Spending on housing, or overall spending levels will grab most of the attention, but the 2024 Federal Budget also promises further action on many consumer protection issues.
The $57 billion in new spending and projected deficits of $40 billion for 2023-24 and similar amounts for the next two years will irk the fiscally minded. And the $8.5 billion to be spent on housing incentives over the next five years represents the most emphasized initiatives in the budget, delivered by Deputy Prime Minister and Finance Minister Chrystia Freeland April 16.
But the budget has new initiatives, new commitments to existing initiatives on banking fees, predatory lending, right to repair, junk fees, open banking and making it easier to change telecom plans.
The housing spending is split evenly between programs to increase the supply of housing, and funding for those who are unable to afford a home. The government plans to unload unused government offices, and use vacant land to increase the supply of new homes. Large amounts are committed to a new Canada Housing Infrastructure Fund (to be spent through provinces and municipalities), a program to add additional suites to single family homes and investing to build more apartments for renters.
A $20 million commitment to modernize the collection and use of housing data for Statistics Canada and the Canada Mortgage and Housing Corporation is a small, but important development. Allowing 30-year mortgage amortizations for first-time home buyers of newly constructed homes may intend to give younger purchasers the ability to make purchases, but also exposes those same purchasers to additional risks.
There are other commitments to renters, with the government calling on bankers and credit bureaus to allow renters to report rent payment history to credit bureaus, theoretically improving credit scores more quickly.
The budget statement declared housing should be treated as homes for people, instead of a speculative asset class, saying: “When purchasing a home, Canadians might expect to be bidding against other potential buyers, not a multi-billion-dollar hedge fund.”
The budget included plans to amend the Criminal Code to enhance enforcement of the criminal rate of interest. The lack of enforcement had been a significant impediment to consumer protection, as the government previously announced reductions to maximum borrowing costs for payday and installment loans. It also announced its intent to work with provinces to cap the costs of optional insurance products, which often double the amounts consumers pay on these loans, to limit advertising, and to harmonize provincial regulations.
Previous budgets have announced an intent to address ‘right to repair’ issues. Consultations will begin this June to develop a framework, and the government signalled strong support for Quebec’s recent Bill as “an example of how provinces can protect consumers by promoting right to repair.”
Similarly, previous budgets have announced the intent to curb ‘junk fees’. The budget identified better transparency of optional airline services such as seat selection fees, baggage fees, and meals, to ensure consumers can select fares properly. It also pledged to work with provinces to adopt best practices for ticket sales, particularly affecting price transparency, the rights to timely refunds and targeting bots and resellers that artificially inflate secondary market prices.
The government plans to amend the Telecommunications Act to allow consumers to change internet, phone and cell phone plan providers more easily and at lower cost.
It intends to cap NSF fees charged by banks to $10 per instance, prohibit multiple NSF fees for recurring transactions, and restrict the frequency of those fees.
Open banking, now ‘re-re-named’ Consumer-Driven Banking, will come under the auspices of the Financial Consumer Agency of Canada (FCAC). There is funding to creating a consumer awareness campaign, and also funding to create and maintain an oversight entity.
There was little in the budget on grocery pricing, beyond previously announced initiatives.
On the revenue side, the key change is an increase in the capital gains inclusion rates. Currently, 50 per cent of capital gains (profits on the sales of assets such as stocks and secondary residences) are included as income for tax purposes. That will continue to be the rate on amounts below $250,000 in gains annually. Above that level, the inclusion rate increases to two-thirds (66.7%).