Trudeau Liberals hike northern tax benefit, spend a bit on housing

A windowless shack that a homeless Iqaluit man has lived in for the past seven years. The Trudeau government’s March 22 budget promises $76.7 million on social housing construction over the next two years, enough to build less than 200 new units. But the territory needs at least 3,000 to meet its current shortfall. (FILE PHOTO)

Justin Trudeau’s Liberals have kept at least one promise they made to northern voters last year, Finance Minister Bill Morneau’s March 22 budget reveals.

They’ve hiked the value of the northern residents tax deduction.

But their spending commitments on social housing are likely to disappoint Inuit and other northerners. Many of the government’s infrastructure spending plans for the North are vague and lacking in detail, and the federal government’s spending plans do not include funding for Inuit suicide prevention or mental wellness.

One big measure, which Morneau did not mention in his highly-anticipated budget speech, did draw praise from Inuit Tapiriit Kanatami.

When they fill out their 2016 income tax returns next year, northern tax-filers can reduce their taxable incomes by up to $8,030 per year, a document attached to federal Morneau’s budget reveals.

The value of the benefit will rise from $8.25 per day per household to $11 and in self-contained dwelling units with only one tax-filer, from $16.50 to $22 per day.

“The increase in the Northern Residents Deduction from $16.50 to $22 a day is a positive measure, the first such increase in years,” ITK said in a statement.

But on another big issue for Inuit and northerners, social housing, Morneau’s budget will likely disappoint most people in Nunavut and Nunavik.

In it, the federal government proposes spending $177.7 million on northern and Inuit housing over the next two years, starting in 2016-17.

When broken down by jurisdiction, it falls far short of what most Inuit organizations and northern governments have been asking for.

The Liberal government’s northern social housing commitments are divided up like this over the two years between now and 2018:

• Nunavut: $76.7 million;

• Northwest Territories: $12 million;

• Yukon: $8 million;

• Nunavik: $50 million;

• Nunatsiavut: $15 million; and,

• Inuvialuit Settlement Region: $15 million.

“It is a positive change to see Inuit as well as specific Inuit regions recognized in the budget text,” ITK’s president Natan Obed said in a statement.

But ITK also said those amounts are not enough to clear the current backlog.

In Nunavut, for example, the territorial government has estimated that at least 3,000 units are required to meet the territory’s social housing deficit.

The new federal spending announced March 22 will reduce that deficit by only a small fraction.

“The budget’s northern and Inuit housing allocation would cover the cost of building not even 200 units [in Nunavut],” ITK’s statement said.

In Nunavik, where regional leaders estimate they need at least 1,000 new units, the promised spending of $50 million over two years would likely deliver only about 75 new units a year, based on an average construction cost of $330,000 per unit.

But Obed said the modest social housing commitments that Ottawa announced March 22 are still “welcome, given the severity of crowding in our four regions.”

“I look forward to working with the government to find ways to achieve the much larger investment that is necessary,” Obed said.

And ITK likes another budget announcement that promises to restore funding the organization has lost to federal government cuts in recent years.

The Liberal government will spend an extra $96 million over the next five years on aboriginal representative organizations to improve their ability to lobby the government, Morneau’s budget said.

“We look forward to learning more about how this increase — roughly $20 million a year over five years, in addition to the current funding level of $21 million for 46 Inuit, First Nations and Metis organizations, will affect Inuit and Inuit organizations,” Obed said.

But the budget projects no extra spending on Inuit mental wellness and suicide prevention — a disappointment for ITK.

“Taking action to prevent suicide in our communities is an urgent priority, and it is not acceptable that basic funding to support this vital work remains incidental year after year,” Obed said.

As for the federal government’s big infrastructure spending promises, Ottawa will spend $11.9 billion across Canada over the next five years in addition to money previously budgeted within the Gas Tax Fund and the New Building Canada Fund.

But budget documents contain no information on how that spending will be divided among territories and provinces.

The government will also eliminate the Universal Child Care Benefit and the Canada Child Tax benefit, and replace those programs with a new plan called the Canada Child Benefit.

The CCB will provide a benefit of $6,400 per each child under the age of six and $5,400 for each child aged six through 17.

But on the portion of adjusted family net income between $30,000 and $65,000, the benefit will be phased out at a rate of seven per cent for a one-child family, 13.5 per cent for a two-child family, 19 per cent for a three-child family and 23 per cent for larger families.

Where adjusted family net income exceeds $65,000, the remaining benefits will be phased out at rates of 3.2 per cent for a one-child family, 5.7 per cent for a two-child family, eight per cent for a three-child family and 9.5 per cent for larger families, on the portion of income above $65,000.

The benefit is non-taxable and the government claims it will give nine of 10 families an average increase of $2,300 a year over the programs that it replaces.

Other budget measures that will affect northerners and Inuit, and in some cases, all other Canadians, include:

• a rise in Nunavut’s territorial financing formula transfer to $1.489 billion in 2016-17, for total federal transfers of $1.54 billion, equal to $41,060 for every man, woman and child living in Nunavut;

• a tax cut for people with taxable incomes of beween $44,700 and $89,401, from a rate of 22 per cent down to 20.5 per cent, which the government claims is worth $1,340 per year for a two-income household;

• a tax increase, from a rate of 29 per cent to 33 per cent, for incomes greater than $200,000 per year;

• $500 million over five years, starting in 2016–17, for a new program to improve broadband internet in rural and remote communities;

• $19 million over five years for studies by Indigenous and Northern Affairs Canada in the Beaufort Sea, Baffin Bay and Davis Strait, the Kivalliq and Kitikmeot regions, and the Arctic Islands of Nunavut, to gather information on whether oil and gas activities should occur;

• $10.1 million over four years, starting in 2016–17, for the Northern Projects Management Office, which helps mining companies navigate the northern regulatory system — the NPMO is part of the Canadian Northern Economic Development Agency; and

• $64.5 million over five years, starting in 2016-17, for Nutrition North Canada, and $13.8 million per year to expand the program to all northern isolated communities — but the structure of the program will remain unchanged.

(More to follow)