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WORLD> America
Canada plans C$7.8 billion boost for housing
(Agencies)
Updated: 2009-01-28 14:00

Ottawa -- The Canadian government will provide up to C$7.8 billion ($6.3 billion) in tax breaks and funding to spur housing construction over the next two years, a move it hopes will stimulate the flagging economy and boost the country's hard hit industries such as forestry and building products suppliers.

The government said in its 2009 budget on Tuesday that the plan will include a renovation tax credit that could provide an estimated 4.6 million families with up to C$1,350 each. It will also provide money to build housing for low-income seniors and to renovate existing social housing projects.

The new tax credit will be "available for renovations to the house or the cottage, for everything from a new furnace to energy-efficient windows to a new deck," Finance Minister Jim Flaherty said in his budget speech.

"It will give an immediate boost to our economy, and help create jobs."

The spending, including the tax credit, is part of a broader stimulus plan for the Canadian economy, which has been pushed into recession by the global financial crisis and declines in commodity prices.

"It's a good idea, partly because there will be slack freed up in that sector," said Derek Burleton, a senior economist at Toronto-Dominion Bank. "The question is how many households will take advantage of that. I think the jury is out."

The government's housing plan includes C$300 million over two years to provide energy retrofits for an estimated 200,000 homes.

It will also provide a one-time federal investment of C$1 billion over the same period for renovations and energy retrofits for up to 200,000 social housing units, conditional on matching funding from provincial governments.

The budget also pledged C$400 million over two years to build housing for low-income seniors, and C$75 million to build housing for people with disabilities.

Another C$400 million will be dedicated to new social housing projects, including and work on existing housing located on aboriginal reserves.

The government said it will also make up to C$2 billion available over two years in direct, low-cost loans to municipalities to finance improvements in housing related infrastructure.

$1=$1.23 Canadian

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