In an effort to spur a stagnant homebuilding industry, the provincial budget included a pair of measures worth a combined $51 million.

The first-time homebuyers' bonus, expected to cost the government $24 million over the next year, will mean eligible buyers can receive up to $10,000 back on new homes purchased between Feb. 21 of this year and April 2013.

The bonus amounts to five per cent of the purchase price of the home, up to the cap.

To be eligible, purchasers must be B.C. residents and intend to use the home as their primary residence.

Finance Minister Kevin Falcon said the initiative was a response to concerns of young people unable to get into the housing market.

"We believe $10,000 is a great contribution to help our children get into their first home," he said, noting the measure has the added benefit of helping the homeconstruction industry.

Philip Hochstein, president of the Independent Contractors and Businesses, said the bonus will have a big impact on the homebuilding industry.

"When you are buying your first house, you are scrambling to pull all the - money you can find together, and $10,000 can make a mortgage payment go from unaffordable to affordable," he said.

Hochstein also noted that if the program has the kind of take-up he expects - with the government budgeting for $24 million in bonus payments, that could mean 2,400 new homes - the money the government spends will be returned.

"What people sometimes don't realize is when you cut taxes, people have more money to spend - give them $10,000 and the government gets money from the property transfer tax," he said. "It's an investment, not an expenditure."

The bonus will be up to $10,000 for all couples and single first-time buyers who have incomes of $175,000 or less. The amount is reduced as income rises.

In addition to the bonus, the budget provided seniors who undertake renovations - and families who renovate to accommodate a senior family member - with a new tax credit worth up to $1,000 a year.

The initiative, which the government estimates will cost $27 million a year, will be calculated as 10 per cent of eligible expenditures to upgrade a home's accessibility. General maintenance and services such as housekeeping and gardening are not included.

Art Kube, president of the Council of Senior Citizens of B.C., criticized the grant, however, saying seniors would have to spend $10,000 on renovations to get the full allowance.

"Thousands of seniors don't have that kind of money.

Some people can't afford their medications."

In his speech, Falcon said the new measures will give consumers a break while supporting home construction.

Hochstein said the measure will also allow seniors to stay in their homes longer, taking some strain off the health-care system.

The new programs come on the heels of harmonized sales tax mitigation measures introduced last week.

The province increased the threshold for the HST rebate on new homes from $525,000 to $850,000 - a measure the homebuilding industry said would have the immediate effect of kickstarting construction in places such as Victoria and Vancouver, where the average cost of a new home is well above the $525,000 threshold.

Homebuyers at the top end of the scale are now eligible for a rebate of $42,500 - 71.43 per cent of the provincial portion of the HST. Previously exempt from provincial sales tax, new homes are subject to the harmonized tax.

When it introduced the tax, the province provided a rebate of a portion of the HST, but raised the ire of builders when it didn't cover the full amount of the tax on new single-family homes in expensive markets.

Purchasers of new homes costing up to $525,000 were previously eligible to receive the rebate of 71.43 per cent of the provincial portion of the HST, up to a maximum of $26,250, while homes over $525,000 were eligible for a flat rebate of $26,250, but the buyer had to pay the HST beyond that threshold.

The government also announced that purchasers of new secondary or recreational homes worth up to $850,000 outside Greater Victoria and Vancouver would be eligible for a provincial grant of up to $42,500. Until now, there had been no HST rebate for new second and recreational homes.

Not included in the budget were measures to thwart a growing underground economy in the home-renovation sector.

Homebuilders had pushed for the measures, saying growth in the underground economy was fuelled by the HST, which added significant cost to home renovations.

But Hochstein said the key to controlling the underground economy is to keep taxes low.

"That's the right solution and has been for the last 10 years and continues to be the right solution," he said.

"I think this budget was a defining moment for the premier and the minister of finance.

"They had a choice of trying to gain popularity by spending money they didn't have and raising taxes, but they took a prudent, fiscally conservative method and learned from the lessons of Greece, Italy, France and Ontario - that's not a road map, it's a warning."

aduffy@timescolonist.com