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Freeland tables 'affordable housing and groceries' bill, Trudeau calls for all-party backing

OTTAWA -

Finance Minister Chrystia Freeland has tabled new legislation to implement the promised removal of GST from new rental developments, and to revamp Canada's competition laws, framing the bill as a package that will result in more affordable housing and groceries, eventually.

Facing pressure in the polls and from within his own Liberal caucus, last week Prime Minister Justin Trudeau promised this suite of measures in an effort to address Canadians' ongoing cost-of-living concerns.

Speaking from New York City as he wrapped up his UN trip, Trudeau called on the other parties—some of which are trying to advance similar legislative proposals of their own—to get behind the government's bill.

"I urge opposition leaders back home to help us get today's real solutions passed quickly. We're focused on making life more affordable for Canadians, and we'll be continuing this work in the days and weeks to come," Trudeau said. 

Bill C-56, which is being titled "The Affordable Housing and Groceries Act," is the first piece of government legislation to be introduced in the fall sitting.

"More competition will ease sticker shock at the grocery checkout line. Eliminating the GST will get more housing built faster so that more Canadians can have an affordable place to call home," Freeland said during an afternoon press conference alongside a handful of ministers, vowing the Liberals will have "more to say and to announce in the weeks to come."

GST RENTAL REBATE

Through the bill, the federal government is aiming to incentivize the construction of more apartment buildings, student housing, and senior living spaces by offering a 100 per cent rental rebate off of the GST paid on new purpose-built rental housing, up from the current 36 per cent and the existing GST rental rebate phase-out thresholds for new rental housing projects.

This reform would apply to new residential units that would meet the conditions for the existing GST rental rebate: buildings of at least four private apartment units that have a private kitchen, bathroom and living area, or at least 10 private rooms or suites, with at least 90 per cent of units designated for long-term rental. 

This move is estimated to provide $25,000 of tax relief for a two-bedroom rental apartment valued at $500,000, according to Finance Canada, and is expected to cost $4.5 billion over the fiscal period of the program.

Declaring her plans to oversee the implementation of Bill C-56, Treasury Board President Anita Anand vowed to ensure the legislative initiatives taken "will ensure value for taxpayer dollars." 

As for the 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 that complete construction by Dec. 31, 2035, according to senior government officials who briefed reporters on the new legislation on a not-for-attribution basis.

According to the officials, Bill C-56 also allows for municipalities, universities, charities and other entities receiving the current rebate for public service bodies to choose to either continue receiving that, or the new incoming GST rental rebate, allowing them to select the more preferable rate for their projects.

However, officials cautioned that "further legislative changes, including regulations" are required to fully implement the GST rebate.

Housing Minister Sean Fraser said the seven-year time frame was designed to allow for builders to "meaningfully plan ahead." He similarly restated Freeland's pledge that this is just the first of housing affordability-aimed announcements to come. 

COMPETITION ACT CHANGES

As for the Competition Act changes, Bill C-56 proposes to amend the law to beef up protections for Canadians in connection to Canada's grocery sector competition, which is dominated by a handful of companies.

The government is pursuing amendments that if passed, officials said, would give more power to the Competition Bureau to investigate and take enforcement action on unfair behaviour in the sector, such as price fixing or price gouging.

The bureau would also be empowered to compel information from companies through court orders, in order to conduct market studies, and "block collaborations that stifle competition and consumer choice, particularly in situations where large grocers prevent smaller competitors from establishing operations nearby," Finance Canada said.

Noting what an official described as "increasing corporate concentration," the changes would also end "anti-competitive" mergers that exacerbate the high cost and limited choices Canadian consumers face.

Updating Canada's Competition Act follows a review and consultation held last year, and this bill's changes are only a few small tweaks, with the government vowing a more comprehensive legislative reform package "in the coming months."

"These changes were prioritized because they are the most directly related to issues identified in Canada's retail grocery sector," an official said, noting the parallel talks the government is holding with grocery giants on a plan to stabilize prices by Thanksgiving. 

Reacting to the bill's competition measures, the Business Council of Canada warned that they will "create a further chill for business investment" and "negatively impact competition and ultimately harm consumers."

Responding to this, Industry Minister Francois-Philippe Champagne welcomed the comment, but said what Canadians want is "less consolidation, more competition, and lower prices."

"Our competition law has been actually about driving consolidation. And I think what we're saying today with this historic legislation, is Canada is a strong and self confident economy. We are confident enough to have legislation, to have a legal framework, that actually 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 pledged to give small businesses in Canada more time to pay back emergency loans offered during the COVID-19 pandemic. Those changes are being made through regulations and won't require legislative change to implement.

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