Ten things to know about Canada’s 2021 federal budget

Ten things to know about Canada’s 2021 federal budget

by | Apr 30, 2021 | Aboriginal Peoples, Canada, Ending Homelessness, Federal Budget, Fiscal policy, Government, Government Funding, Health Care, Homeless, Housing, Housing First, Income, Income Support, Indigenous peoples, Policy, Poverty, Poverty Reduction, Social Housing, Social Policy

Ten things to know about Canada’s 2021 federal budget

La version française de ce billet se trouve ici.

On April 21, the Trudeau government tabled the 2021 federal budget. The budget includes additional COVID-related measures,[1] a major childcare initiative, and various forms of support for low-income Canadians (including for housing and homelessness).

Here are 10 things to know.

1. The budget commits “up to $30 billion over five years” for early learning and childcare.  The Government of Canada sets out the following goal: “That, in the next 5 years, Canadian parents across the country have access to high quality early learning and childcare, for an average of $10 a day.” This may be the single most important social policy announcement made by any federal government at any point in the past 25 years. But in order for this to be successful, considerable cooperation will be required from provincial and territorial governments.

2. The budget announces major changes to financial assistance for post-secondary students. The Government of Canada is making the grant system more generous and the loan system more forgiving. While the value of grants had doubled as a COVID measure, the budget announces that these enhanced amounts will remain in place until July 2023. Also, students earning less than $40,000 will now be exempt from making payments on their loans, while the previous threshold had been $25,000.[2]

3. The budget proposes important support for seniors, including for long-term care and income support. The budget proposes $3 billion over five years “to support provinces and territories in ensuring standards for long-term care are applied…” The budget also proposes a one-time payment of $500 in August 2021 to Old Age Security (OAS) recipients aged 75 or over. It further proposes to introduce legislation that would permanently increase OAS payments for recipients aged 75 and over by 10%.

4. Low-wage workers will receive additional assistance. The Government of Canada announced its intention to raise the federal minimum wage to $15/hr., indexed to inflation, “with provisions to ensure that where provincial or territorial minimum wages are higher, that wage will prevail.” This directly affects over 26,000 workers in the federally-regulated private sector. The budget also proposes to expand the Canada Workers Benefit to support approximately 1 million additional Canadians in low-wage jobs, meaning “that for the first time, most full-time workers earning minimum wage will receive significant support from this important benefit…A single, full-time, minimum wage worker could receive about $1,000 more in benefits than they would under the current system…” This will be especially helpful for single adults without dependants.[3]

5. The budget proposes important new investments for Indigenous peoples. This includes “more than $6 billion to help close infrastructure gaps in Indigenous communities, and $2.2 billion for actions to end the national tragedy of missing and murdered Indigenous women and girls.” It did not announce an urban, rural and northern Indigenous housing strategy, as many advocates had expected.

6. The budget announces $1.5 billion in new funding for the Rapid Housing Initiative (RHI). Launched in September 2020, this program focuses on the creation of modular housing, the acquisition of land, and the conversion of existing buildings into affordable housing. RHI provides up-front grants for each unit, but relies on provincial and territorial governments to fund ongoing costs.

7. The Canada Housing Benefit will be enhanced. Specifically, an additional $315.4 million over seven years has been committed “for low-income women and children fleeing violence to help with their rent payments.” This benefit was first announced in November 2017. Unfortunately, many provincial and territorial governments have been slow to sign bilateral agreements with the Government of Canada, thus delaying take up.

8. The National Housing Co-Investment Fund (NHCF) has received enhancements. This includes $750 million in new funding, as well as $250 million to support the construction, repair, and operating costs of transitional housing and shelter spaces for women and children fleeing violence (however, it is not clear how much of this consists of grants vs. loans). The NHCF, originally announced in 2017, contains both grants and loans, but has been criticized for being mostly a loan program. It has also been criticized for its onerous application and approval process.

9. This government continues to increase annual funding for homelessness. This budget proposes an additional $567 million over two years, beginning in 2022-23, for Reaching Home (i.e., the federal government’s main funding vehicle for homelessness). This preserves the 2021-22 funding levels announced in the Fall Economic Statement in response to the pandemic. The budget also proposes $45 million over two years for a pilot program “aimed at reducing veteran homelessness through the provision of rent supplements and wrap-around services for homeless veterans such as counselling, addiction treatment, and help finding a job.”

10. An assortment of other housing-related measures was announced. This includes: a national 1% tax on vacant property owned by non-residents; $600 million over seven years “to renew and expand the Affordable Housing Innovation Fund, which encourages new funding models and innovative building techniques in the affordable housing sector;” $118.2 million over seven years for the Federal Community Housing Initiative (for operators of federally-administered co-op housing units); a reallocation of $300 million in loan funds from the Rental Construction Financing Initiative to support the conversion of vacant commercial property into rental housing; $25 million in new housing funding for the Northwest Territories; and $25 million in housing for Nunavut.

In sum. This budget contains important new social investments, especially for childcare. It includes important new funding enhancements for low-income Canadians, including for affordable housing and homelessness. And it does so at a time when federal debt-serving costs are low by historical standards due to low interest rates.

I wish to thank the following individuals for assistance with this blog post: George Fallis, Martha Friendly, Rob Gillezeau, Michel Laforge, David Macdonald, Rianne Mahon, Michael Mendelson, Jeff Morrison, Steve Pomeroy, Shayne Ramsay, Sylvia Regnier, Vincent St-Martin and Greg Suttor. I also wish to thank HomeSpace Society for permission to use the photo that appears above.

—

[1] These include the extension of the wage subsidy, rent subsidy, and Lockdown Support for businesses and other employers until September 2021. Together, these particular measures amount to $12.1 billion in additional support.

[2]  For a thorough overview of all changes announced to post-secondary education, check out this analysis.

[3] For more on the income-related challenges of single adults without dependants, see this recent report.

Ten things to know about Canada’s 2021 federal budget

10 faits saillants à retenir du budget fédéral canadien 2021

by | Apr 30, 2021 | Aboriginal Peoples, Canada, Ending Homelessness, Federal Budget, Fiscal policy, Government, Government Funding, Health Care, Homeless, Housing, Income, Income Support, Indigenous peoples, Labour Market, Policy, Poverty, Poverty Reduction, Social Housing, Social Policy

10 faits saillants à retenir du budget fédéral canadien 2021

An English-language version of this blog post is available here.

Le 21 avril, le gouvernement Trudeau a déposé le budget fédéral 2021. Celui-ci comprend de nouvelles mesures liées à la pandémie[1], une initiative importante de services de garde d’enfants, et plusieurs initiatives pour appuyer les Canadiens à faible revenu (dont des initiatives en logement et en sans-abrisme).

Voici 10 faits saillants à son sujet.

1. Jusqu’à 30 milliards de dollars seront consacrés à l’éducation et aux services de garde pour la petite-enfance. Le gouvernement du Canada a promis qu’« au cours des cinq prochaines années, les parents canadiens de partout au pays [auront] accès à des services d’apprentissage et de garde des jeunes enfants à un coût moyen de 10 $ par jour ». C’est peut-être la politique sociale la plus importante de n’importe quel gouvernement fédéral en 25 ans. Par contre, pour que cette politique soit réalisée correctement, la collaboration des gouvernements provinciaux et territoriaux sera indispensable.

2. Le système d’aide financière pour les étudiants du postsecondaire connaîtra des changements majeurs. Le gouvernement du Canada rendra le système de bourses plus généreux, et celui des prêts plus indulgent. Bien que la valeur des bourses a doublé pour répondre à la pandémie, le budget annonce que ces mesures demeureront en place jusqu’en juillet 2023. De plus, les étudiants qui intègrent le marché du travail et qui gagnent moins de 40 000$ par année seront exemptés du remboursement de leurs prêts, alors que le seuil précédent était de 25 000$[2].

3. Le budget propose d’importantes mesures pour appuyer les personnes ainées, dont les soins de longue durée et un soutien au revenu. Le budget propose 3 milliards de dollars sur cinq ans pour « appuyer les provinces et territoires à assurer que les standards en soins de longue durée […] ». Le budget propose également de remettre un paiement de 500$ aux prestataires de la pension de la Sécurité de la vieillesse (SV) âgés de 75 ans ou plus en août 2021. Il propose également d’augmenter les paiements de la SV à ces prestataires de 10% de manière permanente.

4. Les travailleurs à faible revenu recevront plus d’appui. Le gouvernement du Canada a annoncé qu’il avait l’intention d’augmenter le salaire minimum à 15$/heure, indexé selon l’inflation, « avec des dispositions destinées à garantir que lorsque le salaire minimum provincial ou territorial sera plus élevé, ce salaire prévaudra ». Cette mesure touche plus de 26 000 travailleurs du secteur privé assujetti aux règlementations fédérales. Le budget propose également l’expansion de l’Allocation canadienne pour les travailleurs afin d’appuyer plus d’un million de Canadiens avec des emplois à faible revenu. Signifiant « que pour la première fois, les personnes travaillant à temps plein au salaire minimum bénéficieront d’un soutien considérable grâce à cette importante allocation […] Un travailleur seul à temps plein touchant le salaire minimum pourrait recevoir environ 1 000 $ de plus en prestations que ce qu’il reçoit dans le système actuel ». Cela viendrait appuyer davantage les adultes célibataires sans personne à charge[3].

5. Le budget propose d’importants nouveaux investissements pour les peuples autochtones. Cela comprend « plus de 6 milliards de dollars pour aider à combler les lacunes en matière d’infrastructure dans les communautés autochtones et 2,2 milliards destinés à des mesures pour mettre fin à la tragédie nationale des femmes et des filles autochtones disparues et assassinées ». Malgré l’avis de plusieurs experts, ces nouveaux investissements ne comprenaient pas de stratégie pour le logement autochtone urbain, rural et nordique.

6. Le budget annonce 1,5 milliard en nouveaux fonds pour l’Initiative pour la création rapide de logements (ICRL). Lancée en 2021, ce programme sert à construire de nouveaux logements mobiles, l’acquisition de terrains, et la réaffectation d’édifices en logements abordables. L’ICRL offre des subventions pour la mise sur pied de chaque unité, mais a recours aux gouvernements provinciaux et territoriaux pour financer les coûts opérationnels.

7. L’Allocation canadienne pour le logement sera améliorée. On consacrera 315,4 millions de dollars sur sept ans pour « pour accroître le soutien financier offert directement aux femmes à faible revenu fuyant la violence et leurs enfants afin de les aider à payer leur loyer ». L’annonce de cette prestation remonte à novembre 2017. Malheureusement, plusieurs gouvernements provinciaux et territoriaux tardent à signer des ententes bilatérales avec le gouvernement du Canada, retardant sa mise en oeuvre.

8. Le Fonds national de co-investissement pour le logement (FNCIL) a été amélioré. Ceux-ci comptent 750 millions de dollars en financement, et 250 millions de dollars pour appuyer la construction, la réparation, et les frais de fonctionnement des logements temporaires pour les femmes et les enfants fuyants la violence (il n’est toutefois pas clair quelle proportion de ces montants sont des subventions ou de prêts). Le FNCIL, qui date de 2017, a fait l’objet de critiques puisqu’il offre surtout des prêts, et en raison de son onéreux processus de demande et d’approbation.

9. Ce gouvernement continue à augmenter le financement des initiatives pour lutter contre l’itinérance. Le budget propose 567$ million de dollars de plus, sur une période de deux ans, débutant en 2022-2023, pour le programme Vers un chez-soi (la stratégie canadienne de lutte contre l’itinérance). Le gouvernement maintient donc le niveau de financement issu de l’énoncé économique de l’automne 2021. Le budget propose également 45 millions de dollars sur deux ans pour un projet pilote « visant à réduire le nombre de vétérans en situation d’itinérance à l’aide du versement de suppléments de loyer et de la prestation de services complets pour les vétérans sans abri comme le counseling, le traitement de la toxicomanie et [de] l’aide à trouver un emploi ».

10. Une variété d’autres mesures reliées au logement ont également été annoncées. Parmi celles-ci : une taxe d’un pour cent sur les propriétés vacantes appartenant à des non-résidents; 600 millions de dollars sur sept ans « pour renouveler et élargir le Fonds d’innovation pour le logement abordable, ce qui favorise de nouveaux modèles de financement et des techniques de construction novatrices dans le secteur du logement abordable »; 118,2 millions de dollars sur sept ans pour l’Initiative fédérale de logement communautaire (pour les entrepreneurs de logements coopératifs administrés par le fédéral); une réaffectation d’un prêt de 300 millions de dollars du programme de Financement de la construction de logements locatifs afin d’appuyer la transformation de propriété commerciale vacante en logement locatif; 25 millions de dollars pour de nouveaux logements dans les Territoires du Nord-Ouest; 25 millions de dollars pour de nouveaux logements au Nunavut.

En conclusion. Ce budget consacre d’importantes nouvelles sommes à des initiatives sociales, surtout par le biais de services de garderie. Il prévoit également de nouveaux fonds pour les Canadiens à faible revenu, incluant du logement et des mesures pour lutter contre l’itinérance. Il le fait également à un moment où les coûts liés au service de la dette sont faibles en raison de taux d’intérêt bas.

Je souhaite remercier les personnes suivantes pour leur appui à la rédaction de ce billet : George Fallis, Martha Friendly, Rob Gillezeau, Michel Laforge, David Macdonald, Rianne Mahon, Michael Mendelson, Jeff Morrison, Steve Pomeroy, Shayne Ramsay, Sylvia Regnier, Vincent St-Martin et Greg Suttor. Je souhaite également remercier HomeSpace Society pour l’usage de la photo ci-dessus.

[1] Ceux-ci comprennent le prolongement de la subvention salariale, la subvention sur le logement, la mesure de soutien pour les entreprises et d’autres employeurs jusqu’en septembre 2021. La somme de ces mesures totalise 12.1 milliards de dollars en appui additionnel.

[2]  Pour une analyse complète des nouvelles mesures affectant le postsecondaire, jetez un coup d’oeil à cette analyse (en anglais).

[3] Pour plus d’informations concernants les défis financiers des adultes célibataires sans personne à charge, consultez ce rapport récent (en anglais).

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

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

by | Apr 11, 2021 | Canada, Ending Homelessness, Federal Budget, Fiscal policy, Government, Government Funding, Homeless, Housing, Indigenous peoples, Policy, Social Housing, Social Policy

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.

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

Canada : Dix faits saillants sur le rôle du fédéral en matière de politique du logement

by | Apr 11, 2021 | Canada, Federal Budget, Fiscal policy, Government, Government Funding, Homeless, Housing, Indigenous peoples, Policy, Social Housing, Social Policy

Canada : Dix faits saillants sur le rôle du fédéral en matière de politique du logement

An English-language version of this blog post is available here.

Le 24 mars 2021, dans un cours du professeur Benjamin Adu Gyamfi à l’université de Calgary, j’ai donné une présentation qui survolait le rôle du fédéral en matière de politique du logement à partir de 1964. Les notes de cette présentation sont disponibles ici.

En voici 10 points saillants.

1. Le gouvernement fédéral canadien joue un rôle important dans l’accession à la propriété et offre également de l’assistance aux locataires. C’est grâce à une société de la couronne, la Société canadienne d’hypothèques et de logement (SCHL), que le fédéral joue ce rôle. La SCHL appuie les acheteurs d’une première habitation en offrant une assurance hypothèque. Elle offre également des subventions aux locataires.

2. Le gouvernement fédéral appuie également les propriétaires grâce à des dépenses fiscales. Comme le souligne Frank Clayton, les dépenses fiscales fédérales sont chiffrées à plus de 18 milliards de dollars par année, et les propriétaires d’habitations représentent 90% de ce total. Les dépenses fiscales sont difficiles à percevoir, mais en voici un exemple : si vous vendez votre habitation plus cher que vous l’avez payée, la différence n’est pas taxée (si l’habitation était votre résidence principale). C’est un exemple de dépense fiscale qui soutient les propriétaires.

3. Lorsque le fédéral augmente ses dépenses en programmes sociaux, les subventions pour les logements locatifs ont également tendance à augmenter. En d’autres mots, le contexte macroéconomique est important. On peut donc dire qu’à partir du milieu des années 60 et jusqu’au début des années 90, les dépenses fédérales en logement étaient historiquement élevées. (De plus, pendant les ralentissements économiques, le gouvernement fédéral se sert de politiques sur le logement comme stimulus économique temporaire.)

4. Au cours des années 60, des changements importants et positifs sont survenus en politique fédérale de logement. Auparavant, les coûts de nouveaux logements sociaux étaient répartis selon un ratio 25:75 fédéral-provincial; à partir de 1964, la répartition était de 50:50 (en plus d’une augmentation du financement d’immobilisations de la part du gouvernement fédéral). Également pendant les années 60, Affaires indiennes et du Nord a mis sur pied le premier programme de subvention de logement en réserve pour la construction et la rénovation.

5. Inversement, le milieu et la fin des années 90 ont été des années sombres en matière de politique fédérale de logement. Dans son budget d’avril 1993, le gouvernement du Canada a annoncé qu’il n’y aurait plus d’argent fédéral pour de nouveaux logements sociaux, à l’exception de certains logements sur des réserves. Tom Carter stipule qu’il s’agissait « réellement du point culminant de près de neuf ans de mesures plus ou moins constantes pour restreindre les dépenses envers les programmes de logement social ». (Heureusement, le gouvernement fédéral a annulé cette décision en 2001.)

6. Les gouvernements de gauche ont tendance à dépenser davantage sur des subventions pour le logement locatif. Il n’est pas rare d’entendre un parti de centre gauche promettre d’augmenter les dépenses en logements à condition d’être élu; pourtant, il est rare d’entendre un parti de centre droit émettre des idées semblables. (Il est cependant commun d’entendre ces mêmes partis de centre droit promettre d’assouplir les règles en faveur des promoteurs immobiliers ou des propriétaires.)

7. La pression publique peut être un moyen efficace pour faire augmenter les dépenses fédérales en logement locatif. Cela est aussi efficace lorsque la pression provient de groupes communautaires tout comme lorsqu’elle provient d’organismes professionnels de lobbying. Parfois, on fait pression directement auprès du gouvernement fédéral; à d’autres moments, on s’adresse aux élus municipaux qui se retournent à leur tour vers le fédéral. Je crois que la Fédération canadienne des municipalités a été particulièrement efficace à influencer le gouvernement fédéral en matière de logement locatif (quoique leur travail est facilité par celui des groupes de pression communautaires).

8. Comparées à celles d’autres pays prospères, les dépenses du gouvernement fédéral canadien en matière de subvention pour le logement locatif sont modestes. La tendance se maintient pour d’autres types de programmes sociaux. Gøsta Esping-Andersen a beaucoup écrit à ce sujet.

9. Le gouvernement fédéral canadien joue un rôle important par rapport aux investissements dans les logements locatifs. La SCHL est un moyen efficace de pousser les gouvernements provinciaux et territoriaux à partager les coûts de nouveaux logements. En d’autres mots, les gouvernements provinciaux et territoriaux ont tendance à être réceptifs lorsque la SCHL offre de partager les coûts liés aux nouveaux logements. (Ceci étant dit, certains gouvernements provinciaux et territoriaux ont de la difficulté à égaler les montants fédéraux. Le Québec ne participe pas toujours aux initiatives fédérales; et quand tel est le cas, la province a tendance à allouer les sommes fédérales à d’autres initiatives de logement.)

10. En 2017, le Gouvernement du Canada a dévoilé la Stratégie nationale sur le logement. Certains députés libéraux ont vanté ses bienfaits. Cependant, l’ampleur de la stratégie a été exagérée dès sa mise sur pied; et au cours des trois dernières années, sa mise en œuvre avance à pas de tortue. 

Pour conclure. Le gouvernement fédéral canadien a joué un rôle important par rapport à réglementation des hypothèques, les dépenses fiscales, et l’aide financière pour les locataires. Cependant, son niveau d’appui demeure modeste lorsqu’on le compare à celui d’autres pays prospères.

J’aimerais remercier les personnes suivantes pour leur appui à la rédaction de ce billet : Maroine Bendaoud, Catherine Boucher, Stéphan Corriveau, Susan Falvo, David Hulchanski, Michel Laforge, James McGregor, Vincent St-Martin and Marion Steele.

Trudeau government should spend more on affordable housing and homelessness

Trudeau government should spend more on affordable housing and homelessness

by | 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.

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

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

by | 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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. 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).
  7. 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.
  8. 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).
  9.  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).
  10.  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.