Liberals drop pledge to waive GST for new rental-housing construction

Share

The federal government is dropping a campaign pledge to waive the GST on the construction of new rental units, claiming research has shown there are better ways to boost the supply of affordable housing.

The GST plan is one of just three pledges out of 364 government commitments that are listed on a new tracking website as "not being pursued." The federal website, launched Tuesday, lists the government's progress on the items in the mandate letters provided to cabinet ministers.

Most of the mandate-letter pledges reflect political promises made by the Liberal Party during the 2015 election campaign. The disclosure of mandate letters and follow-up tracking is part of a broader pledge to be more transparent about government objectives and whether or not they have been achieved.

The new website places pledges into six categories: 66 were listed as "completed fully met;" one – the resettlement of 25,000 Syrian refugees – is listed as "completed modified" because the target was not achieved as quickly as promised; 218 are listed as "under way on track;" 13 are "under way with challenges;" three are "not being pursued;" and 21 are listed as an "on-going commitment."

The classification was the result of conversations between public servants in departments and public servants at the central Privy Council Office, but the ultimate decisions are political and made by cabinet.

Some will clearly raise eyebrows. For instance, rather than listing it as an abandoned pledge, the government's original plan to balance the budget in 2019 is listed as "under way with challenges."

Finance Minister Bill Morneau's 2017 budget provided no indication of a plan to balance the budget by then. The Minister's October fall economic statement estimates there will be a $17.3-billion deficit that year.

The release of the tracking tool marked the first time the federal government has said it would not be following through on its pledge related to the GST and affordable rental housing.

The revelation comes as the federal Liberals are preparing to release a major policy document that will outline a national housing strategy. The strategy received a budget of $11.2-billion over 11 years in the most recent budget and the policy document will show how that money will be spent.

The Liberal Party platform estimated that waiving the GST on new rental housing would cost $125-million a year.

Mr. Morneau's press secretary, Chloé Luciani-Girouard, said the housing strategy will detail how the government intends to promote affordable housing.

"The Government concluded, based on research and evidence, that there were more effective ways of encouraging the construction of affordable rental housing," she said in an e-mail.

Jeff Morrison, who advocates for more affordable housing as executive director of the Canadian Housing and Renewal Association, said Tuesday that he hopes the federal government will "reconsider" its position on the GST.

The Canadian Home Builders Association had recommended that the GST should be exempt from all new rental construction, not just for affordable housing.

David Foster, a spokesperson for the association, said the GST issue is just one aspect of what needs to be a broad policy response to address a tightening rental market and housing pressures generally.

Mr. Foster said the association is reserving judgment on Ottawa's plans until the new housing strategy is released shortly.

"We're taking a wait-and-see attitude," he said.

In addition to the GST issue, the two other pledges that the government listed as "not being pursued" are electoral reform and a promise to provide a 12-month break on Employment Insurance premiums for firms that hire younger workers into permanent positions.

The government is planning to release a second round of performance tracking data next month that will focus on government-wide priorities – such as Indigenous issues and the environment – and assessing whether results have been achieved.

Four of the 13 pledges listed as "under way with challenges," relate to Indigenous issues. These include improving essential infrastructure for Indigenous communities, implementing the recommendations of the Truth and Reconciliation Commission, investing in First Nations education on reserve and undertaking an inquiry into murdered and missing Indigenous women and girls.