that would help Canadians at all skills levels improve their skills.
• Provide $470 million over three years, beginning in 2021-22, to establish a new Apprenticeship Service. The Apprenticeship Service would help 55,000 first-year apprentices in construction and manufacturing Red Seal trades connect with opportunities at small- and medium-sized employers. This incentive will be doubled to $10,000 for employers who hire those underrepresented, including women, racialized Canadians, and persons with disabilities.

Tourism, Hospitality, Arts and Culture

Budget 2021 proposes to:

• Invest $200 million through the regional development agencies to support major festivals and events.
• Invest $200 million through Canadian Heritage to support local festivals, community cultural events, outdoor theatre performances, heritage celebrations, local museums, amateur sport events, and more.
• Provide $100 million to Destination Canada for marketing campaigns to help Canadians and other visitors discover and explore the country.
• Establish a $500 million Tourism Relief Fund, administered by the regional development agencies. The fund will support investments by local tourism businesses in adapting their products and services to public health measures and other investments that will help them recover from the pandemic and position themselves for future growth.

Women

Budget 2021 proposes to:

• Invest almost $30 billion over the next five years and provide permanent ongoing funding, working with provincial and territorial, and Indigenous partners to support quality, not-for-profit child care. This plan will aim to reduce fees for parents with children in regulated child care by 50 per cent on average, by 2022, with a goal of reaching $10 per day on average by 2026, everywhere outside of Quebec.
• Provide up to $146.9 million over four years, starting in 2021-22, to strengthen the Women Entrepreneurship Strategy. Women entrepreneurs would have greater access to financing, mentorship, and training. Funding would also further support the Women Entrepreneurship Ecosystem Fund and the Women Entrepreneurship Knowledge Hub.
• Hold a public consultation on measures that would adapt and apply the Canada Business Corporations Act diversity requirements to federally regulated financial institutions. This objective is to promote greater gender, racial, ethnic, and Indigenous diversity among senior ranks of the financial sector, and ensure more Canadians have access to these opportunities. Details on the consultation will be announced in the near future.
• Invest $601.3 million over five years, starting in 2021-22, to advance towards a new National Action Plan to End Gender-Based Violence, which will include support to:
  • Enhance the capacity and responsiveness of gender-based violence organizations, including women’s shelters and sexual assault centres;
  • Make our communities more resilient to the threats of gender-based violence through the government’s Gender-Based Violence Program;
  • Establish a dedicated secretariat to coordinate the ongoing work towards the development and implementation of the National Action Plan to End Gender-Based Violence;
  • Assist crisis hotlines that are experiencing a rise in call volumes during the pandemic; and
  • Bolster the capacity of Indigenous women and 2SLGBTQQIA+ organizations to provide gender-based violence prevention programming aimed at addressing the root causes of violence against Indigenous women, girls, and 2SLGBTQQIA+ people.

Environment

Budget 2021 proposes to:

• Provide $4.4 billion on a cash basis ($778.7 million on an accrual basis over five years, starting in 2021-22, with $414.1 million in future years), to the Canada Mortgage and Housing Corporation (CMHC) to help homeowners complete deep home retrofits through interest-free loans worth up to $40,000. Loans would be available to homeowners and landlords who undertake retrofits identified through an authorized EnerGuide energy assessment. The program would be available by summer 2021. It is estimated that more than 200,000 households would take advantage of this opportunity.
• Provide $5 billion over seven years (cash basis), to the Net Zero Accelerator. Building on the support for the Net Zero Accelerator announced in the strengthened climate plan, this funding would allow the government to provide up to $8 billion of support for projects that will help reduce domestic greenhouse gas emissions across the Canadian economy.
• Introduce an investment tax credit for capital invested in carbon capture, utilization, and storage (CCUS) projects, with the goal of reducing emissions by at least 15 megatonnes of CO2 annually. This measure will come into effect in 2022.
• Provide $319 million over seven years, starting in 2021-22, with $1.5 million in remaining amortization, to Natural Resources Canada to support research, development, and demonstrations that would improve the commercial viability of carbon capture, utilization, and storage technologies.
• Reduce—by 50 per cent—the general corporate and small business income tax rates for businesses that manufacture zero-emission technologies. The reductions would go into effect on January 1, 2022, and would be gradually phased out starting January 1, 2029 and eliminated by January 1, 2032.
• Provide $200 million over three years, starting in 2021-22, to Infrastructure Canada to establish a Natural Infrastructure Fund to support natural and hybrid infrastructure projects.
• Provide $1.4 billion over 12 years, starting in 2021-22, to Infrastructure Canada to top up the Disaster Mitigation and Adaptation Fund, to support projects such as wildfire mitigation activities, rehabilitation of storm water systems, and restoration of wetlands and shorelines.
• Invest $11.7 million over five years, starting in 2021-22, through Infrastructure Canada to renew the Standards to Support Resilience in Infrastructure Program, so that the Standards Council of Canada can continue updating standards and guidance in priority areas, such as flood mapping and building in the North.

New taxes

• A sales tax for online platforms and e-commerce warehouses, to start in July.
• A digital services tax on Big Tech, defined as tech companies with at least 750 million euros in revenue, also to begin in July, of 3%.
• A tax on new cars and private aircraft valued at more than $100,000 and boats worth over $250,000 of either 20 per cent of the value of the vehicle above that threshold, or 10 per cent of the total value, whatever is lower. RVs and snowmobiles would be exempt.
• Excise duties on vaping products to be introduced in 2022.
• Increased taxes on tobacco products of $4 per carton of 200 cigarettes.

What was missing

The following items were widely speculated upon, but did not appear in the 2021 budget:

• A speculated capital gains tax on primary residence sales.
• A new wealth tax, such as that proposed by the federal NDP.
• A universal basic income.
• A national pharmacare program.
• Any GST increase.
• Additional healthcare funding transfers to the provinces.

The deficit for the year just ended stands at $354.2 billion, with a 2021-22 deficit of $154.7 billion forecast. Deficits will continue until at least 2025/6 at a steadily-reducing rate. The Parliamentary Budget Office estimated the deficit for the 2020-21 fiscal year stands at $363.4 billion, without including any of the stimulus spending. The C.D. Howe Institute, which also does not include stimulus spending, puts that number at $388.7 billion.

The fall economic statement put the deficit for the preceding year at $381.6 billion.

Clarification on new Ontario restrictions

The Government of Ontario has rescinded the closure of playgrounds.

Rules for construction projects have been clarified. Construction companies should continue to follow safety guidelines for COVID-19.  Permitted construction activities include:

Construction activities or projects and related services (including land surveying and demolition services) are essential if they:

• are associated with the health care sector or long-term care, including new facilities, expansions, renovations and conversion of spaces that could be repurposed for health care space
• ensure safe and reliable operations of, or provide new capacity in:
  • municipal infrastructure
  • provincial infrastructure, including but not limited to, the transit, transportation, resource, energy and justice sectors
• support the operations of, or provide new capacity in, electricity generation, transmission, distribution and storage, natural gas distribution, transmission and storage or in the supply of resources
• support the operations of, or provide new capacity in, schools, colleges, universities or child care centres within the meaning of theChild Care and Early Years Act, 2014
• are required for:
  • the maintenance and operations of petrochemical plants and refineries
  • significant industrial petrochemical projects where preliminary work commenced before April 17, 2021
  • industrial construction and modifications to existing industrial structures limited solely to work necessary for the production, maintenance or enhancement of personal protective equipment, medical devices such as ventilators and other identified products directly related to combatting the COVID-19covid 19 pandemic
• would provide additional capacity in the production, processing, manufacturing or distribution of food, beverages or agricultural products
• were started before April 17, 2021 and would provide additional capacity:
  • for businesses that provide logistical support, distribution services, warehousing, storage or shipping and delivery services
  • in the operation and delivery of Information Technology (IT) services or telecommunications services
  • to, or enhance the efficiency or operations of, businesses that extract, manufacture, process and distribute goods, products, equipment and materials
• support the operations of broadband internet and cellular technologies and services
• are residential construction activities or projects and related services
• prepare a site for an institutional, commercial, industrial or residential development, including any necessary excavation, grading, roads or utilities infrastructure
• are necessary to temporarily close construction sites that have paused, or that are not active, to ensure ongoing public safety
• are funded in whole or in part by:
  • the Crown in right of Canada or in right of Ontario
  • an agency of the Crown in right of Canada or in right of Ontario
  • a municipality
• are:
  • intended to provide shelter or supports for vulnerable persons or affordable housing
  • being funded in whole or in part by, or are being undertaken by:
    • the Crown in right of Canada or in right of Ontario
    • an agency of the Crown in right of Canada or in right of Ontario
    • a municipality
    • a service manager as defined theHousing Services Act, 2011
    • a registered charity within the meaning of theIncome Tax Act(Canada)
    • a not-for-profit corporation