`THERE IS A COST OF LIVING CRISIS'
O'TOOLE, SINGH POINT TO SPIKE IN HOUSING PRICES, INFLATION AS KEY ELECTION ISSUE
Akey housing metric used by Statistics Canada surged more than 14 per cent last month, the biggest increase in three decades, bringing new urgency to an election campaign that has revolved around public anxiety over affordability.
Inflation rates also rose 4.1 per cent since last August, the biggest increase since the spring of 2003.
The homeowners' replacement cost index — which tracks how much it would cost to replace a home at current prices — increased by 14.3 per cent, a reflection of the rising cost of housing that has become one of the biggest issues for voters this election.
Opposition parties framed the latest surge in prices as a direct result of government mismanagement under Liberal Leader Justin Trudeau. It's an issue that provokes raw feelings among many voters, particularly young families struggling to purchase their first home.
“There's a cost of living crisis happening under Mr. Trudeau,” Erin O'toole, the Conservative leader, told reporters Wednesday. “There's a housing crisis. Families are falling further and further behind. They need help with daycare now, they need flexibility and choice, and they need downward pressure on their bills.”
NDP Leader Jagmeet Singh said in a statement, “Justin Trudeau's housing plan is always meant for big developers, not people who want to find a place they can actually afford.”
In Halifax, Trudeau said the COVID-19 pandemic had disrupted the economy and raised prices.
“First of all, let's recognize that our country and our world is bouncing back — coming roaring back in Canada's (case) — from an extreme crisis,” he said during a press conference.
He said the Liberal plan was aimed at providing support to families to “help them with affordability” and carry them through what could be the tail end of the global pandemic.
The Conservatives have said they would suppress inflationary pressures by boosting competition among telecoms providers, putting an end to price-fixing by grocery store chains, and scrapping the GST for small retailers for the month of December.
O'toole on Wednesday reiterated that the Conservative's proposed childcare tax credit would be enacted immediately and provide immediate relief to families, whereas the Liberal's proposed national childcare program could take months or years longer to fully negotiate.
Rising housing costs have become an especially major issue in the Toronto and Vancouver areas, where Trudeau's re-election bid rests in a handful of crucial ridings.
In Greater Vancouver, where the Conservatives, NDP and Liberals are locked in several tight three-way races, the price for a home has increased $300,000 since November. The average detached home in the region now sells for roughly $1.8 million.
At the same time, policies proposed by major parties would only scratch the surface of soaring housing prices, many observers have said. The Conservatives, Liberals and NDP have promised to build hundreds of thousands of new homes as a way to ease housing prices, for example, all while ignoring the long and tedious negotiations with municipalities that would be required to reach their targets.
The latest consumer price index (CPI) increase of 4.1 per cent continues a hot streak that has barely relented since the beginning of the year, propelled by the gradual easing of pandemic lockdowns and higher oil prices. CPI measures a wide basket of goods, everything from coffee to pharmaceuticals. Gasoline prices increased 32.5 per cent over the year, while airfares were up 37.5 per cent and hotel charges were up 12 per cent since July. Prices rose for seven of the eight major basket components of the CPI.
Rising inflation, if it persists, could in turn add fresh doubts to the spending plans proposed by all three major parties, each of which have carved out tens of billions in new spending proposals as a way to bolster Canada's economic recovery.
Economists are widely in agreement that Ottawa could sustain continued deficit-financed stimulus as a way to encourage growth, but warn that rising interest rates in the longer-term could pose future fiscal constraints.
Trudeau has long said that rising interest rates are a distant issue that should take a back seat to current concerns, including still-low employment rates and the need to fund Canada's transition toward a low carbon economy.
Even so, while the Bank of Canada anticipates sustained, elevated levels of inflation, the current rally, if it persists, could make it difficult for policy-makers to bring inflation back to its target of two per cent over the long-term.
Canada's inflation rate first grew beyond the Bank of Canada's comfort zone of between one and three per cent in April, and has remained elevated ever since.
Supply-chain constraints are increasingly responsible for higher prices, recent data show, rather than year-overyear comparisons with the worst months of the recession, when deflation presented a far bigger risk to the Canadian economy.
Still, interest rates are unlikely to rise any time soon. Governor Tiff Macklem has said repeatedly that he wants to see a “complete” economic recovery before he hikes interest rates, largely dependent on a recovery in labour market participation.
According to the latest data, Canadian employers will need to add an additional 156,000 positions to reach that threshold, which was set in February 2020.