Canada: Ten things to know about the federal role in housing policy

La version française de ce billet se trouve ici.

On 24 March 2021, I gave a guest lecture for Professor Benjamin Adu Gyamfi at the University of Calgary. It focused on the federal role in housing policy, beginning in 1964. My detailed slide deck is available here.

Here are 10 things to know.

1. Canada’s federal government plays an important role with respect to both home ownership and assistance for renters. It does this in part through a crown corporation called the Canada Mortgage and Housing Corporation (CMHC). CMHC assists first-time homeowners with CMHC-insured mortgages. It also provides subsidies to some renters.

2. The federal government also uses tax expenditures to assist homeowners. As Frank Clayton has recently noted, federal tax expenditures for housing currently amount to more than $18 billion/yr., and homeowners account for nearly 90% of this total. Tax expenditures are hard for some people to ‘see,’ but here’s an example: if you sell your home for more than you paid for it, you don’t get taxed on that differential (provided the house was your principal residence). That’s an example of tax expenditure policy that assists homeowners.

3. In years that federal spending on social programs increases, federal subsidies for rental housing also tend to increase. Put differently, macroeconomic context matters. Thus, from the mid-1960s until the early-1990s, federal spending on housing was relatively high by historical standards. (Also, during economic downturns, the federal government sometimes likes to use housing policy as time-limited stimulus policy.)

4. The 1960s ushered in important, positive changes with respect to federal housing policy. Prior to that year, there had been a 25:75 federal-provincial split on the operating costs of new social housing units; but beginning in 1964, there would be a 50:50 split (as well as an increase in capital funding from the federal government). Also in the 1960s, Indian and Northern Affairs Canada developed the first on-reserve housing subsidy program providing funding for new construction and renovation.

5. Conversely, the mid- and late-1990s were dark years for federal housing policy. In its April 1993 budget, the Government of Canada announced that, with the exception of some on-reserve housing, there would be no more federal money for new social housing. Tom Carter argues this was “really only the culmination of almost nine years of more or less constant spending restraint measures with respect to housing programs.” (Fortunately, the federal government re-emerged on this front in 2001.)

6. Governments with left-leaning perspectives tend to spend more on subsidies for rental housing. It’s common to hear a left-of-centre party vowing to spend more on housing if they come to power; yet, it’s rare to hear a right-of-centre party say something similar. (It is, however, common to hear a right-of-centre party promising to make regulations more ‘developer friendly’ and ‘landlord friendly.’)

7. Advocacy can be effective at pushing the federal government to spend more on rental housing. This applies to efforts by both grassroots groups and more professional organizations. Sometimes advocates lobby the federal government directly; other times, they lobby municipal politicians, who in turn lobby the federal government. I personally think the Federation of Canadian Municipalities has been particularly effective at lobbying the federal government with respect to rental housing (though their job is often made easier by grassroots advocacy from other groups).

8. Compared with other wealthy countries, Canada’s federal government spends modestly on subsidies for renters. This is rather consistent with Canada’s spending on other types of social programs (relative to other wealthy countries). Gøsta Esping-Andersen has written extensively on this.

9. Canada’s federal government plays an important leadership role with respect to investment in rental housing. CMHC is effective at pushing provincial and territorial governments to cost-share new housing. Put differently, when CMHC offers to cost-share new housing, provincial and territorial governments tend to respond positively. (Having said that, some provincial and territorial governments have difficulty matching federal funding levels. Quebec does not always participate in federal initiatives; and when it doesn’t, it typically repurposes the federal money for other housing initiatives.)

10. In 2017, the Government of Canada unveiled the National Housing Strategy. Some Liberal Members of Parliament have been quite vocal about its transformative nature. However, its scale was exaggerated from the outset; and over the past three years, its pace of implementation has been a bit sluggish.

In sum. Canada’s federal government has played a very important role with respect to mortgage regulation, tax expenditure and financial assistance for renters. However, its level of assistance for renters has been modest compared with that other wealthy countries.

I wish to thank the following individuals for assistance with this blog post: Maroine Bendaoud, Catherine Boucher, Stéphan Corriveau, Susan Falvo, David Hulchanski, Michel Laforge, James McGregor, Vincent St-Martin and Marion Steele. I also wish to thank HomeSpace Society for permission to use the photo used in this post.