During the 2021 federal election campaign, the Liberals pointed a finger – correctly – at a core problem in Canada’s housing market: ossified civic zoning rules that prevented enough new homes from being built.
The party pledged $4-billion over three years for a “housing accelerator” program that would help to build an additional 100,000 “middle class” homes built by 2025. That was an ambitious number, given that Canada has seen an annual average of about 200,000 homes completed in recent years.
Ambition has been slow to turn into reality.
Explainer: What is the Housing Accelerator Fund?
The Liberal platform said the money would “reward” cities that “tackle NIMBYism” and allowed greater housing density. This was, in theory, a worthwhile policy, given the role of constrained supply in pumping up prices in the housing market.
Cities across Canada have long been too rigid with their rules about what can be built where and how. Rather than Ottawa trying to muck around in the details of local governance, the Liberals’ promise of money to encourage lasting changes in civic rules makes sense.
But that 2021 campaign promise is now more than 15 months old. What the housing accelerator will achieve, and particularly when it will achieve it, remains unclear. It’s still at the starting line. This lack of urgency is all too typical in attempts at housing policy reform.
The only real change so far is the watering down of the election promise in last year’s federal budget. The finish line for the 100,000 homes goal was pushed back to 2027 from 2025. Funding was also delayed, compared with the Liberals’ election platform. Hardly any money has yet been spent, and fiscal 2023-24 and 2024-25 will see $925-million each year, rather than $1.63-billion in those years pledged during the election. The last $2-billion stretches out to 2025-26 and 2026-27.
Of equal concern is an apparent drift in the focus of the program – $4-billion might seem like a lot of money but given the size of the housing market, it’s a pittance. To spark change the program needs to be targeted.
That was made clear in late 2021 in Housing Minister Ahmed Hussen’s mandate letter. He was told to zero in on housing in Canada’s largest cities, specifically on density, speedier approvals, and developing vacant land.
But the budget in April, 2022 described a broader effort. That less targeted effort could essentially cover the entire country, including small, rural communities in northern Ontario and Atlantic Canada.
The lure of money to cities has grabbed the attention of provincial leaders. Ontario has mused that $1.6-billion of the total – which would be the province’s share on a per-capita basis – could be used to compensate cities for a recent reduction in their housing development fees. Ottawa has not committed to such a move, saying instead funds will go directly to cities that make “systemic changes.” Might Toronto be in line for money, for a housing density proposal city council approved in December, whose details land in March? Maybe.
The wait and see nears an end. Program details are pending from Canada Mortgage and Housing Corp. in the coming weeks. What is certain is the need for a lot more new housing, as outlined by research from CMHC and many others.
In last year’s budget, the Liberals talked of doubling housing completions to 400,000 a year. That is certainly a big target, but the 1970s show it has been done before. That decade saw a building boom of all kinds of housing, from detached homes and apartments to social housing – which Ottawa helped finance. On a per-capita basis, Canada built almost double the number of homes a year in the 1970s compared with recent years. The single-year high of 257,243 new homes in 1974 hasn’t been surpassed since.
There are constraints beyond planning rules, including interest rates and labour. Current rates have shot up but are lower than in the 1970s, and data on labour suggest the purported squeeze hasn’t driven up real wages of skilled trades in construction, as one would expect. Wages in real terms, in fact, have ticked down since 2017.
The biggest issue is where housing can be built. Wide swaths of Toronto and other cities are reserved for detached homes. That was fine when Canada’s population was 40 per cent smaller a half century ago, but more urban density is needed now. Ottawa’s accelerator money has been slow to arrive but its potential impact is still important. Two years have already been lost; the Liberals need to get to work in speeding up the pace of housing construction.