The Trudeau government loves to spend lots of money. All that spending makes life less affordable in Canada — housing in particular. When the Liberals came to power in 2015, Ottawa was spending $288 billion a year. This year, the federal Liberals are expected to spend $499 billion, and next year, $519 billion. They will spend over a quarter more than they did nine years ago, which doesn’t include emergency pandemic spending.
The government’s spending has made things worse rather than better in the housing affordability crisis. Spending by the government may cause inflation. An excessive amount of easily accessible government funds flood the market, driving up prices as they compete with the restricted supply of goods and services offered to businesses and consumers. Governments can only raise money for more spending in two main ways: by increasing taxes or borrowing more money. Tax increases reduce affordability by taking more money out of taxpayers’ pockets. Regarding the carbon tax, paying the tax results in lower consumer income and higher prices for almost all well-meaning purchases, which has a double-edged effect on affordability. As a result of excessive borrowing, the national debt nearly doubled.
An excessive amount of borrowing by the government raises interest rates and increases the cost of loans and mortgages for all borrowers. Businesses transfer the higher cost of borrowing through to customers in the form of higher prices, which feeds inflation and forces the Bank of Canada to attempt to control it by hiking interest rates additionally. Our economy has slowed down as a result of the government’s environmental measures, which have also decreased government revenues, individual incomes, and small company profits.
Because of their open-door immigration policy, which resulted in the addition of over a million new international students, refugees, temporary residents, permanent residents, and illegal immigrants last year, all of whom needed to find accommodation and buy food. Despite Trudeau’s boasts of “building more homes, faster,” in 2024 and 2025, “rents will rise, and vacancy rates will fall,” according to projections from the Canada Mortgage and Housing Corporation. In the meantime, from 241,000 new units two years ago, housing starts this year could drop as low as 225,000.
Why is there a shortage of new homes despite a high demand? Due to the high-interest rates, sluggish economic growth, and inflationary policies of the Liberal administration. The rise in unemployment and mortgage rates hurts home building. The CMHC predicts immigration and high-interest rates will push home prices “beyond previous peak levels.” According to the Royal Bank, buying a home now requires 63% of the median Canadian salary, up from 44% when Trudeau entered office.
