Are you self-conscious about your spending? Luckily, you don’t have to broadcast it to the entire nation like the federal government will later today in its fall economic update.
Driving the news: The update — which we must note is merely a statement on the budget and not a new budget — will focus on two top-of-mind matters: Housing and affordability.
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The feds are set to unveil $15 billion in loans for rental housing construction, a $1 billion fund to build affordable housing, and new rules to protect mortgage holders.
- The feds also plan to make short-term rental properties less lucrative, with a new tax rule that eliminates owner expense claims in areas that restrict short-term rentals.
Yes, but: The feds also promised to prioritize fiscal restraint in the update, which might be difficult after accounting for the above measures and costly surprises that cropped up this year, like hefty subsidies for EV factories and wage increases for public sector workers.
- Experts, including the Parliamentary Budget Office, believe that the feds will have to recalculate the planned deficit of the budget, up from $40.1 billion to ~$46.5 billion.
Why it matters: The government’s ability to pay for everything in the current economic climate is being called into question. Interest costs on federal debt were up 35% in the first eight months of the year compared to last, while federal revenue growth has begun to slow.
Big picture: Fears remain that overspending could reignite inflation. Most analysts believe federal spending is complicating the inflation fight, while Bank of Canada Governor Tiff Macklem said last month the pace of government spending has been “not helpful.”—QH