Wellesley update: Federal budget 2006 and housing
Federal Finance Minister James Flaherty delivered the first budget of the Conservative minority government on May 2, 2006. This note examines the housing elements of the 2006 federal budget. Housing is one of the social determinants of health, and a key priority in the work of
Wellesley Central Health Corporation.
As expected, federal budget 2006 allocates $1.4 billion for new affordable housing over the next three years to the provinces and territories. This will add to the $474 million in federal funding that has been allocated to the provinces and territories starting in 2001 but remains unspent. Federal budget 2006 doesn’t offer specific plans on how to get the new and previous money flowing to new affordable housing, including co-op and non-profit homes.
There is no word on other key housing and homelessness initiatives, such as an extension of the federal homelessness and housing rehabilitation programs (which are due to expire this year); nor any support for the ramping up of federal spending to meet the nation-wide affordable housing crisis.
In summary, the Flaherty budget is a stand-pat document when it comes to housing and homelessness. No new spending ” despite the urgent national need ” but the 2006 federal budget does take a step towards allocating housing spending approved by the last Parliament.
(1) What’s in the federal budget speech
As expected, Minister Flaherty has announced that $1.4 billion of the $1.6 billion in housing funding in Bill C-48 (passed by Parliament last summer, but not allocated by the then-Liberal government) will be divided into three trust funds to be spent over the next three years:
– $800 for the provinces (see breakdown below)
– $300 for the three northern territories (see breakdown below)
– $300 million for off-reserve Aboriginal housing (to be administered by provinces)
The Flaherty-Harper budget takes two significant steps backward from Bill C-48. First, the spending allocated in the federal budget is $200 million short of the amount approved by Parliament in Bill C-48. Second, the C-48 spending was supposed to flow over two years, while the federal budget stretches the spending to three years.
Here is the text on housing from Minister Flaherty’s budget speech:
We must support our Canadian Aboriginal communities in addressing their particular needs.
We are providing $450 million for improving water supply and housing on reserve, education outcomes, and socio-economic conditions for Aboriginal women, children and families.
We are confirming up to $300 million to the provinces to address immediate pressures in off-reserve Aboriginal housing.
Mr. Speaker, not enough affordable housing has been built to accommodate individuals and families who need it. Some are homeless. We need to do more to address these pressures now.
The Government will allocate up to $800 million for a major, one-time investment to increase the supply of affordable housing in our cities and communities through a new Affordable Housing Trust.
To address the particularly acute housing situation in Canada’s North, the Government is making a one-time investment of up to $300 million to increase the supply of affordable housing in the territories.
The key focus of the budget is delivering massive tax cuts (though not as big as the $100 million tax cuts delivered by the Liberals in 2000). Tax cuts tend to favour wealthier people (they get the most benefit from cuts in consumption and income taxes). The tax cuts tend to penalize lower-income people (tax cuts limit spending on priorities that benefit lower-income people, like health, education, housing and income assistance).
For instance, the 1% cut in the GST will deliver more than $1 billion to new home buyers over the next three years. That will put $10,000 into the pockets of those people who will be buying a new million-dollar home in Vancouver.
(2) What’s in the background documents
The background papers provide more details about housing allocations and spending:
Increasing the Supply of Affordable Housing
In order to help provinces and territories address short-term pressures with regard to the supply of affordable housing, the Government is providing a one-time payment of $800 million, to be paid into a third-party trust, contingent on sufficient funds from the 2005″06 surplus in excess of $2 billion. The Affordable Housing Trust will support investments to increase the supply of affordable housing, including transitional and supportive housing.
Pending confirmation in fall 2006 of the Government of Canada’s financial results for 2005″06, funding will be distributed on an equal per capita basis among provinces and territories, and notionally allocated over three years.
Off-Reserve Aboriginal Housing
In order to help provinces address short-term pressures with regard to the housing needs of Aboriginal Canadians living off reserve, the Government is providing a one-time payment of $300 million, to be paid into a third-party trust, contingent on sufficient funds from the 2005″06 surplus in excess of $2 billion. The Off-Reserve Aboriginal Housing Trust will support investments to increase the supply of rental housing and enhance home ownership opportunities for Aboriginal Canadians living off reserve.
Pending confirmation in fall 2006 of the Government of Canada’s financial results for 2005″06, funding will be distributed to provinces based on their share of the Aboriginal population living off reserve and notionally allocated over three years.
Affordable Housing in the Territories
The pressures on housing in the territories, where many Aboriginal Canadians live, are particularly acute. In order to help the territories address short-term affordable housing pressures, the Government is providing a one-time payment of $300 million, to be paid into a third-party trust, contingent on sufficient funds from the 2005″06 surplus in excess of $2 billion. The Northern Housing Trust will support investments to increase the supply of affordable housing, including rental, transitional and supportive housing in the territories.
Pending confirmation in fall 2006 of the Government of Canada’s financial results for 2005″06, funding will be notionally allocated over three years and distributed among the three territories as follows: $50 million each for the Yukon, the Northwest Territories and Nunavut, plus an additional $150 million for urgent needs in Nunavut.
Here is the breakdown, from the federal budget papers, on the allocations to provinces and territories:
Funding Support to Provinces and Territories for Housing
Funding Support to Provinces and Territories for Housing
|Province/territory||Affordable housing||Northern housing||Off-reserve Aboriginal housing|
|Prince Edward Island||3.4||0.7|
(3) Analysis and Questions from Wellesley
Plenty of questions remain:
Who will make sure that the $1.4 billion allocated to the three housing trust funds actually gets spent on new affordable housing (there is little information on accountability and standards)?
What has happened to the remaining $200 million in affordable housing funding from Bill C-48 (the federal budget only allocates $1.4 billion of the $1.6 billion in the legislation)?
What is the federal government planning to do with the huge and growing national housing surplus (the annual surplus of Canada Mortgage and Housing Corporation is variously calculated at from $892 million to $4.7 billion in the current fiscal year)?
What are the federal plans to speed up the flow of federal dollars in the pipeline (according to federal housing minister Diane Finley, the federal government still hasn’t allocated $474 million of the $1 billion in housing spending first promised in November of 2001)?