Trudeau government should spend more on affordable housing and homelessness

by admin | Jul 22, 2020 | Alternative Federal Budget, Canada, Ending Homelessness, Federal Budget, Fiscal policy, Government, Government Funding, Homeless, Housing, Income Support, Policy, Poverty, Social Housing, Social Policy

Trudeau government should spend more on affordable housing and homelessness

On July 21, the Alternative Federal Budget (AFB) Recovery Plan was released. The document aims to provide public policy direction to Canada’s federal government, in light of the current COVID-19 pandemic (more information on the AFB Recovery Plan can be found, while an overview of the AFB’s history can be found here).

I was author of the Recovery Plan’s chapter on affordable housing and homelessness, which can be accessed here.

Here are 10 things to know.

1. The COVID-19 Recession has resulted in income loss and rental arrears, especially for lower-income households who are mostly renters. Eviction bans across Canada have had some effectiveness in preventing or slowing down evictions; but when those bans are lifted, many households will be on the brink of absolute homelessness.

2. The recession has diminished people’s ability to get mortgage approvals. In part, this is due to many people having reduced income (or having lost their jobs entirely); it is also due in part to new mortgage rules taking effect on July 1.[1] This means an entire cohort of would-be homeowners will be stuck in the rental market, driving down rental vacancy rates.

3. The COVID-19 pandemic has also exposed cracks in the patchwork of social services in place for people experiencing homelessness. Challenges have included: the closing of daytime services (e.g., drop-in centres); the closing of public spaces with access to washroom facilities (e.g., libraries); and a lack of Internet access. The pandemic has also created additional costs and operational pressures on supportive housing programs and emergency shelters—for cleaning, personal protective equipment and increased staffing.

4. Across Canada, local officials in the homelessness sector have worked very hard responding to the pandemic. They have created more physical distancing at existing emergency shelters, opened new facilities, leased hotel rooms, and created facilities for both isolation and quarantine. The Trudeau government has provided important financial assistance to the homelessness sector to support these efforts. Indeed, the Government of Canada’s COVID-19 Economic Response Plan, announced on 18 March 2020, includes an additional $157.5 million in one-time funding for Reaching Home (representing a 74% increase in Reaching Home funding for the 2020-21 fiscal year).

5. Nevertheless, challenges remain in the homelessness sector. They include: the existence of shared bathrooms; inadequate access to personal protective equipment; harm reduction (e.g., safe access to illicit drugs); encampments (i.e., outdoor sleeping); a dwindling workforce at emergency shelters and drop-in centres; and an anticipated increase in homelessness resulting from the economic downturn.[2]

6. The Trudeau government should provide a rental top-up to the Canada Emergency Response Benefit (CERB). This could simply be added to existing CERB payments, showing up in recipients’ bank accounts along with CERB. Canada Revenue Agency could administer the program, just as it does CERB.[3] CERB recipients transitioning onto Employment Insurance could carry their rental top-up with them.

7. The recent Reaching Home enhancement ought to be made permanent. The AFB Recovery Plan would make permanent the recent enhancement to federal Reaching Home funding. Across Canada, federal funding for homelessness (i.e., Reaching Home) is rather modest. According to a 2018 federal program evaluation, for each $1 invested federally, $13 is invested by other sources (mostly provincial and municipal dollars).[4]

8. Federal spending on the National Housing Co-investment Fund should be boosted. A central feature of the National Housing Strategy unveiled in November 2017 is a new National Housing Co-investment Fund (NHCF). Primarily a loan program (as opposed to a grant program) the NHCF has been criticized for providing insufficient funding to make rent levels truly affordable for low-income tenants. The AFB Recovery Plan would enhance the NHCF with an additional $3 billion in grant money annually, over and above what has already been committed by the Trudeau government.

9. The Canada Housing Benefit ought to be enhanced. Central to the Trudeau government’s National Housing Strategy is the launch, in 2020, of a Canada Housing Benefit (CHB). This benefit provides financial assistance to help low-income households afford the rent. The AFB Recovery Plan would double the federal contribution to this benefit at a cost of $250 million annually, over and above current allocations. Province and territories would be expected to cost-share.

10. There should be federal spending earmarked to fund capital for supportive housing. Supportive housing refers to specialized housing for vulnerable populations that features professional (i.e., social work) staff support. The National Housing Strategy contains no specific provisions for supportive housing, even though one of the Strategy’s stated goals is to reduce chronic homelessness by 50%.[5] The AFB Recovery Plan would allocate $2 billion in new annual funding (for capital) for supportive housing.

In sum. The AFB Recovery Plan urges the federal government to create housing options to the point where, when we are hit by a future wave or new pandemic, all Canadians have a home in which to stay safe. Further, the downturn in the real estate market offers an opportunity for the Trudeau government to assist non-profit housing providers to acquire new stock in cost-effective ways.

The following individuals provided invaluable assistance with the affordable housing and homelessness chapter of the AFB Recovery Plan: Meaghan Bell, Michele Biss, Stéphan Corriveau, Katie-Sue Derejko, John Dickie, George Fallis, Sherwin Flight, Alex Hemingway, Graeme Hussey, Bruce Irvine, Brandi Kapell, Ron Kneebone, Brian Kreps, David Macdonald, Christina Maes Nino, Bernadette Majdell, Elsbeth Mehrer, Michael Mendelson, Jeff Morrison, Amanda Noble, Abe Oudshoorn, Steve Pomeroy, Tim Richter, Michal Rozworski, Natalie Spagnuolo, Marion Steele, Greg Suttor, Jennifer Tipple, Letisha Toop, Ricardo Tranjan, Stuart Trew, Samuel Watts and one anonymous source. I wish to also thank Susan Falvo, Hayley Gislason, Angela Regnier, Vincent St-Martin and Sarah Woodgate for assistance with this blog post. Any errors are mine.

Photo used with permission from Home Space Society.

[1] Canada Mortgage and Housing Corporation. (2020, June 4). CMHC reviews underwriting criteria. Retrieved from CMHC website: https://www.cmhc-schl.gc.ca

[2] Bainbridge, J., & Carrizales, T. J. (2017). Global homelessness in a post-recession world. Journal of Public Management & Social Policy, 24(1), 6. Retrieved from: https://digitalscholarship.tsu.edu/jpmsp/vol24/iss1/6/

[3] This proposal has been put forth by Marion Steele and also by a third-sector group of experts. For more information, see this recent Toronto Star opinion piece: https://www.thestar.com/business/opinion/2020/05/24/a-lot-of-toronto-renters-cant-get-by-even-with-cerb-they-need-a-top-up-from-the-feds.html.

[4] Employment and Social Development Canada. (2018). Evaluation of the Homelessness Partnering Strategy: Final Report. Retrieved from the Government of Canada website: https://www.canada.ca

[5] Having said that, supportive housing has received Co-investment Fund financing.

Ten things to know about affordable housing in Alberta

by admin | Jun 30, 2019 | Aboriginal Peoples, Alberta, Alternative Federal Budget, Calgary, Ending Homelessness, Fiscal policy, Government, Government Funding, Homeless, Housing, Housing First, Income Inequality, Indigenous peoples, Policy, Poverty, Poverty Reduction, Research and Data, Ron Kneebone, seniors, Social Housing, Social Policy

Ten things to know about affordable housing in Alberta

People without affordable housing suffer from poor health outcomes, have difficulty finding and sustaining employment and are at greater risk of having their children removed by child welfare authorities.

Here are 10 things to know about affordable housing in Alberta specifically:

The NDP government of Rachel Notley undertook important initiatives pertaining to affordable housing. In its 2016 budget, the Notley government announced the near doubling of provincial spending on housing. This represented a total of $892 million in new funding, spanning a five-year period.
According to the most recent Census, 11.4% of Alberta households experience core housing need, representing more than 164,000 households. In order to assess housing need for Canadians, the Canada Mortgage and Housing Corporation uses a measure called core housing need. A household is said to be in core housing need if, out of financial necessity, they either pay more than 30% of their gross household income on housing, live in housing requiring major repairs, or live in housing with insufficient bedrooms for the household size in question (as determined by the National Occupancy Standards).
Seniors living alone in Alberta face particularly high rates of core housing need. Nearly 34% of senior (65+) females living alone in Alberta were in core housing need in 2011, while the figure for senior (65+) males living alone was just under 26%.
Female lone-parent households in Alberta also face a particularly high rate of core housing need. More than 27% of these households were in core housing need in 2011. However, that figure likely dropped after the NDP government of Rachel Notley introduced the Alberta Child Benefit, a major feature of the 2016 Alberta budget.
Members of Alberta First Nations also experience very high rates of core housing need. In fact, the rate of core housing need for Status Indians is nearly 25%—more than double the rate for non-Indigenous households in the province. And get this: these core need figures do not account for households living on reserve (if they did, that figure would be much greater). I should also note that more than 25% of persons experiencing absolute homelessness in Alberta identify as being Indigenous, even though Indigenous peoples make up just 7% of Alberta’s total population.
Housing typically constitutes a larger share of spending for low-income households (compared with middle- and higher-income households). And as the figure below illustrates, that phenomenon got measurably worse for low-income households in Alberta between 2010 and 2016.
Source. Kneebone, R., & Wilkins, M. G. (2018). Social Policy Trends: Paying for the Essentials: Shelter, Food and Energy Consumption by Household Income Quintile for 2010 and 2016. The School of Public Policy Publications, 11. Retrieved from Policy School’s website: https://www.policyschool.ca/wp-content/uploads/2018/07/Social-Trends-Engel-Curves-July-2018.pdf
On a per capita basis, Alberta has far fewer subsidized housing units than the rest of Canada. According to the most recent Census, subsidized housing represents just 2.9% of Alberta’s housing units; for Canada as a whole, the figure is 4.2%.
Some Alberta cities have much more low-cost rental housing (per capita) than others. The visual below shows the range of private market rents paid on one- and two-bedroom apartments across Alberta’s seven major cities. The light-coloured bars show the range of rents paid on the second quintile (i.e., the second-poorest quintile) of private market rents. The next darkest bar shows the range of rents paid on the third quintile (i.e., the middle quintile) of rents, while the darkest bars define the range of rents paid on the fourth quintile of rents. Among the seven major cities, Medicine Hat appears to have the most low-cost rental housing units (per capita), and Calgary the fewest.
Notes. Monthly rent quintiles by city in 2017. Data provided to Ron Kneebone (University of Calgary) by Canada Mortgage and Housing Corporation. The range of rents paid on the first and fifth quintiles are not reported due to confidentiality reasons.
Going forward, the impact of the federal government’s National Housing Strategy will be modest. Recent analysis by Canada’s Parliamentary Budget Officer (PBO) projects future federal housing spending to actually decrease over the next decade (relative to Gross Domestic Product). The same analysis projects that total spending on Indigenous housing by Canada’s federal government will be “substantially lower” going forward. (For a general overview of the National Housing Strategy, see this analysis.)
There are considerable cost savings to be realized when investing in affordable housing, especially when the tenants have serious mental health challenges. Subsidized housing for vulnerable subpopulations (including persons with mental health challenges) that is accompanied by professional staff support is referred to as supportive housing. Recent analysis in Calgary estimates considerable cost savings in the health and justice sectors attributable to formerly-homeless persons receiving supportive housing.

In Sum. For a more comprehensive look at affordable housing in Alberta, see this year’s Alberta Alternative Budget (AAB). Full disclosure: I was primary author of the chapter on affordable housing and homelessness.

I wish to thank the following individuals for invaluable assistance with the housing chapter of this year’s AAB: Meaghan Bell, John Kmech, Claire Noble, Chidom Otogwu, Steve Pomeroy, Ron Kneebone, Vincent St. Martin, John Veenstra and one anonymous reviewer. Any errors are mine.

What Impact will the 2019 Federal Budget have on Canada’s Housing Market?

by admin | Apr 25, 2019 | Alternative Federal Budget, Canada, Federal Budget, Housing

What Impact will the 2019 Federal Budget have on Canada’s Housing Market?

On March 19, Canada’s federal finance minister tabled the Trudeau government’s 2019 budget titled Investing in the Middle Class. Key social policy announcements include a new Canada Training Credit, increased funding for municipalities, some increased funding for women’s organizations and increased earnings’ exemptions for low-income seniors.

Budget 2019 also has implications for housing—and on that front, here are 10 things to know:

Budget 2019 introduces a new First-Time Home Buyer Incentive, creating so-called ‘shared-equity mortgages.’ This program fronts a portion of the required down payment for a ‘middle income’ household trying to buy a home for the first time. The federal government contribution is set at 5% of the value of an existing home, or 10% of the value of a newly-built home. The household does not pay interest on the federal loan portion; however, Canada Mortgage and Housing Corporation (CMHC) ends up owning 5% or 10% of the home’s value—and on the home’s sale, CMHC gets back 5% or 10% of the appreciated (or depreciated) value. Participants must be first-time home buyers with annual household incomes of under $120,000. The maximum value of the mortgage plus CMHC support will be four times household income (i.e., $480,000). This program is expected to be operational by September 2019. Federal officials say they expect approximately 100,000 first-time home buyers to take advantage of this program over the next three years.
The Home Buyers’ Plan withdrawal limit has been raised from $25,000 to $35,000. This is the program that allows first-time homeowners in Canada to borrow from their Registered Retirement Savings Plan for a down payment. This increased limit is available for withdrawals made after March 19, 2019. Budget 2019 also proposes that individuals who go through a separation or divorce be permitted to participate in the Plan, even if they’re not buying for the first time.
The good news on the housing affordability front is that the home ownership measures contained in Budget 2019 will likely increase the average rental vacancy rate and exert downward pressure on average rent levels. That’s because some households currently renting will now become home owners, creating a bit of slack in the rental market. This is good news for prospective renters and existing renters. Some landlords won’t be happy though—with reduced demand for rental housing, they may not be able to charge as much rent or be as selective in terms of which tenants they rent to.
The bad news on the housing affordability front is that these same measures will likely exert upward pressure on the average price of a new home. That’s because when you increase demand for a product, its price typically goes up as well. This is good news for current home owners, especially when they decide to sell, but it’s bad news for prospective home owners who aren’t eligible for the initiatives.
Incentivizing households of modest means to become home owners isn’t necessarily good public policy. In a 2006 report, Michael Mendelson argued that Canadian housing prices are subject to large price swings. Indeed, housing prices do not only go up—for example, from January 2018 until January 2019, the price of detached homes in Vancouver fell by approximately 9%. Mendelson argues that such price decreases are bad news for owners of modest means who need to sell during such a downturn, especially if they haven’t been owners for very long. He cautioned that, in such situations, those households can lose their life savings.
Incentivizing households of modest means to become home owners also runs counter to at least one action recently introduced at the federal level in Canada. I refer here to the introduction of the mortgage stress test, largely in response to unprecedented consumer debt levels (and against which Canada’s home builders have recently expressed strong opposition). This measure was introduced by the Office of the Superintendent of Financial Institutions, an arm’s length regulator (and endorsed by the federal minister of finance).
Canada’s Rental Construction Financing Initiative, originally scheduled to be in place for four years, will now be extended to nine years and provided with an additional $10 billion in loans. Originally announced in the 2016 federal budget, this program provides low-cost loans for the construction of new rental housing for ‘middle income’ households. These loans are for developers (either non-profit or for-profit) and unit rents must be set 10% below full market potential. Funded projects must also meet two other important criteria: 1) achieve a standard 15% better than required by national codes for energy efficiency and reduction of greenhouse gas emissions; and 2) have 10% of units accessible. With changes announced in the 2019 federal budget, the program is now expected to assist 42,500 new units across Canada, targeting areas of low rental supply. This represents federal loans totalling $829.5 million over nine years, starting in 2019–20. It’s expected that CMHC will make money on these loans.
This budget announced a new $300 million program to improve energy efficiency in new and existing housing. It is being allocated to, and will be administered by, the Federation of Canadian Municipalities (FCM). In fact, three energy-efficiency initiatives for residential, commercial and multi-unit buildings worth a total of just over $1 billion annually were announced in this year’s federal budget, all of which will be administered by the FCM. This includes one $300 million initiative specifically for energy efficiency in social/affordable housing (new and existing).
This budget announced that the Canada Revenue Agency will receive $50 million over five years to create audit teams in high-risk regions of the country. One can infer from this that the federal government believes that home prices, especially in Toronto and Vancouver, have been driven up by investors flipping houses and not paying their fair share of taxes in the process (a practice that makes houses more expensive while denying revenue to the federal government).
A budget supported by a more robust social spending framework could do a lot for both affordable housing and homelessness. A major reason people have housing affordability challenges is that they have low incomes. Addressing low incomes requires a well-funded social spending framework that would reduce income inequality. This year’s Alternative Federal Budget (AFB) provided such a framework. The AFB is a fully costed-out advocacy document that includes funding increases for post-secondary education, seniors’ benefits, child care, First Nations’ infrastructure, social assistance, and affordable housing (including supportive housing for vulnerable populations). It also proposes universal pharmacare. (Full disclosure: I was primary author of the AFB’s housing chapter.)

In sum. The Trudeau government’s 2019 federal budget contains very few initiatives explicitly geared toward affordable rental housing, and no new funding at all for absolute homelessness. The home-buying incentive measures will make it easier for some households to become homeowners; however, they may have unintended consequences as well. The extension of the Rental Construction Financing Initiative is good news for housing affordability, while new funding for auditing may have the effect of exerting downward pressure on the price of homes—especially new condos in Toronto and Vancouver. Far-reaching changes to housing affordability would require bold changes to fiscal policy, such as those proposed in the 2018 Alternative Federal Budget.

I wish to thank Helen Harris, Ron Kneebone, Marc Lee, Scott Leon, Michael Mendelson, Claire Noble, Brian Pincott, Shayne Ramsay, Tim Richter, Steve Saretsky, Marion Steele, Ray Sullivan, Greg Suttor, and three anonymous reviewers for invaluable assistance with this blog post. Any errors are mine.

Nick Falvo is a Calgary-based research consultant, a research associate at the Carleton University Centre for Community Innovation, and a CCPA research associate.