Politicians point fingers on housing crisis, but calls growing for more co-operation

By Nojoud Al Mallees, The Canadian Press on June 24, 2023.

OTTAWA – Calls for co-ordinated action across levels of government to address Canada’s housing crisis are growing as affordability deteriorates and the country risks falling even further behind on building more homes.

As it stands, Canada is not on track to build the 3.5 million additional homes – on top of the current pace of building – that the federal housing agency says are needed to restore affordability by 2030.

During a roundtable interview with The Canadian Press last week, officials from the Canada Mortgage Housing Corporation said reversing this trend will require a “Team Canada” approach, in which all levels of government co-operate to address the shortage.

And while the officials’ proposed solutions – building denser cities, incentivizing private investment in housing and boosting public investment in social housing – are shared by many housing experts, no one has yet presented a plan for executing these ambitious changes across levels of government.

Instead, politicians have been quick to place blame elsewhere, taking particular aim at municipalities for standing in the way of new developments.

“No one level of government controls all the policy levers that affect both the demand and supply for housing. And it’s one of the things that’s made this such a tricky problem is there’s been a lot more finger pointing,” said Mike Moffatt, an assistant professor at Western University.

“We need some kind of national roundtable or unified plan where the federal government, the provinces and some of the bigger municipalities get together and agree on reforms.”

An outspoken voice on housing policy, Moffatt has been sounding the alarm about the political implications of failing to act. He warned that young people are ready to give up on today’s political system.

“I’ve never seen a cohort of 22-year-olds as angry and wanting to burn down the system as the group I’ve taught in recent years. And I can’t exactly blame them, that they feel like their futures are being taken away from them, that they’ll never be able to afford a home,” he said.

Moffatt, who served as an economic adviser to then-Liberal leader Justin Trudeau, said the Liberal government got elected in 2015 in part because millennial voters were energized by their progressive policy proposals, including legalizing cannabis.

Now, those millennials are struggling to find homes they can afford, he said.

“There’s a real risk here that the very same people who got the Liberals elected in 2015 may be the ones to get them defeated during the next federal election,” Moffatt said.

Calls for urgent action on housing have been growing from all directions. The International Monetary Fund recently recommended that a permanent discussion forum be formed between levels of government and stakeholders to find ways to boost the country’s housing supply.

And a report from Desjardins published in May warned its affordability index reached an all-time low in the last quarter of 2022, suggesting “historically stretched affordability.”

“We don’t anticipate any significant improvement in affordability in the next couple of years,” the report said.

For young people, the report highlights how housing affordability is altering life choices. Young people who spend more than 30 per cent of their income on shelter, for example, start having kids at a later age.

Conservative Leader Pierre Poilievre has been particularly focused on speaking to those young people, commonly referring to the “35-year-olds still living in their parents’ basements” in the House of Commons.

Moffatt said that message likely resonates with many young people, particularly young men. But when it comes to actual policy proposals, the Conservatives haven’t differentiated themselves much from the federal government, he said.

“There’s very little difference between Liberals and Conservatives on in terms of housing policy. I mean, both are essentially saying that they will use the federal spending power to try and influence change at the municipal level,” he said.

Poilievre has threatened to withhold federal funding from cities that don’t build enough housing.

Meanwhile, the federal government is launching a housing accelerator fund this fall that offers money to municipalities to incentivize more housing construction.

But Moffatt said the federal government could be doing much more, particularly on incentivizing more private investment in housing.

“The biggest bottleneck, I would say, is a lack of capital. And the government can do something about that through tax provisions,” he said.

For example, the federal government used to allow apartment building developers in the 1960s and ’70s to claim the depreciation of the structure on their taxes, he said.

“The irony is a lot of the a lot of the policy tools are essentially the same ones that the federal government (is) currently using to get the Stellantis plant in Windsor built and the (Volkswagen) plant in St. Thomas,” he said.

“Basically, you can use the same set of policy tools to build clean energy projects as you can to build apartment buildings.”

This report by The Canadian Press was first published June 24, 2023.

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