'Challenges' with way new dental program rolled out

Federal support programs

This week, the House of Commons is back in session in Ottawa.

The government has introduced two bills intended to provide relief for some Canadian families struggling with higher interest rates and inflation.

The bills are C-30 “An Act to amend the Income Tax Act (temporary enhancement to the Goods and Services Tax/Harmonized Sales Tax credit)” and Bill C-31 “An Act respecting cost of living relief measures related to dental care and rental housing”.

Bill C-30 proposes to raise the GST rebate to a low-income earner by 50% of what they normally would receive on their GST rebate.
This one-time measure, over the proposed six-month time frame, will cost the treasury $2.5 billion.

What would the increase in the GST credit look like? Here are a few hypothetical situations:

• A low-income senior couple with a combined annual income of $45,000 would receive an additional $353.30.

• A single student who makes $25,000 would receive an additional $612.

• A single parent with one child and $45,000 in net income would receive an additional $257.15. If they earn $50,000, that additional payment would go down to $132.15. If that single parent earns more than $55,000 in net income, they would receive no payment.

• Similarly, a couple with two children and $45,000 in net family income would receive a reduced extra payment of $337.65 (compared to $467 at $35,000 in net income), and would receive $87.65 with a $55,000 net family income.

The GST credit increase will be completely phased out at a net income of $58,500 or above.

Bill C-31 proposes a two-year dental benefit for children under 12 and would provide a maximum of $650 a year per child, for two years, for families earning less than $70,390 a year. Families that have an income between $70,390 and $90,000 would see the benefit reduced to somewhere between $390 and down to $260, depending on the income cutoff.

What is interesting is so far, the government is proposing this dental benefit be provided upfront, before a child sees a dentist, and parents won’t have to automatically submit receipts or return any unused money, as reported by the National Post.

It should be noted dental care programs for low-income children already exist in all provinces and territories except Manitoba and the Northwest Territories, and almost 70 per cent of Canadians have dental coverage.

This creates two challenges.

Without any type of verification process, the program could be open to abuse and fraud. Secondly, without any verification or billing information required, there is no opportunity for the government to compile data that can be used to assess and monitor how well the program is actually working.

The Canadian Dental Association has said the federal government can best ensure funding will quickly and efficiently benefit those Canadians who need it most, namely by collaborating with provinces and territories to stabilize and enhance existing provincial and territorial dental care programs.

While this advice is reasonable, the government has not followed it.

Scotiabank has also said that these new spending announcements will increases the likelihood the Bank of Canada will need to raise interest rates above 4%.

If that occurs, it will financially punish many Canadians who will not benefit from these proposed new programs.

My question this week:

Are you supportive of Bill C-30 and C-31?

I can be reached at [email protected] or call toll free 1-800-665-8711

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Concerns about latest federal help for Canadians

Increased federal spending

In my last column, I referenced the recent news that the Bank of Canada had once again increased its benchmark interest rate (also called the “overnight rate”) a further 75 basis points from 2.5% up to 3.25%.

Since March of this year, the rate has increased by (a total of ) 300 basis points, which is the largest increase in roughly 30 years.

I closed the column by asking readers if their household has been, or will be, adversely impacted by the increased interest rates, or even if they are in a situation where they are not impacted.

Over the past seven days, I received a strong level of response to that question, and I would like to thank the many people who took the time to get back to me on the issue.

After hearing from so many, a clear pattern began to emerge. For those who are wealthier, typically they were concerned about rising interest rates and the possibility of a recession but were otherwise not personally impacted. Some even reported they were earning more money because of higher interest on certain investments.

However, for many working families struggling to pay bills and who have outstanding debt, many were severally impacted. Several people took the time to share, in detail, just how hard financially—in terms of actual dollars—they were attempting to mitigate and absorb (the increases).

The anxiety and stress being caused as the Bank of Canada continues to raise interest rates is causing serious hardship for some Okanagan families. It is fair to say some households are carrying a far larger burden than others as interest rates continue to rise.

Many asked when will the increases end?

This is a fair question without a simple answer. Last week our federal finance minister, while in Vancouver, stated: "We also understand right now that our government has a real responsibility to be fiscally responsible".

Flash forward to this week and the finance minister, with the prime minister while in New Brunswick, announced $4.5 billion in spending for “inflationary relief”.

Why does this matter? Many economists and major Canadian Banks are warning Prime Minister Justin Trudeau that the relentless spending by his government is part of what is driving up inflation, making the problem worse.

Bank of Nova Scotia economist Derek Holt, in response to this week's $4.5 billion spending announcement, stated: “It seems sensible to assume that this will add to pressures on measures of core inflation.” He added, anyone who believes it will ease inflationary pressures “must have studied different economics textbooks.”

As reported by Bloomberg, the Canadian Imperial Bank of Commerce, the Bank of Montreal and the Bank of Nova Scotia have all released reports expressing concerns over using revenue windfalls for additional spending.

I have two concerns:

1. My Conservative caucus and I have raised inflation and cost of living concerns formally with the government for months. After a summer of silence, to now hear some planned help for some families is welcome, although it is clearly not designed to be broad-based enough to help the general population with cost of living increases. In addition, due to new legislation being required, it is an open question when these supports will be forthcoming.

2. These supports are new spending, which, as indicated earlier, will have inflationary results. Conservatives have proposed a pay-as-you-go rule, where government departments should find an equal amount of savings before proposing new spending.

In this year’s budget, the government said it will have a policy review, where it anticipates it can find savings in its existing budget. Had it paired these new spending supports with savings elsewhere, the inflationary concerns would, in many cases, be offset or lessened.

My question this week:

Are you concerned about the ongoing spending by the federal government or do you believe it is necessary in these challenging times of inflation and higher interest rates?

I can be reached at [email protected] or call toll free 1-800-665-8711

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

The impact of rising interest rates on Canadians

Dealing with interest hikes

Canadians woke up to news this week that the Bank of Canada has once again increased its benchmark interest rate (also called the “overnight rate”), a further 75 basis points from 2.5% up to 3.25%.

Since March, the rate has increased by 300 basis points, which is the largest increase in roughly 30 years.

For many Canadian households, how this increase in the benchmark interest rate will impact your household budget will depend on a number of factors.

For those who have a mortgage that is locked in, or have a fixed payment, this may be of little concern. But for others who have a variable payment that rises with increased interest rates, this may be a very serious concern.
Some people may have a variable rate mortgage, where their costs simply go up or down with the prime rate (plus or minus any negotiated discount), which tracks the Bank of Canada benchmark rate.

Others, with variable rate mortgages with a ‘trigger rate” may be contacted by their banks or lending institutions, advising them because rates have risen significantly, their scheduled payment amount must be higher as the interest portion on their mortgage is now higher than the principal payment.

As we have had historic low interest rates for an extended period of time, these “trigger rate” increases are not common and those with that kind of mortgage will likely have some sticker shock when they see the revised payment amount.

Conversely for those with an interest-only line of credit or other forms of debt such as credit cards, there may also be a significant increased payment because of this interest rate increase.

One of the challenges when trying to assess the impact to family households of these types of increases, on debt related interest payments, is a lack of region-specific information.
In addition, with many mortgage lenders in the marketplace, the impact on some borrowers may be very different from others as a result of contrasting lending practices.

While there is an Ottawa-imposed “stress test” that is applied uniformly across the mortgage industry, as some have pointed out, it does not take into account the increase in local property taxes that, in many cases, are also well above inflation.

In addition, for those who live in strata properties, insurance costs have also gone up with premium increases significantly beyond the rate of inflation.

For those that are impacted by higher interest rates, let us recognize that, with less disposable income, there is less money to put into our local economy.

My purpose in raising these concerns related to the increase in the interest rate is to ask you if this is something that will impact your household to the point of serious concern?

If your household has, or will be adversely impacted by these increased interest rates, or even if you are in a situation where you are not impacted, I would appreciate hearing from you.

I can be reached at [email protected] or call toll free 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.


Government tax policies driving jobs out of Canada

Companies leaving Canada

Since the partnership between the Liberals and NDP was formed back in late March of this year, one of the joint political messages has been “tax the rich”.

In terms of policy decisions, that translated into a new federal luxury tax on vehicles and aircraft priced over $100,000 and boats priced over $250,000.

The tax rate is either 10% of the total post-tax purchase price, or 20% of value over a certain threshold, whichever is lesser.

For the purpose of this report, I will focus on boats.

The justification for the tax, from the government, is anyone who can afford a boat costing $250,000 can afford to pay more in tax.

Some readers are probably already wondering why even bother to mention a tax that only an incredibly small percentage of the population will need to be concerned with.

I'm not writing to advocate for potential new boat owners but rather to explain the policy ramifications involved with taxation competitiveness.

When the Parliamentary Budget Officer (PBO) looked at the fiscal implications of the luxury tax, he concluded it will generate government revenues of up to $760 million.
While that sounds positive, the downside is that the PBO also calculates there will be a sales decline of $2.9 billion.

The PBO estimates 75% of that loss — or $2.1bn — will be incurred by the recreational boat industry here in Canada.

In other words, this tax creates a loss of revenue.

As we heard from representatives of the Canadian marine industry, the tax is expected to create job losses and other economic hardships.

As many will know, Campion Marine, an iconic Kelowna boat manufacturer, recently closed its doors, creating the loss of roughly 100 well-paid jobs, as well as the loss of other economic contributions important to our regional and national economy.

It must be acknowledged there is already a provincial luxury tax in B.C., and an additional federal luxury tax will hit B.C. harder than other parts of Canada.

The provincial and federal luxury taxes would be applied to boat purchases before GST is applied. That means the GST is also ultimately applicable to the provincial and federal luxury taxes, which creates an even higher final sale amount on the boat in question.

These added costs create a larger incentive for buyers wanting to avoid paying these taxes and have the means to go to other jurisdictions where the taxes aren't an issue.

I am not suggesting the luxury tax was the sole reason for the closure of Campion in Kelowna, as most of the boats it built would not have been impacted by this luxury tax.

However, it does point out a pattern that we, as Canadians, should take note of. Global Okanagan News has reported Campion will move production to Texas and Mexico. In Texas, Campion will pay no luxury tax, no carbon taxes, nor would it pay higher payroll taxes on EI and CPP, as well as the Provincial Employers Health Tax.

In other words, as these new extra costs make Canadian-made products and services more expensive, it makes the cost of doing business outside of Canada more attractive.

For example, you may remember the Bombardier C-Series jet. Despite Canadian taxpayers investing roughly $1 billion into the development of this commercial jet, it is now built in Alabama and Canada.

On another different but local note, while Tolko industries has closed local lumber mills in communities of Kelowna and Merritt, it has invested in several new lumber mills in places like Ackerman, Mississippi, Urania, Louisiana and Ruston, Louisiana.

This is not a problem that lands solely at the feet of the federal government. Many provincial government policies also contribute to the lack of competitiveness and, in some cases, local government plays a role as well.

My question this week:

Are you concerned about the growing number of well-paying mill and manufacturing jobs moving from Canada to the United States?

I can be reached at [email protected] or call toll free 1-800-665-8711.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

More Dan in Ottawa articles

About the Author

Dan Albas, Conservative member of Parliament for the riding of Central Okanagan-Similkameen-Nicola, is the official Oppositions's finance critic.

Before entering public life, Dan was the owner of Kick City Martial Arts, responsible for training hundreds of men, women and youth to bring out their best.

Dan  is consistently recognized as one of Canada’s top 10 most active Members of Parliament on Twitter (@danalbas) and also continues to write a weekly column published in many local newspapers and on this website.

Dan welcomes comments, questions and concerns from citizens and is often available to speak to groups and organizations on matters of federal concern. 

He can be reached at [email protected] or call toll free at 1-800-665-8711.

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

Previous Stories