The 2017 Federal Budget brings good and bad news for millennials. Mostly bad.
When it comes to home ownership, Canada’s millennials are already facing discordant conditions. The country is experiencing its lowest wage growth rate in 15 years, while housing affordability is at a 25-year low.
Vancouver’s affordability has reached 87.6 per cent — which means the amount of pre-tax income (the median) those in the West Coast city would need to cover the mortgage payments, property taxes and utilities of a new home. Toronto is the second most expensive city at 60.6 per cent affordability.
Yet, it’s likely the new $11 billion National Housing Strategy announced by Finance Minister Bill Morneau won’t have any effect on runaway home prices. Geared towards “vulnerable citizens, including: seniors, Indigenous Peoples, survivors fleeing domestic violence, persons with disabilities, those dealing with mental health issues, and veterans,” the housing is not meant to help a middle class family buy a house. It’s meant for low-income families to be able to get an apartment.
Interestingly, seniors are named in the list of people targeted by a National Housing Strategy — the same group with the highest levels of home ownership. According to the most recent StatsCan study, peak level of home ownership is 73 per cent for the 1916-20 birth cohort, 76 per cent for the 1926-30 cohort, and 77 per cent for the 1936-40 cohort, and it rises further, to 78%, for the 1941-45 birth cohort.
Getting around is getting more expensive. The public transit tax credit will be gone July 1, which means no one will get a couple hundred dollars back at the end of the year for their monthly Metropasses.
And if millennials were trying to save money by foregoing a personal vehicle and using ride-sharing services such as Lyft or Uber, there’s more bad news: the government wants these companies to charge tax on their fares. This means your Uber/Lyft costs will rise by 13 per cent.
This would also be a good time to cut down on drinking and quit smoking. Budget 2017 calls for higher taxes on alcohol and tobacco products. The excise duty rate on cigarettes will rise to $21.56 per carton from $21.03, while alcohol will go up 2 per cent. Both will be adjusted every April 1 starting next year, based on the consumer price index.
This isn’t to say that only millennials drink alcohol and/or smoke, but in 2013, an estimated 22 million Canadians 15 years of age and older (almost 80% of the population) drank alcohol in the previous year, with the highest percentage of past year drinkers found in 30 to 34 year olds. In 2014, 1,721,286 Canadians aged 20 to 34 reported being a current smoker, versus only 492,718 aged 65+.
The highest number of current smokers, however, was 1,969,122 found in age group 45 to 64.
But it’s not all bad news. The 2017 Federal Budget also plans to make it easier for more students to qualify for federal loans if they’re a part-time student. The income threshold to qualify will be raised, and the idea is to enable part-time job holders or young parents go back to school and train for new skills. This will cost a modest $59.8 million over four years, beginning in 2018-19, and another $107.4 million is earmarked over the same period for students with dependent children.
Under the current system, if you’re in school for more than 14 hours a week, you wont get employment insurance benefits. The new Budget will change this; $132 million will be distributed over the next four years to enable unemployed Canadians to receive EI benefits while going back to school to retrain themselves.
Still, according to Generation Squeeze, a group that advocates for the rights of younger Canadians, this year the federal government will spend approximately $23,000 per person age 65-plus, over $9,000 per person age 45 to 64, and approximately $5,500 per Canadian under 45. The $5,500 includes direct spending and tax breaks.
Did those Canadians born between 1982 and 2004 get a raw deal from Bill Morneau? Time will tell — but all signs point to decreased affordability.