Go big or go home on housing, Mr. Trudeau

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Maybe it was just a coincidence that the new federal Housing Minister, Sean Fraser, told the press he’d be taking the train to an announcement in Burnaby, B.C., on Monday.

But Conservative Leader Pierre Poilievre had been talking about building housing next to train stations in a social-media video he posted Saturday that garnered over two million views and won plaudits from housing experts.

That made Mr. Fraser’s arrival on the SkyTrain to talk about housing seem a little late. That’s a recurring problem for the Liberals.

The biggest, loudest, most obvious political issue in Canada is the high cost of housing. Yet Prime Minister Justin Trudeau’s Liberals have been slow to see it build. And they still haven’t matched the public’s angst with governing ambition.

That’s baffling, if only because of the politics. Mr. Poilievre has been banging the housing issue like a drum for a year and half, striking a chord with couples who can’t afford a house and folks facing skyrocketing rents. NDP Leader Jagmeet Singh is now making it his theme in tour stops, too. And housing is a top-of-mind concern for many in cities and suburbs – and that’s core Liberal electoral geography.

Mr. Trudeau likes big policy initiatives in areas like child care or clean energy, yet he has sounded pretty ambivalent about housing lately. A few weeks ago, he backed into a vague answer about Ottawa’s plans with an assertion that much of the problem is in provincial jurisdiction, not federal.

But it should be obvious that Mr. Trudeau has to expand the scale of federal housing policy to another level.

Canada’s approach to housing is bad for the economy

Former Liberal policy adviser Tyler Meredith argues Mr. Trudeau should go big: by bringing the federal government back into funding large-scale development of affordable housing, creating tax incentives for residential building, adjusting infrastructure programs and policies in areas such as immigration and banking. Then, he suggests, the PM should call provincial premiers to a national housing summit.

Mr. Meredith wants to see the Canada Mortgage and Housing Corporation put tens of billions of dollars into developing affordable housing, noting that can be done without a major impact on Ottawa’s budget deficit or net debt, because Ottawa will own the buildings as an asset. It doesn’t have to be a landlord: It might lease those houses to non-profit organizations.

Policy thinkers have already proposed a number of solid, relatively low-cost ways to change the tax system to provide incentives to build – and acting on such things now should be a no-brainer.

One is eliminating the GST on purpose-built rental housing, which should seem like a good idea to Mr. Trudeau because it was in his 2015 Liberal election platform. Another, proposed by economist Mike Moffat and former Stephen Harper adviser Ken Boessenkool, working with the Smart Prosperity Institute, is more generous tax treatment for depreciation of residential buildings. Those two measures would cost the treasury relatively small sums.

Both the Liberals and the Conservatives have proposed using infrastructure spending as a lever to get municipalities to permit more building. Mr. Poilievre has called for Ottawa to withhold funds from cities that don’t approve housing projects quickly, while the Liberals have created a $4-billion “housing accelerator fund” to encourage towns to speed up the process.

And it’s pretty clear money will talk: Municipalities will be reluctant to lower the costs they charge to developers unless someone – Ottawa or the provincial government – replaces the revenue.

Mr. Meredith also thinks the Prime Minister should call premiers to a national housing summit, because a lot of the obstacles are at the provincial or municipal level, from building rules and permits to fees. Provinces are responsible for municipal governance.

Usually, prime ministers are wary of such summits as premiers tend to come to them with demands. But the cynical political calculation could be different for a prime minister launching major federal housing initiatives and inviting premiers to join the mission. It could shift some of the political pressure to act back to the provinces.

At any rate, Mr. Trudeau has reached a point where he has little time to catch up to the urgency many Canadians feel. The alternative is to roll out small initiatives and argue his government has done enough, and that means missing the train on the country’s hottest political issue.