The plan from Ottawa on housing in its fall economic statement “does not reflect” the scale of need to address the housing crisis, Canadian cities say.
Scott Pearce, president of the Federation of Canadian Municipalities (FCM), said the federal government’s fiscal update takes “some steps to improve housing affordability,” but lacks infrastructure investment and doesn’t do enough to meet the needs of people right now.
“While FCM acknowledges the federal investments to support new housing construction announced today, the reality is that we cannot rapidly scale up new housing construction without also investing in the municipal infrastructure that supports it. In May 2023, the federal government made a commitment to deliver a landmark investment in infrastructure across this country this fall,” he said in a statement Tuesday.
“We are concerned that the fall economic statement does not reflect the scale of infrastructure investment required to meet the national housing supply gap, and FCM will be looking to Budget 2024 for a comprehensive, ambitious investment in community infrastructure that matches the record-breaking population growth currently underway in Canada.”
Finance Minister Chrystia Freeland tabled her fiscal update Tuesday, emphasizing in the days leading up to it that Ottawa was focused on measures to address housing and affordability challenges.
Tuesday’s housing measures for new construction would be implemented two years from now. Ottawa is earmarking $15 billion for loan funding, beginning in the 2025-2026 fiscal year, to build more than 30,000 homes, as well as $1 billion for new affordable housing in the same fiscal year to help build 7,000 new homes.
Furthermore, Ottawa is earmarking $309 million for a new co-operative housing development program, which it said will go toward a co-developed program that it expects to launch in early 2024.
Also, the government is planning to spend $50 million over three years, starting next year, to support municipalities in cracking down on short-term rentals. Ottawa also plans to deny income tax deductions when short-term rental operators are not complying with provincial and municipal rules.
Co-operative housing corporations that provide long-term rental accommodations will be eligible for the removal of the GST on new rental housing, and finally, Ottawa said it will update its mortgage charter to ensure that financial institutions offer tailored relief and reasonable payments for borrowers.
The charter, however, is not mandatory.
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“Housing is an urgent concern of Canadians. Housing is so connected to affordability for Canadians. And that is why our focus is supply, supply, supply,” Freeland told reporters in lock-up Tuesday.
However, Pearce and other industry experts suggest Tuesday’s fall economic statement won’t change much in the short term.
“In the last year alone, Canada’s population increased by more than 1.1 million. With every home built, there is a corresponding infrastructure need that must be met. New housing depends on new municipal infrastructure: from water, to roads, to wastewater facilities, to community amenities, to public transit facilities. This is what makes the difference between laying brick and mortar, and ensuring vibrant, successful communities into the future,” Pearce said.
“As our nation grows, the need for municipalities to confidently meet that growth is clearer than ever. Municipalities are on the frontlines of challenges related to homelessness and mental health, climate change and more. As Budget 2024 approaches, we will, as the order of government of proximity, continue to engage with our federal counterparts, putting forward detailed, future-focused recommendations that will empower Canadians by empowering communities.”
Matti Siemiatycki, professor of geography and planning and director of the Infrastructure Institute at the University of Toronto, told Global News Wednesday the fall economic statement was “underwhelming in terms of its scale and in terms of its urgency.”
“I would like to see significant investments in affordable and deeply affordable housing. I’d like to see those paired with infrastructure investments … but we need to make sure that we’re building complete communities that have a school, a library, a rec centre, a retail area and parks – all of the things that create a neighbourhood in a community,” he said.
“We need to really focus and make sure that our investments are coordinated, and this is challenging for government because it requires coordination between the local level, the provinces and the federal governments, as well as the private and nonprofit sector. We need to be ensuring that once we build all of this housing, there’s complete communities that create great places for people to live.”
Tim Richter, president and CEO of the Canadian Alliance to End Homelessness, said that while the measures are welcomed, it’s not enough.
“With affordability worsening, homelessness surging and the dream of home ownership continuing to slip away for many, the federal government must move more aggressively to solve the housing crisis,” Richter said in an email.
“I’m especially concerned with the notable absence of measures to address homelessness as we start another harsh and dangerous winter.”
RBC economists Rachel Battaglia and Carrie Freestone said in an analysis that Tuesday’s measures will be helpful in addressing the housing affordability crisis, but won’t change things immediately.
“We think concerted efforts focused on growing the supply of homes Canadians can afford are the best way to improve the situation on a sustained basis,” they said.
“But they won’t be quick fixes. Building the number of homes needed is a protracted effort requiring investment, improved efficiencies to the development process, and time.”
Canada’s housing crisis has been fuelled by a surge in demand and a lack of inventory for years, leading to inflated prices in many markets.
The minority Liberals have recently been touting the Housing Accelerator Fund, a program designed to entice cities to submit applications for federal funding tied to zoning changes.
They promised the $4-billion fund during the 2021 election campaign. The money was allocated to the Canada Mortgage and Housing Corp. in the 2022 federal budget, with the goal of adding at least 100,000 new homes across the country over five years.
However, the first deal wasn’t announced until September, with London, Ont., being the recipient.
Other Ontario cities, Brampton, London, Vaughan and Hamilton, as well as Halifax and Kelowna, have all signed agreements with the federal government.
Ottawa is facing pressure to avoid spending, which could make it harder to keep lowering inflation. The Liberals are trying to tackle both the housing crisis and significant affordability challenges and to halt their ongoing slump in the polls, as they’re trailing the Conservatives in many parts of the country.
The Bank of Canada helped relieve some pressure on Oct. 25 when it held its key interest rate for a second straight decision, but with the economy still showing signs of weakening, Ottawa will be under pressure to show officials grasp the moment and have a plan going forward.
Bank of Canada Governor Tiff Macklem voiced his own concerns late last month about the pace of government spending. After holding rates steady on Oct. 25, he said the projected fiscal spending plans at all levels of government are “not helpful” in taming inflation.
Regardless, Siemiatycki said there’s no “quick fix” to the housing crisis.
“It took us decades to get into this mess,” he said.
“And it’s going to take years to dig our way out.”
— with files from Global News’ Craig Lord