The federal government can lead on housing

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When Prime Minister Justin Trudeau told a news conference earlier this month that “housing isn’t a primary federal responsibility,” but “it is something that we can and must help with,” it was baffling to anyone who understood the crucial role that the most senior level of government plays in the housing system.

The prime minister made the comments at the unveiling of a minor housing initiative in Hamilton.

“That’s a very strange statement, given that the feds drove all the really affordable housing back in the seventies and early eighties,” says Burnaby, B.C. mayor Mike Hurley.

“There were different programs that included tax credits for people who were willing to develop [housing]. “Look at all the three-storey walks-ups around the region from that era, they all come out of that program. And that worked really well.”

And the rental supply that does get delivered is largely possible because of federal programs, such as the Canada Mortgage and Housing Corporation’s MLI Select insured lending program for new rental construction, says Jason Turcotte, president of Darwin Properties, who mostly build rental housing.

“I just thought that was bizarre,” Mr. Turcotte says of the prime minister’s comment. “How can you make that statement, to say they are not responsible? They are more responsible in terms of rental, anyway, than any level of government.”

B.C. housing minister Ravi Kahlon said that the province doesn’t want to get into a “fight” with the federal government, but they’re tired of waiting for action.

“I’ll give the Prime Minister the benefit of the doubt that he perhaps misspoke at that news conference … but that being said, I’ve been clear to them; they have a big role to play,” said Mr. Kahlon.

“We aren’t even saying to them that they have to lead. We’re saying, ‘just match us.’”

For example, the province has had to fill in for the feds when it comes to Indigenous housing, said the housing minister.

“That is 100 per cent federal jurisdiction, yet we are building more housing on reserves than probably the federal government,” he says.

Andy Yan, director of Simon Fraser University’s City Program, says the federal government has always had “tremendous power” around shaping supply, demand and financing of Canada’s housing system.

“With federal power comes great housing responsibility, and this statement by the Prime Minister just highlights a larger problem – that there’s a disconnect between holding that power and fulfilling that responsibility. It’s a responsibility that federal governments have been shirking for over 30 years, which is why there had been so much hope for the National Housing Strategy.”

He says the feds also crucially supply housing data via Statistics Canada, which are used to shape policy at every level of government, and inform real estate markets.

It’s almost hard to believe there was a time when the federal government was duty bound to deliver centrally located housing that was affordable to low and middle class citizens. After the Second World War, the CMHC was formed to meet another housing crisis – the flood of returning veterans looking for homes. The federal government created a public housing program for low-income families and eventually built Regent Park in Toronto and Little Mountain in Vancouver. In the 1960s, the CMHC built co-operative housing projects and in the 1970s, it introduced a program to help low income citizens buy homes.

CMHC’s original role after World War II was to initiate and build a lot of housing for returning veterans, and they followed the pattern of Great Britain, where the national government was involved in building council housing,” says Michael Geller, a developer and real estate consultant who worked at CMHC from 1972 to 1981. One of his last assignments was regeneration of older public housing projects. He will be giving a talk at SFU on Oct. 18 about planning and government’s role in housing.”It was the federal government that took the lead on public housing projects across Canada,” he says.

By the early 1990s, the federal government pulled financing from public housing projects, which, experts agree, is largely the reason that there’s a dearth of purpose-built rental stock available now. Little Mountain became a BC Housing project and got sold off to a developer. And for the past three decades, government tax policy shifted toward homeowners instead of renters.

But without government subsidies, Mr. Hurley doesn’t see how the creation of market supply alone will solve the housing crisis. Feeling that that senior levels of government aren’t delivering on their housing promises, Burnaby is taking control by launching a housing authority of its own next year.

“Absolutely, it has to be subsidized by government,” he says of housing. “It’s the only way it can happen.”

Burnaby is the test case for the argument that supply alone will decrease prices, he says.

“If that was the case, Metrotown would be the cheapest place around, and it’s not.

“We are building a lot of housing in the Lower Mainland. If you look around and if you look around Burnaby, you can see we are certainly not holding back and we are building housing. But it’s not making it cheaper. If anything, it’s going the other way.”

The federal government has always played a central role delivering housing programs throughout history, says University of Toronto Prof. David Hulchanski, professor of housing and community development in the Factor-Inwentash Faculty of Social Work. But even more crucial than those programs is their role in setting interest rates via the Bank of Canada, providing mortgage loan insurance, setting mortgage rules through the Office of the Superintendent of Financial Institutions, setting national economic policy, and establishing tax system advantages around housing as well as capital gains exemptions on principal residences, he says.

In the 2015 election, the Prime Minister promised to restore federal leadership in affordable housing. Part of that promise was to develop a national housing strategy.

Prof. David Hulchanski doesn’t see anything new and improved since 2015, other than “random subsidies with no clear rationale.”

He cites the Prime Minister’s delivery of 214 housing units in Hamilton, both new and renovated, with $45-million in federal loans and grants. The project represents only 0.05 per cent of a promised $82-billion towards housing, he says.

Federal policy does not address income and wealth inequality, human rights violations, the hyper-commodification of housing, and home ownership entitlement to unearned, untaxed capital gains, says Prof. Hulchanski.

The way things are going, he says he sees no reason why national housing insecurity won’t continue.

Mr. Turcotte says an immediate boost for rental development would be if the feds offered a rebate on the GST, which, outside of construction costs, is the single biggest line item in his budget. Full rebates are only offered on units valued at less than $350,000.

“The industry has been lobbying for years to have that addressed and it would be a simple way for the federal government to actually allow for more affordable housing and to allow for more supply, because projects would be more viable,” said Mr. Turcotte.

Mr. Yan would like to see specifics around federal housing policy. CMHC issued a report last year that stated, “to restore affordability, an additional 3.5 million affordable housing units are needed by 2030.”

That means 22 million housing units are required by 2030 “to help achieve affordability,” according to CMHC. But the target number is bereft of context, said Mr. Yan.

“Are the units intended to be built on a greenbelt?” he asks. “Are they intended to sprawl from a city core? It could unintentionally make the economic health of those living in those units worse, because it requires them to have a car.

“I don’t think that’s the intention. I don’t think they are saying, ‘sprawl it out.’ But they’re lacking details. It’s just a number in need of a contextual home.”