The Housing Crisis Needs a Response from Ottawa

Canada’s housing crisis was the primary topic at the recent cabinet retreat in Charlottetown. The ministers received briefings and recommendations from experts. Prime Minister Trudeau’s remarks to the press afterwards were extensive but remarkably lacking in substance given the many ideas that have been proposed.

Organizations such as the Institute for Research on Public Policy (IRPP), the National Housing Accord, and others have advocated various initiatives:

  1. Municipal regulation and fees cause delays and add to the cost of construction. Councilors are hounded by citizens who don’t want to see multiple unit buildings in their neighborhoods. Toronto and Vancouver are the worst offenders and unsurprisingly have the most expensive housing markets.
    Though homelessness is still growing, the Houston government’s aggressive intervention in HRM approval processes has reduced barriers and accelerated developments.
    Across Canada, the problem is that there are more people than all of the residential buildings can accommodate. So proposals to increase rental supplements for low-income households might change who is housed, but will not reduce the number of homeless.
  2. The number of international students has ballooned to 807,750 in 2022, up 31% from the previous year and more than double the number in 2015. Because they pay much higher tuitions than Canadian students they have become crucial to the finances of universities.
    As reported in the Globe and Mail international students are the principal clients of private career colleges. As students they have the right to work as many hours they want. It becomes a second temporary foreign worker plan without the need of a sponsoring employer.
    New housing minister Sean Fraser will need to get a grip on this, restricting it to those for whom the education part of the arrangement is primary.
  3. The Rapid Housing Initiative is a worthwhile federal program launched in 2020 that funds cities and non-profit organizations to build affordable homes for vulnerable Canadians.
    Funding was approved for 4,792 units in March 2021 and 5,473 a year later. As of November 30, 2022, CMHC says only 1,449 units have been completed.
    The projects are vulnerable to delays in getting labour and materials and some of the non-profits may be inexperienced in construction management. The program needs tweaking, but should be continued and expanded.
  4. Trudeau has set a goal of 500,000 immigrants a year. In the twelve months ending March 31 this year, Canada grew by an unplanned 1.2 million, a number that may have included a backlog of approved immigrants who were delayed by covid.
    Nevertheless, it points to an unsustainable pace of increase. At the current rate our shortages of housing and health care workers will become worse.
    This space has, since 2010, argued for greater immigration, but it is time to exercise discipline. Efforts to recruit more workers in those two areas must be increased, and the number of others limited to the level that will not increase waiting lists.
  5. Real Estate Investment Trusts have been important buyers of new rental buildings, providing developers with the proceeds needed for their next project. It is puzzling that the IRPP proposes to discourage those sources of capital by curbing profits and raising taxes.
    Soaring costs for labour and materials were manageable when interest rates were low, but today’s higher rate environment is discouraging new starts.
    Proposals for inclusionary zoning require developers to provide a percentage of units at below market rates. This amounts to a tax. It makes new starts even less likely. It is the wrong way to support low-income households.
  6. In the near term, starts may need some financial support from governments in order to be viable. The Accord calls for low-cost, long term fixed-rate financing plus elimination of the HST for constructing purpose-built rental housing. Providing financing and HST at the rates prevalent 18 months ago would recreate the circumstances when new starts were abundant. And the support should become less necessary as rates ease in the future. Eliminating the HST should not be needed.
  7. More promising is the proposal for creating a national catalogue of pre-inspected and pre-approved plans for four-, six- and eight-plex apartment buildings. These would be mostly manufactured in factories and then shipped to construction sites where local labour would assemble them. The savings in both time and cost would be considerable.

Allowing more immigrants and international students than we can provide with housing and health services is a disservice to them and to Canadians. We should expand capacity as quickly and efficiently as possible, and tailor our intake of future Canadians to the numbers we can support.

The next time he speaks on the topic, the Prime Minister needs to provide a substantial response.


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