Federal budget 2017: Big investment in affordable housing, nothing to cool red-hot markets

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Federal government to invest $11 billion in affordable housing
Federal government to invest $11 billion in affordable housing – Mar 22, 2017

The federal government is investing $11.2 billion over 11 years in affordable housing, it announced in its 2017 budget Wednesday.

But, critics say that this isn’t nearly enough to make a difference when it comes to reducing wait times for social housing, for example.

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“You need in the neighbourhood of about a billion dollars a year to really make a big dent,” said David Macdonald, senior economist for the Canadian Centre for Policy Alternatives. He thinks that the spending outlined in this budget is only about half of that.

A new National Housing Fund, with about $5 billion over 11 years, will expand lending for new rental housing construction, provide temporary funding to social housing providers, and help social housing providers transition to “more efficient and financially sustainable operating models.”

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“I really, really need a home” Penticton mother pleads for affordable housing

Money from the National Housing Fund is planned to ramp up slowly, from $141 million in 2018-19 to a high of $707 million in 2024-25, well after the next election. Macdonald doesn’t think this is fast enough.

“There’s a huge backlog in affordable housing. The wait lists in any big city are going to be massive,” he said.

“This will have an impact, $100 or $200 million, but a big push would require much more than that.”

IN-DEPTH: Affordable housing in Canada

To Ian Lee, associate professor at Carleton University’s Sprott School of Business, the investment is largely symbolic.

“I think the Liberals are brilliant at doing this, actually, at signalling to their various supporters that they hear them, that they care about them,” he said.

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Toronto to ask provincial and federal governments for more affordable housing funding

“I think it’s more political symbolism so (Prime Minister Justin Trudeau) can say to the premiers, he can say to the municipalities and to these groups, homelessness groups, anti-poverty groups, ‘Hey, look what we said in the budget. We’re there with you. We’re working on it. We’re behind you, we agree with you.’”

A lot of the money allocated to housing – $2.1 billion – is aimed at reducing homelessness.

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“The homelessness spending is roughly on par with the total new national housing fund spending, at least until the next election,” said Macdonald.

None of this is brand new money though. As with much of this budget, the broad strokes of the spending were laid out in the fall economic update and in Budget 2016. This budget just provides more detail on the specifics of the spending.

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“You open Budget 2017 and the only thing that’s in it is Budget 2016,” said Macdonald.

No cooling for hot housing markets

One thing missing from the budget are any policies aimed at cooling the hot housing markets in parts of Canada, notably in Vancouver and Toronto.

“My sense is they feel they’ve done enough to address the problem,” said Lee.

READ MORE: Homes under $1 million in Vancouver are virtually extinct

The government has made it more difficult to get an insured house, made sure that mortgage default insurance can no longer be placed on rental properties and made down-payment and income capacity rules more stringent, he said.

“They’ve done a whole host of changes. So I think they’ve said ok, there’s not much more to do, short of stopping lending completely.”

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