Policies of the Federal Parties in Personal Finance Perspective. Part 4
This is the fourth of four blog posts on the election platforms of the national parties that had seats in the House of Commons at dissolution. I exclude the Bloc Quebecois because they do not appoint candidates outside of Quebec. In the previous posts, I wrote about the Green Party, the New Democratic Party, and the Conservative Party. This week it is the Liberal Party of Canada.
The emphasis on these posts is to present the platforms and policies of the parties that will directly affect household income and wealth. While many policies have a broad impact on the economy which will ultimately affect our personal financial accounts, I want to focus on those policies that explicitly and directly affect “home economics,” one might say.
Part 4. The Liberal Party of Canada
Increase the availability of health care services in rural and underserved communities by expanding access to debt forgiveness for healthcare professionals.
Mental Health Care
Establish the Canada Mental Health Transfer to expand access to mental health services.
Review access to the Disability Tax Credit, CPP Disability pension, and other federal benefits and programs to ensure they are available to people experiencing mental health challenges.
People in rural communities may have to make long and therefore expensive journeys to access health care. Sometimes they may be forced to temporarily relocate, again at considerable expense, to gain access to treatment. Providing financial incentives for healthcare professionals to locate in rural areas is one way to encourage greater local access.
Increase to 25% (from 15%), and expand eligibility for, the refundable tax credit through the Eligible Educator School Supply Tax Credit.
Introduce a new 15% tax credit to cover the cost of home appliance repairs performed by technicians (up to $500).
Create a minimum tax rule so that everyone who earns enough to qualify for the top bracket pays at least 15% each year (the tax rate paid by people earning less than $49,000), removing their ability to artificially pay no tax through excessive use of deductions and credits.
Implement a tax on luxury cars, boats, and planes as outlined in Budget 2021.
Significantly increase the resources of the Canada Revenue Agency to combat aggressive tax planning and tax avoidance that allows the wealthiest to avoid paying the taxes they owe. This will increase CRA’s resources by up to $1 billion per year in order to close Canada’s tax gap.
Eliminate flow-through shares for oil, gas, and coal projects to help promote clean growth and Canada’s transition to a net-zero economy.
Implement a national anti-flipping tax and move forward with Canada’s first-ever national tax on non-resident, non-Canadians on vacant land and residential property.
Move forward with a national tax on vaping products and require tobacco manufacturers to pay for the cost of federal public health investments in tobacco control.
I am not a tax accountant; my perspective as a financial planner is to help clients take appropriate advantage of available credits and deductions. Having said that, additional targeted credits, deductions, or taxes only serve to complicate an already complex tax code. An overhaul aimed at simplification would be desirable, in my opinion.
If you are a teacher who spends money out of your own pocket to provide school supplies, then you may appreciate the increase in the credit available to you as an “eligible educator.”
Several of the other policies apply more broadly to Canadians; a new tax credit for home appliance repairs; a new minimum tax rule; a tax on luxury goods; increasing the CRA’s resources to combat “aggressive” tax planning and tax avoidance; eliminating flow-through shares for oil, gas and coal projects; an anti-flipping tax and a tax on non-resident, non-Canadians who own vacant land and residential property; and a tax on vaping products and tobacco manufacturers. Several categories of people may balk at some of these proposed changes, but they intend to either encourage some forms of behaviour or discourage other forms.
Jobs and (Re)training
Introduce amendments to the Canada Labour Code to provide 10 days of paid sick leave for all federally regulated workers so that no one has to choose between going to work sick or paying their bills.
Convene provinces and territories to develop a national action plan to legislate sick leave across the country, while respecting provincial-territorial jurisdiction and the unique needs of small business owners.
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, who will be eligible for up to $1,400 a year.
Introduce a new Employment Insurance benefit for self-employed Canadians, delivered through the tax system, that would provide unemployment assistance comparable to EI and last for as much as 26 weeks. This could provide support of nearly $15,500 when it is needed most.
Strengthen rights for workers employed by digital platforms so that they are entitled to job protections under the Canada Labour Code and establish new provisions in the Income Tax Act to ensure this work counts toward EI and CPP while also making these platforms pay associated contributions as any employer would.
Establish an EI Career Insurance Benefit. This benefit will be available to people who have worked continuously for the same employer for five or more years and are laid off when the business closes. The Career Insurance Benefit will kick in after regular EI ends, providing an additional 20% of insured earnings in the first year following the layoff, and an extra 10% in the second year. This will give workers up to almost $16,900 over two years, providing significant help at a difficult time.
Extend the Home Expense deduction for an additional 2 years, through the 2022 tax year, and increase the deductible amount to $500 from the current $400.
Provide up to 5 new paid leave days for federally regulated employees who experience a miscarriage or stillbirth, which can happen in up to 1 in 5 pregnancies.
Strengthen provisions in the Canada Labour Code to better support women that need to be temporarily re-assigned to other duties during pregnancy and while breastfeeding.
Create a fairer collective bargaining process by introducing legislation to prohibit the use of replacement workers, “scabs,” when a union employer in a federally regulated industry has locked out employees.
Work with federally regulated employers and labour groups to co-develop a new policy for the right to disconnect so that workers can disconnect at the end of a workday without worrying about job security and restore a healthy work-life balance.
Double the Union Training and Innovation program to $50 million a year to support more apprenticeship training opportunities and additional partnerships in the Red Seal trades across Canada, and target more participation from women, Indigenous people, newcomers, persons with disabilities, and Black and racialized Canadians.
Move forward on the plan to establish a new Apprenticeship Service that will connect 55,000 first-year apprentices in Red Seal trades with opportunities at small and medium-sized employers.
Ensuring Workers and Communities Prosper in the Move to Net Zero
Establish a $2 billion Futures Fund for Alberta, Saskatchewan, Newfoundland and Labrador that will be designed in collaboration with local workers, unions, educational institutions, environmental groups, investors, and Indigenous peoples who know their communities best. Support local and regional economic diversification and specific place-based strategies.
Move forward with Just Transition Legislation.
Launch a Clean Jobs Training Centre to help industrial, and skilled trade workers across sectors to upgrade or gain new skills to be on the leading edge of the zero-carbon industry.
In the aftermath of COVID-19, governments have realized that allowing employers to force employees to show up for work when they are sick, at the risk of losing their jobs if they don’t, is bad public health policy.
Gig economy workers, those working from home, and the self-employed all potentially benefit from the policies proposed.
Canada is one of the most highly educated countries in the world. However, the cultural desire to see every child in a professional career means that the necessary and highly remunerative skilled trades positions are experiencing shortages. People who are forecast to lose jobs in the volatile fossil fuel energy sector are also in need of retraining. For those planning on careers or career changes, these incentives are worth considering.
I note as well the proposals to make careers more attractive for women of childbearing age as policies that can help with household budgets.
Require financial institutions offer flexible repayment options by default if you fall on hard times or face a life event that causes financial stress. This will include a mandatory option for a 6-month deferral of mortgage payments in qualifying circumstances.
Establish a single, independent ombudsperson for handling consumer complaints involving banks, with the power to impose binding arbitration.
Crack down on predatory lenders by lowering the criminal rate of interest.
Enhance the powers of the Financial Consumer Agency of Canada to review the prices charged by banks and impose changes if they are excessive.
Move forward with a made-in-Canada model of open banking that will launch no later than the beginning of 2023. This system will ensure that you, not your bank, control your data.
Modernize Canada’s payments technology to deliver faster and lower-cost options so that you can securely and conveniently manage money, pay bills, and transfer funds to loved ones around the world.
Implement a “right to repair” to extend the life of home appliances, particularly electronics, by requiring manufacturers to supply repair manuals and spare parts and facilitate their replication after the part is no longer produced.
Introduce a bill that includes provisions to better inform citizens of the environmental impacts of consumer products.
Require businesses to inform Canadians of the environmental impacts of consumer products.
Amend the Copyright Act to ensure that its provisions cannot prevent the repair of digital devices and systems, even when nothing is being copied or distributed.
These proposals all seem good and appropriate. Banks operate under a federal charter. Regulatory capture is the idea that the regulator acts on behalf of the industry rather than for the public good. These proposals in the financial sector may indicate that the government’s regulatory bodies might actually be granted some teeth. Did you know that several of the banks simply choose to hire their own agencies to arbitrate disputes with customers? These proposals seem to be a step toward eliminating that unfair arrangement.
Work with provincial, territorial, municipal, Indigenous partners, and stakeholders to develop a National School Food Policy and work toward a national school nutritious meal program with a $1 billion dollar investment over five years.
Appoint a new Federal Housing Advocate within the first 100 days of a new mandate to ensure the federal government’s work toward eliminating chronic homelessness, as well as other housing commitments, are fulfilled.
Build more than 20,000 more units of new affordable rental housing and ensure 130,000 units are revitalized from a state of critical disrepair.
Food and housing are the main themes here. It seems relatively thin compared to some of the other areas of the platform. To the Liberal government’s credit, the Canada Child Credit has helped many low-income families to get out of poverty, and proposals to increase access to mental health care are a step in the right direction, but no doubt there is more that could be done.
Introduce a new rent-to-own program to help make it easier for renters to get on the path towards home ownership while renting.
Introduce a tax-free First Home Savings Account will allow Canadians under 40 to save up to $40,000 towards their first home, and to withdraw it tax-free to put towards their first home purchase, with no requirement to repay it.
Update the First-Time Home Buyers’ Incentive (FTHBI) to allow a choice between the current shared-equity approach or a loan that is repayable only at the time of sale.
Double the First-Time Home Buyers Tax Credit from $5,000 to $10,000, which will make $1,500 available to make a home purchase a little bit easier.
Reduce the price charged by the Canadian Mortgage and Housing Corporation on mortgage insurance by 25%. For a typical homebuyer, this will save $6,100.
Increase the insured mortgage cut-off from $1 million to $1.25 million, and index this to inflation, to better reflect today’s home prices.
Invest $4 billion in a new Housing Accelerator Fund which will grow the annual housing supply in the country’s largest cities every year, creating a target of 100,000 new middle-class homes by 2024-25.
Permanently increase funding to the National Housing Co-Investment fund by a total of $2.7 billion over 4 years, more than double its current allocation. These extra funds will be dedicated to helping affordable housing providers acquire land and buildings to build and preserve more units, extending the model of cooperative housing to new communities, accelerating critical repairs so that housing supply remains affordable and is not lost, and developing projects for vulnerable groups, such as women, youth, and persons with disabilities.
Double the existing Budget 2021 commitment to $600 million to support the conversion of empty office and retail space into market-based housing. Convert space in the federal portfolio and commercial buildings.
Introduce a new Multigenerational Home Renovation tax credit to help families add a secondary unit to their home for an immediate or extended family member. Families will be able to claim a 15% tax credit for up to $50,000 in renovation and construction costs, saving up to $7,500.
Work with Indigenous partners to co-develop an Urban, Rural, and Northern Indigenous Housing Strategy and support this strategy with dedicated investments.
Work with Indigenous partners to create a National Indigenous Housing Centre with Indigenous people overseeing federal Indigenous housing programs once fully realized.
Create a national Home Buyers’ Bill of Rights so that the process of buying a home is fair, open, and transparent.
Stop “renovictions” by deterring unfair rent increases that fall outside of a normal change in rent.
Require landlords to disclose, on their tax filing, the rent they receive pre- and post-renovation, and implement a proportional surtax if the increase in rent is excessive.
Establish an anti-flipping tax on residential properties, requiring properties to be held for at least 12 months, with appropriate exemptions for changes in life circumstances.
Ban foreign money from purchasing a non-recreational, residential property in Canada for the next two years, unless this purchase is confirmed to be for future employment or immigration in the next two years.
Extend Canada’s first-ever national tax on non-resident, non-Canadian owners of vacant, underused housing, announced to begin on January 1, 2022, to include foreign-owned vacant land within large urban areas.
Review the down payment requirements for investment properties.
Increase the power of federal regulators to respond to housing price fluctuations and ensure a more stable Canadian housing market.
Launch a pilot program next year that will provide rent supplements and wrap-around supports to homeless Veterans, so that they can get the housing and services they need.
Introduce a Veterans stream to the Rapid Housing Initiative which will see new affordable housing become available for Veterans.
I always view housing through the traditional economics of supply and demand. Any policy that increases demand is counterproductive to the essential issue, which is lack of supply.
And then some issues are mere window dressing. People tend not to fully use either their RRSP or TFSA contribution room. Adding a First Home Savings Account, when people already have the option of withdrawing from their RRSP without withholding tax under the Home Buyers’ Plan and can withdraw from their TFSAs at any time for any reason, seems unnecessary. It is superfluous at best and an additional benefit to the wealthy unavailable to the middle class at worst. Furthermore, it is a tool that will only increase the demand for housing.
If I had my way, I would move any of the money to support demand into policies that would increase supply or at least control price increases. Among them are:
- the Housing Accelerator Fund,
- the National Housing Co-Investment Fund,
- the Multigenerational Home Renovation tax credit,
- the Urban, Rural, and Northern Indigenous Housing Strategy,
- the Home Buyers’ Bill of Rights,
- stopping renovictions,
- the anti-flipping tax,
- banning foreign money for the next two years
- a tax on vacant, underused housing
Reduce fees for childcare by 50% in the next year.
Deliver $10 a day childcare within five years or less.
Build 250,000 new high-quality childcare spaces.
Hire 40,000 more early childhood educators.
Finalize agreements with all remaining provinces and territories.
Expand the Canada Caregiver Credit into a refundable, tax-free benefit, allowing caregivers to received up to $1,250 per year. This will help 200,000 more Canadians qualify and increase support for 448,000 people.
These policies work at different ends of the spectrum, but both tend to support women who, by default tend to stay home more often than men for childcare reasons, and who also tend to take on caregiver roles more often.
Allow new parents to pause repayment of their federal student loans until their youngest child reaches the age of five. This would also include new parents who have graduated but still haven’t finished paying off their loans.
Eliminate the federal interest on Canada Student Loans and Canada Apprentice Loans to support young Canadians who choose to invest in post-secondary education. This will benefit over 1 million student loan borrowers and save an average borrower more than $3,000 over the lifetime of their loan.
Increase the repayment assistance threshold to $50,000 for Canada Student Loan borrowers who are single. This means that new grads, working hard early in their careers, won’t have to begin repaying their loans until they earn at least $50,000 annually.
Introduce a new fund for student well-being to improve wait times and increase access to mental health care at colleges and universities. The fund will support the hiring of up to 1,200 new mental health care counselors, including those who can support the needs of BIPOC students, at post-secondary institutions across Canada.
Invest $500 million over four years and dedicate 10% annually to support Indigenous-governed and operated post-secondary institutions.
Student debts tend not to be as bad in Canada as they are reputed to be in the United States, but loans that persist for many years often are a disincentive to household formation, marriage, and the rearing of children. Policies that allow pauses on debt repayment, the elimination of interest, and delaying the obligation to repay until income rises sufficiently to support repayment, should make life a bit easier.
Governments across Canada used to think that funding higher education was good for the economy and society. Over time, more of that financial burden has fallen on students and their families. The proposals here make that burden somewhat more tolerable, although there are limits given that education falls under provincial jurisdiction.
Work with provinces and territories to support seniors with an investment of $9 billion over 5 years to support safer conditions for seniors and improved wages and working conditions for personal support workers.
OAS and GIS
Move forward with the plan to boost the OAS by 10% next year for seniors 75 and over.
Increase the GIS by $500 for single seniors and $750 for couples, starting at age 65.
CPP Survivors’ Benefit
Work with all provinces and territories over the next year to increase the support survivors receive by increasing the Canada Pension Plan and Quebec Pension Plan survivor’s benefit by 25%.
Certainly, the response to COVID-19 in long-term care (LTC) facilities has been an issue in many cases. There is certainly some good in improving the wages and working conditions for those who work in such facilities, but one has to wonder whether the profit motive needs to be removed entirely from the LTC situation. Not-for-profit charitable societies run by religious or community organizations should be encouraged, in my opinion.
I have seen some complaints from lower-income seniors under age 65 for whom the OAS increase is perceived as unfair. The rationale, however, is clear. Those over age 75 tend to have higher expenses than those under 75 and are also less likely to be able to supplement their government benefits and personal savings with part-time or occasional employment.
Affordable and Accessible Cellphone and Internet Services
Require those that have purchased the rights to build broadband actually do so. Canada’s large national carriers will be required to accelerate the roll-out of wireless and high-speed internet in rural and northern Canada by progressively meeting broadband access milestones between now and 2025. If these milestones are not met, mandate the resale of spectrum rights, and reallocate that capacity to smaller, regional providers.
Whether for business, educational, or personal use, access to cellphone and internet services is increasingly a necessity in our digital economy. Providing “carrots” or “sticks” to the providers of these services is not unexpected.
Provide Canada’s hard-hit tourism industry with temporary wage and rent support of up to 75% of their expenses to help them get through the winter.
Implement the Canada Digital Adoption Program.
- Give microgrants of up to $2,400 to smaller Main Street businesses so they can afford the costs of new technology.
- Create training and work opportunities for as many as 28,000 young people so they can assist small and medium-sized businesses in adopting new technology.
- Offer zero-interest loans to small and medium-sized businesses so they can finance larger technology adoption projects.
Increase the maximum loan amount from $350,000 to $500,000 and extend loan coverage from 10 to 15 years for equipment and leasehold improvements.
Expand borrower eligibility to include non-profit and charitable social enterprises.
Introduce a new line of credit as part of the Canada Small Business Financing Program.
Expand loan class eligibility to include lending against intellectual property as well as start-up assets and expenses.
Allow privately owned, Canadian-controlled businesses to immediately expense up to $1.5 million of growth-enhancing investments, including in areas like software, patents, and machinery.
Protect Canadian artists, creators, and copyright holders by making changes to the Copyright Act, including amending the Act to allow resale rights for artists.
For people who work or run small businesses in the tourism sector, the supports identified must be welcome news to help keep them afloat until a hoped-for return to something approaching normal in 2022.
Most of these services revolve around the extension of credit to help small businesses get off the ground or weather the restrictions on business caused by the pandemic.
Ordinarily, capital investments like machinery would be depreciated over a certain number of years, limiting the amount available to be used to reduce taxes. Permitting businesses to immediately expense various investments that would ordinarily be categorized as capital investments would have the immediate effect of significantly reducing taxes in the year that they are expensed. There is no indication that this is a temporary measure.
Many small business owners are artists or artisans. They also tend to be lower-income earners. Any supports that would help the people who work in this sector of the economy would no doubt be welcomed by them.
Accelerate major public transit projects.
Support the switch to zero-emission buses.
Develop rural transit solutions.
Advance a National Active Transportation Strategy to build bike lanes, wider sidewalks, pathways, and multi-use trails.
Commit to make High-Frequency Rail a reality. Move forward with the project in the Toronto to Quebec City corridor, using electrified technology. Launch a procurement process by the end of 2021 and also explore other opportunities to extend the rail toward London and Windsor.
While this might appear to be focused on environmental and climate concerns, the potential benefit for households is the increase in the availability of public transit. For some in lower-income and rural situations, this sort of support is necessary. Even for those with higher incomes, creating more efficient public transit would help alleviate the traffic jams that delay travel, decrease productivity, and increase pollution.
People with Disabilities
Double the Home Accessibility Tax Credit, to $20,000, putting up to $1,500 back in the pockets of Canadians who need it.
Re-introduce a Disability Benefit Act which will create a direct monthly payment, the Canada Disability Benefit, for low-income Canadians with disabilities, ages 18-64.
Develop and implement an employment strategy for Canadians with disabilities. This strategy will be focused on supports for workers and employers and creating inclusive and welcoming workplaces. It will also include an investment in the Ready, Willing & Able inclusive hiring program to support individuals with intellectual disabilities and autism spectrum disorder (ASD).
Create a new stream of the Youth Employment and Skills Strategy Program (YESS) to support 5,000 opportunities a year for young people. This would help young Canadians with disabilities gain the skills, experience, and abilities they need to make a successful transition into the labour market and build successful careers.
Many seniors become disabled as they age. There are also those who by accident or illness become disabled. Regardless of the situation, allowing people with disabilities to stay in their homes longer by supporting them to refit their homes for their new needs, is a positive step.
Not all people with low incomes are disabled, but a large number of people with disabilities have to live with a low income. Providing the resources so that people with disabilities can participate in society can only be a benefit.
Comment on Pensions
Unlike in the other parties’ platforms, I did not find any specific mention of legislation protecting employees/retirees with private pensions. Other parties propose to move them to the front of the line as creditors in the event of bankruptcy.
You can read the entire Liberal platform here.
This is the 115th blog post for Russ Writes.
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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.