Last week, the federal government introduced Budget 2013. This year's economic and fiscal blueprint balances returning to balanced budgets by 2015-16 with targeted measures that support job creation, improve competitiveness and address areas the government views as threats to the Canadian economy. These measures largely focus on Canada's declining manufacturing sector, infrastructure, research, and gaps in jobs skills. The budget did not contain significant and widespread short-term spending.
Within this context and given that the housing market is in balanced territory in most regions across the country, we had not expected our industry's lobbying proposals for indexation of the Home Buyers' Plan, access to the Home Buyers' Plan after a significant life change and tax deferral for income property reinvestment to be included in this year's budget.
It often takes years for a well-researched and sound policy proposal to be implemented by government, and success often comes down to timing and persistence. Meetings between REALTORS® and MPs are crucial in this process. We will continue to press for changes to the Home Buyers' Plan and income property reinvestment on Parliament Hill during our industry's PAC lobby days in late April.
It is significant the budget did not include any additional direct measures to tighten mortgage financing. Earlier this year, REALTORS® and CREA were successful in preserving the five percent minimum down payment provisions, despite amortization reductions in mortgage rule changes that came into effect on July 9th. CREA maintains regular dialogue with the Minister of Finance's office and continues to follow this issue closely.
The budget contains a few initiatives of interest to REALTORS®, and Boards and Associations:
- Limiting insurance on pools of low ratio mortgages to only those used in Canada Mortgage and Housing Corporation securitization programs. This is being done to ensure that Canada's high lending standards are maintained and to prevent taxpayer exposure to mortgage lending losses. It will not impact creditworthy first time homebuyers;
- The development of a comprehensive financial consumer code with the aim of ensuring consumers have proper information to make responsible financial decisions;
- A $50,000 increase ($750,000 to $800,000) to the Lifetime Capital Gains Exemption (LCGE) realized on the disposition of qualified small business corporation shares, farms and fishing property. In addition, the LCGE will be indexed to inflation after 2014; and,
- The expansion and extension of the temporary hiring credit for small business. This credit will provide up to $1,000 against a small firm's increase in its 2013 Employment Insurance (EI) premiums over those paid in 2012 to employers with total EI premiums of $15,000 or less in 2012.
CREA will continue to monitor developments on these issues as additional details are disclosed.