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This federal election, the parties are promising student debt forgiveness, more taxes for the ultra-rich, and hundreds of thousands of new homes to be built. But only one party, writes our millennial money expert, has an effective roadmap to financial freedom for young Canadians.

As we head to the polls on September 20, 2021, issues like housing affordability and childcare are top of mind for many voters. Over the past few weeks, the federal candidates have campaigned on these issues, hoping to win the support of younger voters.

The Liberal Party of Canada has held a minority government since 2019 but are clearly hoping their handling and support of Canadians through the pandemic is enough to convince voters to help them secure a majority. However, the New Democratic Party has gained a lot of traction among young voters, particularly GenZ, and the Conservatives have put forward a new leader who has been surprisingly popular.

But what do all their promises mean for you?  In this article, I break down the campaign promises from each party, and give my opinion on what they could mean for your wallet and your financial future.

Housing affordability

Canada is in a housing crisis, the result of more than a decade of ultra-low mortgage rates coupled with population growth outpacing home builds for the past four decades. This issue has been complicated by Boomers ageing in place, not only refusing to downsize and sell their existing homes but often using their wealth to purchase additional properties. Now Canadians face both unaffordable homes and a lack of quality rental properties for our growing population.  For young people looking to buy homes, the stats paint a stark picture: according to Generation Squeeze, millennials need to work on average 14 years in Canada, 24 years in the GTA and 28 years in Metro Vancouver to put a 20% down payment on a house. 

It’s not surprising that a 2020 KPMG poll found that 46% of Canadian millennials believe that owning a house is not realistic, even though 72% want to buy a home. For millennials who already own a home, 46% received financial support from their parents in order to make that dream a reality. 

In an effort to reverse these trends, both the Liberal Party and the NDP have come out with aggressive campaign promises to boost housing stock, maximize down payments and lower monthly mortgage payments in an effort to make the housing market more accessible to first-time buyers. The downside is virtually every effort that fixes our housing issues in the short term, is likely to make them even worse in the long term. 

If you’re a first-time home buyer like me, this election is trying to win you over. Here are the main promises:

Buying A House in Canada: A Guide to Buying Your First Home

More homes for Canadians

The Liberal party has promised 1.4 million homes in the next four years by funding municipalities in their housing efforts as well as introducing a Multigenerational Home Renovation tax credit. They have also made a promise to ban new foreign ownership for the next 2 years. The Conservative party promises 1 million homes in three years by switching federal real estate to housing and “incentivizing” the private sector to give land for affordable housing—namely, putting money into the hands of big corporations instead of Canadian citizens to solve the housing crisis. What could possibly go wrong?

Lagging behind with both the lowest promise of housing and the longest timeline is the NDP, which has pledged to build 500,000 units of affordable housing over the next 10 years. Uniquely, they’ve also suggested a model for co-ownership agreements, which would allow multiple families to share a mortgage on a single property. Among other things, they’ve also promised to impose a 20% tax on foreign homebuyers. Finally, they want to provide up to $5,000 per year in rent subsidies. While it sounds helpful at first, remember that money would flow directly from the hands of tenants into landlord pockets, so who is it really helping?

Make it easier to save a down payment

The Liberal Party has proposed a Tax-Free First Home Savings Account, which is a tax-sheltered investment account for Canadians under the age of 40. The account functions like a blend between the TFSA and RRSP.  You can contribute up to $40,000 and claim those contributions when you file your income taxes, the same as you do with RRSP contributions. The money then grows completely tax-free, and you can withdraw it completely tax-free (just like from a TFSA) for a down payment on your first home. The account has no repayment requirement, and can only be used once. The end result is another tax-sheltered registered account for young Canadians to grow their wealth. 

The only caveat is you must use the money for a down payment on your first home, and you must do so before you turn 40. If you do not end up using the balance to put a down payment on a home, you can transfer it to your RRSP tax-free.  A few elder Millennials and GenX have grumbled at the prospect of “missing out” on another tax-advantaged investment account, but, then again, they were the ones who didn’t miss out on a housing market that was 20% to 80% cheaper than it is now.

How to Save for a Down Payment on a House

Make homeownership more affordable

Both the Liberal Party and the NDP also promise to double the Home Buyer’s tax credit to $1,500. The Liberals are also promising to reduce the CMHC insurance by 25%, which would lower your monthly mortgage payment and make borrowing more affordable to new homeowners. They also want to increase the maximum purchase price of homes to be covered by CMHC insurance to $1.25 million, which makes sense given how much Canadian house prices have inflated in recent years. 

CMHC lost a huge amount of market share when they attempted to tighten lending rules last year, so it appears they’re trying to make up for lost revenue now. We can expect competing mortgage insurers to reduce their premiums and increase their coverage to match CMHC if this goes through. 

The NDP is taking a different approach by offering to re-introduce 30-year mortgage terms for “entry-level homes”. While this would keep homeowners in mortgage debt longer, it would lower their monthly mortgage payment, making homeownership more manageable. 

The Conservative party offers little to address housing affordability for Canadians, and what they do put forward suggests they want to inflate Canada’s housing bubble further. For example, they suggested removing the mortgage stress test, which would allow Canadians to qualify for bigger mortgages, stretching themselves further to become homeowners and leaving them even more vulnerable to volatility to the Canadian housing market.  

My Verdict: If affordable housing is your main concern, the Liberal Party’s platform has the most to offer, and in my opinion, should get your vote. While I know anything that makes it easier for people to buy houses at their current price will drive prices even higher, I can’t help but be wooed by another tax-sheltered investing account. I’ve been a diligent saver and investor for the past decade, and I know the value of tax-free investments, especially after the stock market year we’ve just had! If the Tax-Free First Home Savings Account comes to fruition after a Liberal election, I’ll be able to add $40,000 to my down payment fund and save myself over $10,000 in personal income taxes. If the Liberals are trying to buy my vote… Well, they’ve made a very fair offer.

Childcare

Millennials now represent the largest voting demographic of Canadians, and most of them are parents. Furthermore, many are working parents who rely on childcare so they can go earn their living. Many young parents have found daycare fees in urban centres high enough to eclipse their mortgage and rent payments, leaving them struggling to make ends meet even on good incomes. 

Both the Liberal Party of Canada and the NDP are promising to work directly with the provinces and territories to roll out a nationwide $10/day childcare plan. Depending on the province in which you live, this will save parents anywhere from a few hundred dollars to as much as $2,500 per month in childcare fees. 

The Conservative Party shows up with virtually nothing, spurning millennial voters again. They offer a refundable tax credit to cover up to 75% of childcare fees for low-income families. However, this does very little to help most Canadian families deal with the burden of childcare fees, and even provides less of a benefit to low-income families than $10/day daycare would. Some Canadians will receive only a few hundred dollars under the Conservative child care tax credit, and many will end up with nothing. The Conservatives are not even hiding the fact that cutting the Liberal $10/day childcare plan is exactly how they make their budget competitive compared to the other parties. If they left the Liberal childcare plan as is, the Conservative platform comes out to roughly the same cost as the Liberals, with far less supports for Canadians. So much for efficient balancing of the books. 

My Verdict: If childcare is your main issue, both the Liberal Party and the NDP are promising $10/day childcare. The Liberal Party plan is slightly more robust and already underway towards implementation across Canada. 

Canada’s Federal Budget 2021: What the National Childcare Program Really Means for Canadian Parents

Students and New Graduates

As students and new grads enter an uncertain future and the looming threat of recession, the NDP and Liberal Parties have both doubled down on their promises to permanently do away with interest on federal student loans. The Liberal party already implemented this interest relief in 2020, so will simply be continuing it indefinitely. Likewise, both parties have promised to double non-repayable Canada Student Grants.

The Liberal Party is also raising the income threshold before student loan payments come due to $50,000. This means if you’re not earning at least $50,000 per year, you will not need to make payments on your federal student loans!

The NDP, on the other hand, is promising to forgive up to $20,000 in student debt. They are also promising to give new grads a 5-year moratorium on student loan payments. Their platform mentions working directly with the provinces to cap tuition fees and ultimately work toward making public education free; however, some criticize this move, saying that there’s no clear-cut plan to achieve this. While interest-free and additional payment-free periods for student loan debt have resonated with many young voters, it’s important to note how much of a difference this will really make in your pocket because it does not apply to provincial student loans. Regardless of which Federal party is elected, your provincial loans will continue to accrue interest and require payments – and for most graduates, their provincial loans are 2 to 3 times the size of their federal student debts. 

The NDP has also promised to collaborate with provincial governments to work towards making post-secondary education free. While a bold and attractive promise, it’s made with absolutely no plan whatsoever. But when you know you have no chance at winning an election, you can make any promises you want!

The Conservative Party of Canada boldly offers no campaign promises around education, ignoring GenZ and Millennial voters entirely. Is this a calculated or accidental oversight?          

My Verdict: If you’re a student or new graduate, both the NDP and Liberal parties offer attractive promises. While the Conservatives have said they’re making the effort to appeal to younger voters by doing things like finally acknowledging climate change, it seems they’re still pandering to their old Boomer base. The rising cost of post-secondary and the crippling amount of student debt graduates wind up with gets worse every year. Any party that doesn’t even acknowledge this, let alone doesn’t offer a solution, doesn’t deserve your vote. 

What You Need to Know About Student Loans in Canada

Income taxes

It wouldn’t be a federal election if we didn’t discuss income taxes! Both the Liberal Party and the NDP propose a minimum tax rule so the top tax bracket pays at least 15% income tax. The NDP takes this one step further and proposes increasing the marginal income tax rate from 33% to 35% on those earning $210,000 or more per year, as well as a 1% wealth tax on those with more than $10 million in wealth.

The Liberals are also proposing a luxury tax on new cars and private aircraft worth at least $100,000 and pleasure boats over $250,000. The NDP likewise proposes a luxury goods tax on yachts and private jets. The NDP also plans to raise the capital gains inclusion rate to 75%, which means you’ll pay higher income taxes on your investment gains from real estate investments, stocks, and cryptocurrency. While I appreciate any grab for extra tax dollars from the ultra-wealthy, a 75% capital gains inclusion rate made me wince as an avid trader and crypto investor. At least I don’t have any yachts or jets to worry about being taxed on.

The Conservative Party of Canada avoids the topic of personal income taxes altogether. Instead, they are offering a month-long “holiday” from paying GST. This may save especially extravagant families a few hundred dollars. They also promise to double the Canada Workers Benefit, which is a refundable tax credit for low-income families. As per usual, the Conservative Party is wildly out of touch with what Canadians need so they make something up and hope it sounds good enough for people to think it will help them.

My Verdict: If you’re exceptionally wealthy and tend to spend six-figures on cars or boats, you may pay one to two percent more in income taxes under the NDP or Liberal plans. If you’re a middle- or low-income earner, you will experience no difference to your personal income tax rate under a Liberal, NDP, or Conservative government. 

Final Thoughts

When choosing how to cast your vote in this election, obviously, it’s important to vote for whatever candidate aligns the most with your values and goals. But here’s my take on how (or whether) the party platforms tackle millennial money issues. 

In my view, the Liberals put forward a well-thought-out but expensive plan, the NDP dreams big but has no roadmap to accomplishing their goals, and the Conservatives will ignore your needs entirely and donate your tax dollars to corporations. 

The impact of the election on your finances is a large part, but not the only part, to consider when making your vote. I’ve outlined the personal financial implications of the largest issues on the party platforms this election, but don’t forget to review the promises for other pressing issues, such as healthcare, the climate crisis, and Indigenous affairs. Every election is an opportunity to take a step towards a better Canada, for ourselves and our place in the world. Just make sure you cast your vote!

For more election coverage, read Robb Engen’s analysis on campaign party promises when it comes to housing and real estate. 

Elsewhere, Kristen Darche argues that what’s really needed is more non-profit solutions to get us out of the housing crisis. 

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