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Freeland introduces bill to remove GST off rental developments, amend competition law

OTTAWA — The federal government is moving forward with its promise to remove GST charges off new rental developments and to strengthen the country's competition law.
Canadian Finance Minister Chrystia Freeland introduces U.S. Treasury Secretary Janet Yellen at the Atlantic Council Global Citizen Awards, Wednesday, Sept. 20, 2023, in New York. Freeland has introduced legislation this morning that would remove GST charges from rental developments and update the country's competition law. THE CANADIAN PRESS/AP/Julia Nikhinson

OTTAWA — The federal government is moving forward with its promise to remove GST charges off new rental developments and to strengthen the country's competition law. 

Finance Minister Chrystia Freeland introduced legislation on Thursday, one week after Prime Minister Justin Trudeau announced the measures to address the housing crisis and affordability crunch.

During a news conference in New York City, the prime minister called for other parties to support the legislation. 

"I urge opposition leaders back home to help us get today’s real solutions passed quickly," Trudeau said on Thursday.

Experts have called on the federal government to remove GST charges off new purpose-built rentals to help spur construction of these kinds of homes.

According to the Finance Department, the measure will provide $25,000 of tax relief for a two-bedroom apartment valued at $500,000.

The measure stands in contrast with proposals from the NDP and Conservatives to provide the full rebate only to affordable or below market price rentals. 

Freeland, along with other cabinet ministers, held a news conference later on Thursday to discuss the legislation.

When asked by reporters why the Liberals are offering the rebate to all rental developments, Housing Minister Sean Fraser stressed the importance of increasing housing supply broadly.

"When you're dealing with an intense supply shortage, all supply helps contribute to the solution," Fraser said. 

"This is not the time for complicated half-measures that add layers of bureaucracy to figure out which projects will benefit."

To be eligible for the rebate, projects must have begun construction on or after Sept. 14, and before the end of 2030. They must complete construction by the end of 2035. 

Fraser said the government chose that timeline based on figures from the Canada Mortgage and Housing Corp., which has estimated how many more homes need to be built by 2030 to restore affordability in the housing market. 

Whether the rebate will be extended past 2030 is a decision to be made later, Fraser said. 

"That's a decision that I think would be appropriately taken when we're able to make an assessment of the housing supply gap that may exist or not exist at that time," he said. 

The bill also aims to strengthen the Competition Bureau as part of the federal government's effort to address high prices driven by a lack of competition. 

The legislation would give the bureau the power to compel information from companies to conduct market studies and block collaborations that stifle competition and consumer choice. 

For example, the Competition Bureau could go after commercial agreements that don't allow a competitor to open shop within a certain radius. 

The legislation would also eliminate the "efficiencies defence" that has been used to allow anti-competitive mergers to be approved, if the efficiencies that are generated offset the competitive harm.

The changes to the Competition Act follow a promise from the Liberals to review the law.The federal government published a report this week detailing what it heard during public consultations.

Industry Minister François-Philippe Champagne called the amendments to competition law "landmark changes." 

"What we want in Canada is less consolidation, more competition and lower prices. And I think it's about time, honestly, that we fix the Competition Act in Canada," Champagne said. 

The minister saidmore reforms are to come, although he wouldn't detail when that would happen or what they would entail. 

"This is the big things we're doing. Will there be more? Definitely," Champagne said. 

The Business Council of Canada spoke out against the new changes to the competition law, arguing the federal government did not consult stakeholders on the new legislation. 

In response to that pushback, Freeland said her government believes Canadian businesses are strong enough to compete and don't need an "artificial shield."

"When I talk to businesses, they tell me they believe in capitalism, they believe in competition. This is an opportunity for them to show it," Freeland said. 

Meanwhile, the Canadian Federation of Independent Grocers applauded the changes, which it said address barriers facing small- and medium-sized grocers that are trying to compete. 

This report by The Canadian Press was first published Sept. 21, 2023.

Nojoud Al Mallees, The Canadian Press