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New Democratic Party Leader Jagmeet Singh rises during Question Period, in Ottawa, on June 20.Adrian Wyld/The Canadian Press

Mike Moffatt is senior director of policy and innovation at the Smart Prosperity Institute.

At a press conference last week in Windsor, Ont., NDP Leader Jagmeet Singh criticized the federal government for its lack of action on helping families affected by the housing crisis. His criticism is well-founded, but his solution would do more harm than good.

In an accompanying press release for the event, Mr. Singh gave an example of a family struggling with interest rate hikes, saying that such a family that “purchased a home at the average market price in Windsor with a 25-year variable-rate mortgage has seen their mortgage payment increased by $1,713 a month in less than a year and a half.”

Mr. Singh’s math checks out; in March, 2022, the average home price in Windsor was more than $720,000, and variable rate mortgages were as low as 0.9 per cent, so a family who had purchased that home would see their monthly payments increase by more than $1,700 a month, so long as their lender did not extend the amortization period. This pinch does not just apply to variable-rate mortgages obtained before the pandemic; families like mine who took out five-year fixed-rate mortgages in 2018 are now experiencing monthly payment increases of $1,000 or more.

The NDP’s solutions for this problem are vague, but by calling for “stronger mortgage relief” Mr. Singh appears to be advocating for some kind of subsidy or deferral for homeowners struggling with interest costs. Mr. Singh pointed to initiatives in Spain and Portugal as models Canada could emulate. However, neither would likely help our family in Windsor.

Spain’s policy allows homeowners to renegotiate some terms of their variable-rate mortgage, but this only applies to families earning less than $37,000 a year. Portugal’s program allows families experiencing escalating interest rates to apply for just over $1,000 a year in support, but families need to be in the bottom 60 per cent in income to qualify. In Canada, this would translate to needing an income of around $76,000 or less, excluding most families that had purchased homes for more than $700,000. It would be possible to raise this threshold to allow more families to qualify, but that would increase the program’s cost, transfer wealth to higher-income homeowners rather than renters or people experiencing homelessness, and fuel further growth in home prices.

While this discomfort from higher interest rates is real, relatively well-off homeowners like me and the Windsor family are not the most appropriate targets of financial support. Not when rents on newly leased one-bedroom apartments have risen by more than 20 per cent in communities from Burnaby, B.C., to Brampton, Ont., in a year. Not when homelessness encampments have spread nationwide, and food-bank use in Toronto has tripled. It would also worsen the affordability crisis by discouraging families from downsizing their homes and giving them additional money to invest in the real-estate market when interest rates normalize. This plan would be another in a long line of programs, such as the first-time home buyers’ tax credit, that just pour more money into a market with limited housing supply, causing prices to rise.

Additional financial supports are needed, but these should be targeted toward low-income renters facing the most acute challenges. Ottawa can also address other sources of demand for rental housing. While the federal government arguably lacks the tools to address the loss of affordable housing in the short-term rental market, it does control the number of renters who enter the country on temporary foreign work permits and as international students. The role these programs have on local rental markets should be examined.

There is no solution to the affordability crisis that does not address the lack of housing supply, something that the NDP is rightly calling for. Ottawa has many tools to increase housing construction, including directly funding social and co-operative housing. It can also create the conditions for the market to create more housing with tax tools such as removing the GST from newly constructed purpose-built rental units and reintroducing 1960s-era tax policies that encouraged the building of affordable apartments. It can use labour market policy and immigration to increase the supply of skilled tradespersons and innovation policy to accelerate technologies such as mass-timber construction, which can be built faster with less labour and made more climate-friendly than traditional building methods. The federal government has dozens of potential tools at its disposal; it just lacks the will to use them.

The NDP is correct – the federal government needs to do more on housing. But let’s hope the Liberals don’t bow to pressure from their confidence-and-supply agreement partner on giving cash to homeowners, which would surely push up home prices further and harm many of the people the NDP is trying to help.

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