Canada’s 2023 federal budget

La version française de ce billet se trouve ici.

Canada’s 2023 federal budget was tabled on March 28. Highlights include substantial health care funding, incentives for ‘clean energy,’ new funding for dental care, and a one-time Grocery Store Rebate for low-and modest-income Canadians.

As for what the budget did for housing and homelessness, here are seven things to know:

1. Some new money was announced for affordable housing. The budget committed $4 billion in new funding—albeit over seven years and beginning in 2024-25—“to implement a co-developed Urban, Rural, and Northern Indigenous Housing Strategy.” The amount committed is modest given the scale of the challenge. More information on why such a well-funded strategy is needed is available here.

2. The budget did not respond to calls for a new housing benefit. For the past several months, the Canadian Alliance to End Homelessness (CAEH) has been leading a national campaign for a new form of financial assistance for low-income households (the proposed benefit was supported by favourable polling). An advantage of such a demand-side measure is that it can take effect very quickly and have immediate impact by putting money directly into the pockets of low-income households.

3. Canada’s existing support for demand-side approaches to housing affordability—such as the type proposed by the CAEH—is quite modest. Just 11% of households in Canada’s lowest two quintiles receive rent subsidies (i.e., housing benefits), while the corresponding figure for the OECD is 16%. What’s more, rent subsidy expenditure as a share of Canada’s Gross Domestic Product amounts to just 0.19%, while the corresponding figure for the OECD is 0.26%.[1] It is important that the Government of Canada act on the type of proposal being presented by the CAEH.

4. Canada’s existing support for supply-side approaches to housing affordability—i.e., subsidies that result in low rents for tenants—is also quite modest. Just 4% of Canada’s total housing stock is non-market social housing, while the average for member countries of the OECD is 7% (these figures are available here). Additional investment in supply-side approaches—e.g., the National Housing Co-Investment Fund and the Rapid Housing Initiative—were much needed. An advantage of supply-side approaches is that they can keep housing stock affordable over the long term (as is illustrated here).

5. The Government of Canada’s investment in homelessness remains modest. According to a federal report published in 2018, for every $13 invested by other sources (mostly provincial and municipal governments) only $1 is invested on homelessness by Canada’s federal government. Indeed, it would have been sensible for this budget to have announced increased support for Reaching Home (the Government of Canada’s main funding vehicle for homelessness).

6. Since 2016, there has been explosive growth in home prices in many of Canada’s major cities. Key drivers of this increase include low mortgage rates and further investment by existing homeowners, ultimately rendering many low-income households even more vulnerable to homelessness. It has also made it more challenging for persons currently experiencing homelessness access housing.[2]

7. There are growing signs of outdoor sleeping and ‘social disorder’ associated with rising homelessness. While we do a less-than-optimal job of measuring outdoor sleeping in Canada, anecdotal evidence suggests it has risen considerably since COVID. Further, there has been increased media attention over the past year related to social disorder linked to homelessness. This budget could have done more to address this—especially in light of the modest federal spending on homelessness discussed in point #5 above.

In sum. While some new funding was announced for housing, this budget likely came as a disappointment for most affordable housing and homelessness advocates. Canada already underinvests in these areas. Enhanced budgetary support would have been welcome.

I wish to thank George Fallis, Sean Gadon, Nicholas Gazzard, Steve Pomeroy, Shayne Ramsay, Sylvia Regnier, Tim Richter, Greg Suttor, Ray Sullivan, Alex Tétreault and one anonymous reviewer for assistance with this blog post.

[1] Suttor, G. (2022). Social housing: Strong city roles need regional and federal-provincial partnerships. In E. Slack, G. Eidelman, & T. Hachard (Eds.), Who does what: The municipal role in housing policy. IMFG Perspectives No. 33. Toronto: Institute on Municipal Finance and Governance, University of Toronto.

[2] Pomeroy, S. (2022, August 30-September 2). Examining the causes of escalating home prices in Canada [Paper presentation]. European Network for Housing Research Annual Conference, Barcelona, Spain.