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Perhaps it’s fitting that at a time when many policy analysts have turned their attention to the gaps in Canada’s social safety net exposed by the COVID-19 pandemic, they are doing so in the midst of a runaway housing market. Because housing costs are a gaping hole in that net – and that hole is getting bigger.

In an Institute for Research on Public Policy webinar this week, Garima Talwar Kapoor, director of policy and research at anti-poverty think tank Maytree, laid out some startling figures showing how far government social-assistance payments (often called “welfare”) have fallen behind the costs Canadians face to keep a roof over their heads.

Using Ontario data, she showed that back in the 1990s, social assistance did cover the average cost of an apartment, albeit without a great deal left over for other essentials. But over the past two decades, monthly welfare income has been essentially flat, while the average monthly rent for an apartment in Ontario has gone up nearly 75 per cent. A single person there today, receiving a monthly welfare income of about $800 a month, now faces average rent of nearly $1,400 for a one-bedroom apartment.

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“Social assistance rates do not even come close to the average cost of housing,” she said.

When you note that Canada Mortgage and Housing Corporation considers anyone who spends more than 30 per cent of their gross income on housing to be in “core housing need,” this is a pretty big problem.

Ontario operates several programs, with the assistance of federal funding and in partnership with municipalities, to provide people in need with low-rent housing and rent subsidies to help narrow this immense housing chasm. But a recent report from the Financial Accountability Office, the provincial government’s budget watchdog, said that while 735,000 Ontario households – about 14 per cent – were in core housing need as of 2018, only 297,000 of them received assistance through those provincial programs.

That’s only about 40 per cent of households under financial strain from soaring housing costs who are getting help from the province. While a great deal of ink has been spilled (including in this column) over how the social safety net leaves too many Canadians without adequate income support, the system may be even more porous when it comes to the single biggest monthly expense pressure contributing to poverty.

Yet the FAO report shows that our governments have been spending shockingly little to address the gap. In the five years leading up to the pandemic, Ontario’s annual spending on its housing programs averaged only about $850-million a year, or 0.7 per cent of its total expenditures. If you subtract funding provided by Ottawa for those programs, the provincial government directed only about 0.3 per cent of its spending to helping those in housing need.

“If that is not an indictment of how not seriously governments have been taking our housing crisis, then I don’t know what is,” Ms. Talwar Kapoor said.

And even as the current housing frenzy promises to further aggravate those cost pressures, the FAO forecasts that Ontario’s spending is on track to decline from those levels over the next several years, to about $700-million a year, without policy changes.

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As the FAO points out, this is no recipe for meeting the provincial government’s stated goal of eliminating chronic homelessness by the end of 2025.

One interesting aspect of this is that, according to the FAO’s analysis, the actual level of support for households receiving the Ontario benefits is about adequate to close the affordability gap and lift them out of core housing need. The problem boils down to leaving too many people on the outside looking in.

It’s not hard to imagine, then, that if the programs were, say, doubled in terms of their budgets, they could alleviate much of the housing affordability pressures that threaten lower-income households. And, unquestionably, at a lower cost.

It’s significant that Ms. Talwar Kapoor shared her observations as part of an IRPP webcast whose broader topic was whether a universal basic income would be the best way to mend the holes in the social safety net. Ms. Talwar Kapoor’s own position is that targeted measures addressing the key gaps in the system would be more effective, and more equitable, than a one-size-fits-all basic income.

The housing issue is a pretty compelling case in point. Given housing’s oversized share of monthly expenses, there’s a strong argument that increasing supports directed at housing costs would go a long way to close a critical gap, at a tiny fraction of the cost of a universal basic income.

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