Feds temporarily double GST rebate, reveal launch of dental care plan

Photo: The Canadian Press

Prime Minister Justin Trudeau delivers a speech during the Liberal summer caucus retreat in St. Andrews, N.B., Monday, Sept. 12, 2022.

UPDATE 2:40 p.m.

Liberal cabinet ministers said Tuesday the federal government is listening to Canadians who are struggling under the weight of inflation and offering targeted aid for those who need it the most.

That includes doubling GST rebate payments for six months, the first phase of a national dental care program and a one-time $500 rental allowance payment for low-income Canadians who are paying a big chunk of their income on rent.

"I think the most important thing is to understand that there are Canadians out there really hurting," Prime Minister Justin Trudeau said, during a Liberal caucus retreat in the seaside town of St. Andrews, N.B.

Trudeau had planned to announce the measures during the Liberal cabinet retreat in Vancouver last week, but the announcement was delayed following the death of Queen Elizabeth II.

All three measures are things the NDP pushed the government to do for months. The dental care and housing benefit are written into the confidence agreement the NDP and Liberals reached last spring.

NDP Leader Jagmeet Singh said in an interview that the measures are "a starting point."

"It's something that we had fought for and we forced them to do. They would not have done this but for us, and they're not going to be able to get it passed but for us in the House. We're gonna need to have some legislation to make it happen," Singh said.

"But we still think that (there are) other steps needed."

Trudeau said the legislation enabling the new policies will be the first bills introduced when the House of Commons resumes sitting next week.

The three measures will cost $4.6 billion, though some of the money for dental care and the housing allowance was included in the last federal budget.

Most of it — $2.5 billion — will increase GST rebates to those who already receive them. The total increase will amount to a doubling of the next two payments, but the funds will flow in a single payment sent once the legislation enabling it passes. About 11 million people will receive those payments.

The benefit amount will be up to $233.50 for single individuals, $306 for married or common-law couples, and $80.50 for children. The amounts go down as incomes go up.

Parents with kids under 12 who have a household income below $90,000 will be able to apply to get up to $650 per child to cover dental care bills, both this year and next. The government estimates the dental care help, which will eventually morph into a permanent dental care program for all Canadians, will affect 500,000 kids and cost $938 million this year and next.

And low-income individuals and families who spend at least 30 per cent of their income on rent will get a one-time $500 housing allowance benefit. The government says 1.8 million Canadians should qualify for that, with a total cost to the public purse of $1.2 billion.

"These are things that will make a difference in people's lives right now," said Trudeau. "But they are also sufficiently targeted that we are confident that they will not contribute to increased inflation."

Singh said the government can easily pay for the programs, noting inflation has led to a federal windfall in GST revenue. The federal government collected $15 billion more in GST in 2021-22 compared to the year before, and saw a year-over-year increase of $3.3 billion in the first three months of 2022.

The Liberals have been reluctant to put money on the table to respond to the cost-of-living crisis, for fear that funnelling cash into the economy would simply make inflation worse.

CIBC World Markets chief economist Avery Shenfeld said in a commentary posted last week that provinces have already begun to give in to pressure from voters to ease the pain of inflation. That includes Saskatchewan sending $500 cheques to every resident, and Manitoba spending $87 million to send cheques to families and seniors.

He warned the federal government shouldn't follow suit, "unless very narrowly targeted to only reach those in the most need of support to put food on the table."

Until now, the government has said it is helping through existing policies such as automatic increases to federal benefits that adjust the amounts to the previous year's inflation every July.

The GST and other benefits increased 2.4 per cent in July, but inflation between January and June averaged almost six per cent. Gas prices began to ease in June, but in July, grocery prices were still up by almost 10 per cent from the year before.

New Conservative Leader Pierre Poilievre dismissed Tuesday's announcement, saying the amounts are not enough to really help Canadians but the spending will add to inflation.

"We saw more inflationary spending that will fail to solve the problem for everyday Canadians," he said. "You see the problem with spending more money as a solution to inflation is that it simply pours more gasoline on the inflationary fire and that is exactly what Justin Trudeau continues to do."

Poilievre said the housing allowance, when averaged out over the year, wouldn't even cover one day's worth of rent each month for people in Toronto.

ORIGINAL 5:15 a.m.

Prime Minister Justin Trudeau today will unveil the full details of a plan to try and take some of the sting out of inflation for Canadians feeling it the most.

Both Liberal and NDP sources tell The Canadian Press the plan includes doubling GST rebate cheques for six months as well as a temporary dental-care benefit for some families with young children, and an expanded housing allowance payment.

All three are initiatives the NDP has been asking for since the spring as inflation began weighing heavily on Canadians with low and modest incomes.

The dental-care and housing benefit also fulfil NDP demands made as part of the Liberal-NDP supply and confidence agreement reached last March.

The announcement was to have happened last week during a cabinet retreat in Vancouver but was delayed following the death of Queen Elizabeth II.

Instead, Trudeau is set to release the full details today in the midst of the Liberal caucus retreat in St. Andrews, N.B.