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Liberals deepen federal deficit in response to Trump tax cuts

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The Liberal government is spending billions to help corporate Canada compete with the U.S. and to prop up struggling news organizations — showing a willingness to go deeper into deficit with no timeline for returning to a balanced budget.

In his fall fiscal update, delivered this afternoon, Finance Minister Bill Morneau touted Canada’s strong economic performance but warned that global uncertainty, unpredictable oil prices, lingering trade disputes and deep tax cuts brought in by U.S. President Donald Trump are all posing serious challenges.

The fall economic statement delivers $17.6 billion in new spending over six years — about $16.5 billion of it in foregone revenue to boost Canadian business productivity.

We’re deficit-financing the corporate sector.– Former parliamentary budget officer Kevin Page

Those measures include a new tax write-off scheme allowing manufacturers to immediately recoup the full cost of machinery and equipment, as well an immediate write-off for clean energy equipment.

There’s also a new accelerated capital cost allowance to encourage businesses of all sizes in all sectors to invest in assets that can drive long-term growth by allowing them to deduct the costs of those investments sooner.

Finance Minister Bill Morneau joined Power & Politics Wednesday to explain the government’s fall economic update and why there’s no plan to return to a balanced budget. 8:22

“We could have ignored the concerns of business leaders, decided not to make the investments and the changes that are part of the fall economic statement, and we would have had a lower deficit as a result,” Morneau said.

“To do so would be neither a rational response nor a responsible one.”

No balanced budget in sight

The Liberals, who promised during the 2015 election campaign to cap deficits at $10 billion and balance the books by 2019, are now forecasting a $19 billion shortfall this fiscal year.

That deficit is projected to decrease to about $12 billion by 2022-23. Without the new spending, that deficit figure could have dropped to less than $5 billion.

The Opposition Conservatives have been pressing the government to provide a timeline for eliminating the deficit, but this update provides no such target.

Kevin Page, president of the Institute of Fiscal Studies and Democracy at the University of Ottawa and a former federal parliamentary budget officer, said many might question whether it’s fiscally responsible for the government to respond to the Trump administration’s stimulus efforts with deficit financing. Washington has slashed corporate tax rates from 35 per cent to 21 per cent.

“We’re deficit-financing the corporate sector,” Page said.

The fiscal update also invests $595 million over five years to help non-profit and for-profit news organizations through new charitable tax incentives and refundable and non-refundable tax credits.

Morneau said the investments are meant to protect the “vital role” that independent news media play in Canadian democracy.

Conservative finance critic Pierre Polievre took aim at the government’s decision to carry long-term deficits.

“Not only did they break their promise, not only will they fail to balance the budget, as they said, but they now admit that under their plan the budget will never be balanced,” he said.

“There is no time period into the future where they are even committing to a situation where the debt stops growing.”

Media supports ‘very dangerous’

As for the government’s plan to bolster news media outlets, Polievre said public tax dollars should not be used in an election year to set up a panel who will determine “which media survive and which don’t.”

“We think the media should be independent from the government,” he said. “We should not have a situation where the government picks a panel who then gets to decide who reports the news. That’s very dangerous.”

NDP Leader Jagmeet Singh also stressed the importance of preserving media independence, but said government support is “absolutely important” to the goal of maintaining robust journalism.

“The approach of providing supports is something necessary,” he said, adding the government could help by spending advertising dollars in local newspapers instead of on giants like Google and Facebook.

Avalanche safety, protecting fish stocks

On the announcement of business tax breaks, Singh said the government should have delivered targeted, specific measures aimed at creating and protecting jobs rather than a “blanket approach” that will only benefit corporations.

Other new spending initiatives in the fiscal update include:

  • $25 million for a one-time endowment to Avalanche Canada to develop a national program to research and promote avalanche safety. Prime Minister Justin Trudeau was an advocate for avalanche safety before he became Liberal leader. His brother Michel died in an avalanche in British Columbia in 1998.
  • $107 million over five years to promote sustainable salmon and other fish stocks.
  • $63 million to improve the Nutrition North program.

The federal debt, projected to hit $688 billion this fiscal year, is expected to climb to $765 billion by 2023-2024. By that time, the annual cost of servicing the debt will be more than $34 billion a year.

But the size of the debt compared to GDP — the ratio the Liberals tend to cite as a measure of the federal government’s fiscal health — will continue to decline.

NDP Leader Jagmeet Singh says the government is playing Santa Claus to rich corporations with the release of their fall economic update. 7:41

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7 Tips For First-Time Home Buyers In Calgary

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Buying a house for the first time can be overwhelming to say the least. If you’re wondering what neighbourhood to go with, what you can afford, or even how to just get started on the process, let us take some stress off your hands! We’ve teamed up with Hopewell Residential to give you 7 tips to ensure the home you end up with is everything you dreamed of.

Hopewell Residential is a five-time Developer of the Year award winner, so their expertise is second-to-none in Calgary and beyond. Who better to learn home-buying tips from than the homebuilders themselves?

Create a checklist of needs & wants

This is a biggie. When you’re buying your very first home, you’ll want to weigh your needs vs. your wants. Ensuring you have what you love in your first home is a big, big deal.

What should you do? Easy. Set up a list of needs and a list of wants, but be pretty strict with yourself, and make sure you take your lifestyle into consideration. With the increase in remote work over the past year, it’s important to keep in mind that a home office or flex room might just be the key to maximizing at home happiness. Especially if you’re thinking you might be expanding your family later on, spare rooms and extra space is key (but more on that later!).

Or for instance, you might need a home in an area with a high walkability score, but you want to be close to certain amenities. Set yourself up with the right level of compromise and the number of homes that actually fit your ‘perfect’ idea will skyrocket.

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‘Don’t give up’: Ottawa Valley realtors share statistics, tips for homebuyers in ‘extreme’ sellers market

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The real estate market in the Ottawa Valley can be summed up this way: people from far and wide are in a buying frenzy, but there’s hardly anything to buy at the “store,” and the limited inventory is overpriced.

This “stampede” — as one realtor described it — will affect rural towns as residents grapple with finding affordable housing and agonize over their inability to purchase homes in their price range.

“We are seeing a lack of inventory in all price ranges,” said Laura Keller, a real estate agent from Carleton Place.

Helen Vincent, a Renfrew realtor, said she’s never seen a market like this in her 36 years of practice. “We postpone offers for four to five days in order to get all the buyers,” she said.

Multiple offers — between seven and 10 — became the norm, with cash offers and no conditions, as buyers faced bidding wars. “In Ottawa, they have up to 50 (offers),” she added.

“It’s very stressful. You’re going to get nine (people) ticked off, and one happy. So many people are disappointed,” Vincent said.

Terry Stavenow, an Arnprior realtor for 40 years, said that “the pent-up need took over with inventory going low. It made a stampede on everything that was available.“

“Brand new housing — it’s very much gone. Several building developers are rushing to get inventory. They usually don’t do construction in the winter months,” said Stavenow.

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10 Tips For First-Time Home Buyers

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Buying a home for the first time is exciting and a commitment to the future. It’s often challenging, too, and the process requires a lot of steps, many of which can be tricky to navigate as a first-time home buyer.

What are some things you should keep in mind as a first-time home buyer?

First-Time Home Buyer Tips

Here are 10 tips to keep in mind as you begin your journey toward homeownership.

1. Have Your Finances in Order

It’s wise to begin saving as early as possible once you’ve made the decision to purchase a house. You’ll need to consider the down payment, closing costs (which often range from 2% to 5% of the down payment), as well as move-in expenses.

You also need to understand the other costs of homeownership, such as mortgage insurance. property taxes, utilities, homeowner’s insurance, and more.

2. How Much Can You Afford?

Knowing how much you can realistically afford in a home is another important financial consideration. Look for the home of your dreams that fits your budget.

One way to avoid future financial stress is to set a price range for your home that fits your budget, and then staying within that range. Going through the preapproval process will help you understand what price range is realistic for your budget.

3. Make Sure Your Credit is Good

Another thing to keep in mind as a first-time home buyer is your credit score because it determines whether you qualify for a mortgage and affects the interest rate that lenders offer. 

You can check your credit score from the three credit bureaus – Experian, Equifax, and TransUnion.

This is another good reason for getting preapproved before you start your search. Learn more about the preapproval process and your credit score.

4. Choose The Right Real Estate Agent

A good real estate agent guides you through the process every step of the way. He or she will help you find a home that fits your needs, help you through the financial processes, and help ease any first-time buyer anxiety you may have.

Interview several agents and request references.

5. Research Mortgage Options

A variety of mortgages are available, including conventional mortgages – which are guaranteed by the government – FHA loans, USDA loans, and VA loans (for veterans).

You’ll also have options regarding the mortgage term. A 30-year fixed-rate mortgage is popular among many homebuyers and has an interest rate that doesn’t change over the course of the loan. A 15-year loan usually has a lower interest rate but monthly payments are larger.

6. Talk to Multiple Lenders

It’s worth your time to talk to several lenders and banks before you accept a mortgage offer. The more you shop around, the better deal you’re liable to get – and it may save you thousands of dollars.

7. Get Preapproved First

Getting a mortgage preapproval (in the form of a letter) before you begin hunting for homes is something else to put on your checklist. A lender’s preapproval letter states exactly how much loan money you can get.

Learn more about the preapproval process and how preapproval provides you with a significant competitive advantage in our article How Preapproval Gives You Home Buying Power.

8. Pick the Right House and Neighborhood

Make sure to weigh the pros and cons of the different types of homes based on your budget, lifestyle, etc. Would a condominium or townhome fit your needs better than a house? What type of neighborhood appeals to you?

9. List Your Needs and Must-Haves

The home you purchase should have as many of the features you prefer as possible. List your needs in order of priority; some things may be non-negotiable to you personally.

10. Hire an Inspector

Hiring an inspector is another crucial step in the home buying process. An inspector will tell you about existing or potential problems with the home, and also what’s in good order. You can learn more about home inspections and how to find a home inspector through the American Society of Home Inspectors website.

Buying a home for the first time is a challenge, but it’s one you can handle with the right planning and preparation.

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