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Fiscal update includes loans for housing developers, affordable housing fund: source

OTTAWA — Finance Minister Chrystia Freeland is set to present the fall economic statement on Tuesday, a document that will make billions in loans available for homebuilders and earmark a fund for affordable housing.
Finance Minister Chrystia Freeland will table the fall fiscal update on Tuesday, which is expected to focus on housing and affordability as the Liberal government struggles to regain favour with Canadians feeling overwhelmed and angry about the rising cost of living. Freeland rises during Question Period, in Ottawa, Tuesday, Nov. 7, 2023. THE CANADIAN PRESS/Adrian Wyld

OTTAWA — Finance Minister Chrystia Freeland is set to present the fall economic statement on Tuesday, a document that will make billions in loans available for homebuilders and earmark a fund for affordable housing. 

A senior government official, whom The Canadian Press is not naming because they are not authorized to share details publicly, confirmed that several housing policies will be part of the fiscal update.

The federal government is set to announce $15 billion in low-cost loans for builders as well as a $1 billion fund toward affordable housing, as previously reported by CBC News. 

The official said the low-cost loans to developers will lead to the construction of 30,000 new apartments.

Housing Minister Sean Fraser wouldn't confirm the soon-to-be announced details to reporters on Monday, but compared low-cost loans to the government's existing rental construction financing initiative. 

That program allows the government to pass lower interest rates on to builders in exchange for affordable housing. 

"One of the reasons we need to continue to scale the financings that are available is that we have created more appetite for builders to build more quickly as we've made changes around the GST, for example," Fraser told reporters outside of the House of Commons on Monday.

The government hopes that by combining attractive financing options with tax incentives, builders will be keen to create more supply, he explained. 

Low-cost financing doesn't come at a great expense to the government, Fraser added. 

The fall economic statement is also expected to include support for local governments that are cracking down on short-term rentals, which was first reported by the Toronto Star. 

The measure would prevent operators in those jurisdictions from making tax deductions based on their expenses.The federal government also plans on offering funding for municipal enforcement of rules around short-term rentals. 

"There's likely tens of thousands of homes that could be made available to Canadians by addressing this particular challenge," Fraser said, referring to the tax policy as something the government was "looking at."

He said the government knows Canada also needs to build new homes by the millions, but addressing short-term rentals has the potential to open up more housing supply in the immediate future. 

"It's incumbent upon us to do everything we can to use the properties that are available for homes," he said.

The fall economic statement will also lay out a new Canadian mortgage charter expected to outline what Canadians can expect from their financial institutions when they are renewing their mortgages. 

The fiscal update comes at a time when the Liberals are facing both political and fiscal headwinds. 

The federal government is facing pressure to address housing affordability, with cost-of-living issues top-of-mind for Canadians. 

But with inflation still high and the Bank of Canada's key interest rate at its highest level since 2001, economists have been calling on the federal government to avoid spending more money.

In a nod to these calls, Freeland has repeatedly said the federal government has a thin line to walk in the upcoming budget update. 

"We have to be sure that we make the investments Canadians need, provide them with the support they need, but do it within a fiscally responsible framework," Freeland told reporters in Toronto on Thursday.

"We won't be able to do everything."

This report by The Canadian Press was first published Nov. 20, 2023. 

— With files from Laura Osman.

Nojoud Al Mallees, The Canadian Press