As of November 3rd, the federal government’s annual budget has passed two out of the three required confidence votes. Today, let’s talk about what this new budget of “ambitious savings” entails and how it may affect the broader Canadian economy, including Canada’s desperate housing industry.Housing, Infrastructure, and Communities Canada is the department targeted for the largest savings to give up to other initiatives. CBC points out how Build Canada Homes, the new federal agency, is reflected in the budget with an initial $13 billion investment much of it funded from H, I and C Canada. The cuts seen in the Housing, Infrastructure, and Communities department are largely sourced from the cuts that the Canada Mortgage and Housing Corporation is planning. The budget states that “Build Canada Homes provides an opportunity to reevaluate CMHC’s resources &amp; programming to ensure they are aligned with this important priority,” referring to their purpose of supercharging housing across Canada. CBC also states that the CMHC will slow down their programs that don’t increase housing supply or those that are already going to be addressed by Build Canada Homes.The $13 billion initial investment going towards housing in the next five years is dedicated to increase the country’s supply of affordable housing. The original, ambitious goal for affordable housing, was to double current construction rates for a new rate of 500,000 homes per year. The federal government likely realized the challenges that they would face in achieving such an ambitious plan, and the federal budget reflected a new goal of “nearly double” the current rates, to about 430,000-480,000 units per year.&nbsp;What about the sky-high unemployment rates? CBC reports that the federal government predicts they will “generate thousands of jobs with local infrastructure spending.” Specifically, the federal budgets lays out $51 billion for the next 10 years that will be spent on roads, housing, wastewater, and health facilities. CBC quotes JP Tasker, their senior politics reporter, who stated, “think about all of the other jobs that are associated with building things.” Fine in-depth analysis there. CBC also reports that 67,000 jobs were added to the Canadian economy in October and that the unemployment rate dropped slightly to 6.9%. (Unfortunately, most of these jobs were low paying, temporary or part-time.)BBC reported on all the things Carney plans to do to undo the Trudeau era – the lost economic decade in Canada. We’ve already seen the elimination of the consumer carbon tax, resetting electric vehicle sales mandates, and adjusting increases in the capital gains tax. The budget, according to the BBC, also shows an intention to break free from Trudeau era immigration policies. BCC says the Carney budget cuts temporary resident targets from 673,650 to 385,000 in the next year. Carney also indicated an end to the luxury vehicle tax from 2022 which taxed vehicles and aircrafts valued at over $100,000 and boats valued at over $250,000. Brookfield’s management ranks will rejoice.The budget describes itself as creating generational investments. They plan to make their spending last through investments in “new infrastructure, productivity, &amp; competitiveness measures, defense and security, and housing,” according to CTV News.&nbsp;The budget claims that there will be a major reallocation of resources into what they hope will last Canada generations. (Unclear as to whether “generations” refers to the time to completion, the time to pay it off, or its useful life.) Will it build Canada strong? Unlikely. Spending your way to greatness with borrowed money is a strategy that has bee tried by successive governments and it has failed. Our ability to build and deliver infrastructure in Canada on time and on budget has a woeful track record. In Toronto we only have to look at the Cross Town Light Rail project that is years beyond its completion deadline and painfully over budget. Renovations to our train station took 11 years to complete. These projects may provide construction jobs, temporarily, but only to the extent the borrowed money keeps flowing.A more prudent way to prosperity: cut taxes, cut wasteful government spending, and focus on delivering the things that Canada has and that the world wants rather than inventing new markets that we may be challenged to compete in. The result will be more money in consumers’ pockets, lower inflation, and a more affordable interest rate environment that will encourage entry into the housing market for young people.&nbsp;

2025 Federal Budget: Can Ottawa Buy Back Affordability?

Canada’s 2025 budget promises billions for housing and jobs, but can spending alone fix affordability and rebuild economic confidence?

About RIFO

Business

Investors

News

Contact Us

Contact Us