What you need to know about federal budget 2019
Finance Minister Bill Morneau unveiled his fourth and final budget ahead of October’s federal election Tuesday. Below, BNN Bloomberg breaks down six of the key measures to come out of the fiscal plan.
HELP FOR NEW HOMEBUYERS
In an effort to make home ownership more affordable, Morneau is introducing a new measure called the First-Time Home Buyer Incentive, which will allow new homebuyers to finance a portion of their purchase through a shared equity mortgage with the Canada Mortgage Housing Corporation (CMHC). Through the incentive, the CMHC would provide a loan worth up to 10 per cent of the home’s purchase price that would be repayable when the home is sold. The upfront funds are meant to reduce the size of the buyer’s insured mortgage and lower monthly mortgage payments. Ottawa is also increasing the amount buyers can withdraw from the RRSP Home Buyers’ Plan to $35,000 from $25,000 to reflect today’s home prices.
The government is lowering its deficit projection to $14.9 billion for 2018-19, down from the $18.1 deficit it had projected in its November Fall Economic Statement. However, the federal government is offsetting the deficit with $3 billion from its “risk adjustment” rainy-day fund. Ottawa is forecasting a higher deficit of $19.8 billion for 2019-20 and $19.7 billion for 2021-22. It then sees the deficit shrinking each year after that, reaching $9.8 billion by 2023-24.
The federal government is looking to enhance skills training opportunities for Canadian workers by introducing a new program called the Canada Training Benefit. The initiative will give $250 per year to Canadian workers between the ages of 25 and 64 – with a lifetime limit of $5,000 – to put towards the cost of taking courses or training programs. In addition, Ottawa is introducing a training support benefit that will take effect in late 2020, operated through the Employment Insurance program, to help workers taking time off for a training program and cover their basic expenses. Employers footing the cost are eligible for the new EI Small Business Premium Rebate.
NATIONAL DRUG PLAN
Ottawa is studying the possibility of implementing a National Pharmacare Program. In the meantime, the government says it will work to create a new Canadian Drug Agency that will help negotiate lower prescription drug prices and work with the provinces and territories to decide what the program covers, and make expensive drugs for rare diseases more accessible. Ottawa says the new agency could help reduce drug costs for Canadians by up to $3 billion per year.
HELP FOR SENIORS
Ottawa is looking to help seniors by automatically enrolling people over 70 in the Canada Pension Plan. Ottawa expects this to help as many as 40,000 seniors receive an extra $300 per month beginning next year. Morneau is also enhancing the Guaranteed Income Supplements earnings exemption in the July 2020-21 benefit year from $3,500 to $5,000 per year for each recipient and their spouse, in order to help the older population pocket more of what they earn. The changes will extend the eligibility for the earnings exemption to self-employment income.
SUBSIDIES FOR ELECTRIC VEHICLES
Ottawa is looking to incentivize Canadians to buy zero-emission vehicles with a new purchase subsidy of up to $5,000 for electric battery or hydrogen fuel cell vehicles that retail for less than $45,000. To support businesses adopting zero-emission vehicles, such as a taxi or bus operation companies, Ottawa is proposing those vehicles be eligible for full tax write-off the year they are put to use.