Getting There: Alternative Federal Budget 2018 (Housing and Neighbourhoods Chapter)

Getting There: Alternative Federal Budget 2018 (Housing and Neighbourhoods Chapter)

The 2018 Alternative Federal Budget (AFB) delivers a roadmap to where the country could be on the eve of the next federal election, if the government moves forward with bold action to deliver a progressive economic plan that leaves no one behind. If implemented, the 2018 Alternative Federal Budget: Getting There will reduce income inequality, lift close to a million people out of poverty, close unfair and expensive tax loopholes, and create 600,000 jobs while locking in the unemployment rate in the five per cent range.

The AFB plan:  

  • Boosts direct transfers to low-income families in ways that would lift 600,000 children and adults out of poverty and reduce child poverty by roughly a third;
  • Eliminates all fossil fuel subsidies and creates a Just Transition Fund to help ease energy sector workers into new roles in a fully green economy;
  • Tackles historic under-investment faced by First Nations communities through a $9-billion investment this year in urgently needed infrastructure, clean water, education and health care on reserves;
  • Acts immediately to implement pay equity legislation and invests heavily in child care so women’s labour is no longer discounted as a result of discrimination;
  • Slashes senior poverty rates by 30% by increasing the Canada Pension Plan income exemption for the Guaranteed Income Supplement by $3,000 and boosting the top-up amount by $1,000;
  • Accelerates the national carbon price to reach $50 per tonne by 2020, while investing in training, apprenticeships and green infrastructure.

Background 

All orders of government in Canada, along with the non-profit sector, must play an active role in creating affordable housing. Co-ordination is fundamental for several reasons. 

First, low-income households, especially those relying on social assistance, simply cannot afford monthly rents on most private-market housing. A government subsidy is therefore vital. Second, Canadian cities, especially in high-growth areas, cannot rely on private developers to create the affordable apartment units needed by low-wage workers. 

A third reason for co-ordinated action is that non-profit ownership of affordable housing stock keeps rent levels down over the long term and creates public assets in the process. Finally, when it comes to vulnerable subpopulations (e.g., persons with mental health problems, those living with HIV/AIDS, and frail seniors), non-profit entities are effective at creating buildings that can foster community development. 

Beginning in the 1960s, the federal government very actively created housing for both low-income and middle-income households, often by sharing the costs of development with provincial and territorial governments. Tenants, in turn, were charged rents they could afford, typically in the range of 30% of their gross monthly income. 

As many as 25,000 new subsidized housing units were being created annually across Canada under this system. Low-income households who sought subsidized housing received it more quickly than they would today, and very few individuals stayed in emergency shelters or outside on the street relative to today’s numbers. Today, wait lists for subsidized housing are growing and many people become homeless while they wait.

The federal government stopped subsidizing new units of social housing in the early 1990s (with the exception of on-reserve housing). The government gradually and incrementally started to get back into the housing game, so to speak, after 2001. But fewer units are created annually today than in the 1970s and ‘80s, and these units tend to provide only modest affordability. 

The 2017 federal budget was Canada’s most important for housing since 1993. It proposed investments of $11.2 billion over 11 years, including $2.1 billion to expand and extend funding for the Homelessness Partnering Strategy (HPS) beyond 2018-19. The budget also announced that the Investment in Affordable Housing (IAH) initiative, set to expire at the end of 2018- 19, will be replaced by a new framework. 

The recently unveiled National Housing Strategy (NHS), which made history by adopting housing as a human right, includes plans to create a Canada Housing Benefit consisting of financial assistance to help low-income households afford their rents. However, this will not begin until 2020, and the average beneficiary will receive a mere $200 per month in benefits. This new federal benefit is expected to be cost-shared with the provinces and territories. 

The federal housing strategy also includes the creation of a new National Housing Co- Investment Fund, which over 10 years will create up to 60,000 units of new housing and repair up to 240,000 units of existing housing. This is a unilateral federal program, though some assistance from provincial and territorial governments may be required. 

Furthermore, the government’s strategy includes a new Canada Community Housing Initiative that will focus on preserving existing units of social housing. This will require cost-matching from provinces and territories. Canada’s approximately 500,000 social housing units — those that are both administered by provincial or territorial authorities and have rent-geared-to-income (RGI) subsidies — will be eligible. The fund will assist with repairs, help keep rents affordable and provide mortgage assistance for the operators. 

Once funding starts to flow from this initiative, the challenge of expiring operating agreements will be addressed for a 10-year period, provided the provinces and territories agree to match costs. The Federal Community Housing Initiative will do essentially the same thing for social housing units that are federally administered, including co-op units, at a cost of $500 million to the federal government over 10 years. 

It’s important to note that the National Housing Strategy’s targets — about 6,000 new builds annually over the next decade — represent just one-third of the total volume of Canada’s new annual builds from the 1970s and 1980s, keeping in mind that Canada’s population has grown since that time. 

ORGANIZATION: Canadian Centre for Policy Alternatives
PUBLICATION DATE: 2018