Politics

Trudeau announces new measures to deal with housing, grocery prices

New initiatives come as Liberals conclude caucus meeting in London, Ont.

Posted: September 14, 2023
Last Updated: September 15, 2023

Under pressure to respond to widespread concerns about the cost of living and faced with questions about his leadership, Prime Minister Justin Trudeau announced new measures Thursday aimed at rising housing and grocery prices.

Trudeau's announcement came at the conclusion of a Liberal caucus meeting in London, Ont. that included what one minister called a "robust" discussion of the government's challenges and sagging political fortunes.

Flanked by the entire Liberal caucus, Trudeau said the federal government would remove the GST from the construction of new rental apartments to spur new development. The Liberals also will now require municipalities to repeal or amend exclusionary zoning policies in order to access the government's housing accelerator fund. 

The federal government is also calling on major grocers to come up with plans to stabilize grocery prices in the "near-term."

Trudeau warned that if grocery giants are unable to produce such plans by Thanksgiving, the Liberals "will take further action and we are not ruling anything out, including tax measures."

WATCH: Trudeau announces removal of GST on new rental housing builds

The federal government also announced it will bring forward legislation to empower the Competition Bureau to ensure that corporate mergers and acquisitions do not have an adverse effect on the affordability of goods and services.

"Canadians are struggling right now," Trudeau told reporters, "and we're going to be there as we always have been to have people's back, to invest in the kinds of things that support Canadians and grow the economy at the same time."

The new measures come a day after the federal government announced the first of what it hopes will be a series of agreements with Canadian cities to speed up the construction of new housing.

AT ISSUE | Is the government doing enough to fix the housing crisis? 

Opposition parties, industry offer mixed reviews

The NDP, which has been calling for the federal portion of the GST/HST to be removed from new rental housing, welcomed the move but criticized the Liberals for taking so long to implement it.

"These are actions that should have been taken months ago," NDP Leader Jagmeet Singh said in a statement.

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Speaking in Vancouver, Conservative Leader Pierre Poilievre said a limited change to the GST will be included in legislation he plans to introduce when Parliament reconvenes on Monday. The Conservatives would remove the GST from the construction of new rental homes priced below the local market average.

"Justin Trudeau promised to do this eight years ago. Six years ago he said 'just kidding, promise broken,' and now this morning, just as he got wind this was going to be in my bill, he flip-flopped again," he said.

The GST change announced on Thursday was part of the Liberal party's election platform in 2015, but the Liberal government abandoned that policy in 2017, saying there were better ways to increase rental construction.

Asked to explain the decision to revive the proposal now, Trudeau and Housing Minister Sean Fraser pointed to new circumstances, including higher interest rates, that are standing in the way of construction.

Poilievre's plan would also withdraw federal infrastructure funding from municipalities that do not increase the number of new units and building permits by 15 per cent. Municipalities that go beyond that threshold, he said, would be given a bonus to encourage faster permitting.

WATCH: Poilievre attacks Liberals' approach to housing

Poilievre said his legislation would impose tax penalties on municipalities that block construction near transit stations. It would also require that 15 per cent of federally owned buildings be turned into affordable housing within 18 months of the bill's passage.

Singh also panned the government's plan on grocery prices.

"Asking [Loblaws president] Galen Weston nicely to make less profit is like asking Pierre Poilievre to care about climate change," Singh said.

But the Liberal government's demands were also criticized by the Retail Council of Canada, which said rising grocery prices are more due to external factors such as supply chain challenges, Russia's invasion of Ukraine, fuel prices and climate change.

"Grocers are always prepared to have good faith discussions with government about our industry, challenges with the food supply chain, or with affordability for Canadians," the council said in a media statement. "But we are not going to get anywhere with discussions that time and time again fail to look below the surface as to the true cause of rising grocery prices."

Poilievre and London mayor clash over housing

On Wednesday in London, Ont., Trudeau announced that the city had become the first in Canada to reach a deal with his government under the $4-billion housing accelerator fund, which was announced in the 2022 federal budget.

The deal will see London get $74 million in exchange for the city's agreement to pursue a series of measures, including a change to local zoning rules that should make it easier to build more rental units.

According to federal and municipal officials, the agreement will result in the construction of 2,000 housing units over the next three years and will help build "thousands" more in the years after.

WATCH: Canadian Home Builders' Association reacts to GST announcement

Poilievre criticized the federal government's deal with London, saying the accelerator fund is more like a "decelerator fund" because of how slowly it has moved. He also questioned the value of London's deal under the fund.

"[Trudeau] said his announcement of $74 million would bring 2,000 homes in London," he said. "They were already planning to build 6,000 so its actually less homes than the city was going to build."

London Mayor Josh Morgan's office pushed back in a media statement, saying Poilievre had his numbers wrong.

"Our current plan in London is to build 9,432 homes by 2027," the statement said. "We anticipate this new funding will increase that figure to 11,619. As a result, we project the Housing Accelerator Fund will support the construction of an additional net new 2,187 units."