The Canadian economy is expected to fall into a recession in early 2023. According to the Fall Economic Statement (FES), which was released on Nov. 3 by Chrystia Freeland, deputy prime minister and minister of finance, there is some positive news in sight for Canadians — the Bank of Canada expects inflation to decline to 3 per cent by late 2023. Currently, it sits at around 6.9 per cent.
“While inflation is lower in Canada than in many of our peer countries, I know that fact brings little comfort to Canadians paying higher prices at the checkout counter, or spending more to fill their tanks with gas,” explained Freeland, as part of her speech to the House. “This is a challenging time for millions of Canadians—for our friends, for our families, for our neighbours.”
According to CIPH and MCA Canada, the government is likely wagering that the Bank of Canada is raising interest rates to reduce inflation and create a “soft landing” for the economy. “That thinking is optimistic, but the minister of finance has committed to measuring today that will help those who need help the most,” explained the two associations in a joint statement.
The FES lists inflation as the top global economic challenge largely due to imbalances between supply and demand. These imbalances stem from a series of global supply shocks combined with rebounding demand, which is driving up prices for goods and services. “It’s important, as both the Deputy Prime Minister and the Minister of Finance, that I’m honest with Canadians about the challenges that still lie ahead. Interest rates are rising as the central bank steps in to tackle inflation and that means our economy is slowing down,” states Freeland. “It means business is no longer booming in the same way it has since we left our homes and went back into the world.” As Freeland puts it, the upcoming global slowdown is unavoidable.
Legislative changes
As part of the FES, there are several changes coming to the housing market, which will aim to “make housing more affordable.” The statement reiterates legislation that was passed in parliament in June 2022 that implemented a two-year ban on non-Canadians purchasing residential property in Canada, effective Jan. 1, 2023.
Following the release of the 2022 Fall Economic Statement, the federal government has stated they plan on tabling new legislation. This would create a new Tax-Free First Home Savings Account, and double the First-Time Home Buyers’ tax credit. Additionally, the government stated that they would like to “ensure that profits from flipping properties held for less than 12 months are fully taxed, starting in 2023, with certain exceptions for unexpected life events. This measure will ensure that investors who flip homes pay their fair share, and play a role in lowering housing prices for Canadians.”
Industry comments
There are many exciting elements to the fall economic statement. However, for some, there are a few that deserve the spotlight specifically. “The two most exciting announcements today for CIPH and MCAC are the elimination of interest on the Canada Apprentice Loan and new investments to modernize National Research Council facilities. Minister Freeland has telegraphed other major investments to come that will ensure Canadian businesses and workers are well-funded for the energy transition, but those investments will come in the spring when they are more likely to stimulate the economy,” shared CIPH and MCAC.
There is hope that the removal of the interest on apprenticeship loans will help keep tradespeople in the classroom and finishing their ticket. Additionally, the National Research Council is receiving $962.2 million over eight years towards the council’s scientific infrastructure.
It appears that most within the industry are content with the direction the fall economic statement has Canada leading. The Heating, Refrigeration, and Air Conditioning Institute of Canada (HRAI) welcomes the measures included in the statement that will support a net-zero initiative. “These include a 30 per cent tax credit for investments in low carbon heating technologies, such as air source heat pumps, ground source heat pumps, active solar heating and electricity storage technologies,” shared Martin Luymes, VP of government and stakeholder relations at HRAI, in an email. “More importantly, the industry acknowledges the government’s commitment to investing in the workforce of tomorrow, via the Sustainable Jobs Training Centre and via efforts to beef up immigration efforts focused on skilled trades. These investments will assist the HVAC/R industry in meeting the challenges of the transition to a low-carbon economy.”
The Sustainable Jobs Training Centre is set to develop curriculum, credentials, and on-learning for 15,000 workers to upgrade or gain new skills for jobs in a low-carbon economy, with areas of high demand such as low-carbon buildings and retrofits taking priority.