New Affordable Housing and Groceries Act introduced

Today, Finance Minister Chrystia Freeland introduced Bill C-56, aka the Affordable Housing and Groceries Act. This starts the process of legalizing Prime Minister Trudeau's promises made at last week's Liberal Party meeting.

The law will have a positive impact on the well-being of Canadians for the foreseeable future. It will eliminate the GST, a special tax on new rental housing across the country. The Act should also increase competition, especially in the grocery sector. How will it work in practice?

As for the housing issue

The increase in GST rebate for construction of rental housing is officially enshrined: from 36% to 100%. That is, for this category of construction, the tax is canceled, which, according to the government's plan, should trigger a boom in the construction of apartment buildings, student hostels and hostels for the elderly.

For example, for a two-bedroom rental apartment worth CA$ 500,000, the tax credit under the updated law will be CA$ 25,000. The new rules will apply to objects, the construction of which will begin from September 14, 2023 and later — but not later than December 31, 2030. And construction must be completed by December 31, 2035.

Measures to curb the growth of grocery prices

Amendments to the Competition Act give the Canadian Competition Bureau more leverage over business. Now, in case of unacceptable behavior of giants in different industries (primarily in the grocery sector), the Competition Bureau can:

• conduct its own investigation (e.g. a price hike);
• prohibit anticompetitive mergers and consolidations that raise prices and limit consumer choice;
• block the possibility of collusion between large companies — for example, when large grocery stores prevent smaller competitors from opening nearby.

The Competition Act is intended to complement other measures already in place to stabilize the economic situation of Canadians. These include, for example, providing discounts on groceries to Canadians with modest incomes (about 11 million people) and to families hardest hit by rising food prices. Discounts range from CA$ 234 for single people without children to CA$ 467 for families with two children.

Other financially disadvantaged groups should also feel the support. Automatic advance payments have been introduced for workers in low-paid occupations, interest on loan payments has been eliminated for students, and pensions for people over 75 were raised by 10% a year ago. In addition, the federal minimum wage rose from CA$ 15.55 to CA$ 16.65 per hour.

Changes to the Competition Law were announced more than a year ago. Comprehensive legislative reform is expected in the coming months. Combined with the repeal of the GST, it should have a significant impact on Canadians' spending and their lives in general.