Our last blog summarized the content of the new National Housing Strategy, noting its many positives. This blog looks more closely at its strengths and soft spots, and how much difference it could make.
Strategic turning point: The Strategy marks a turning point in Canadian housing policy, its significance akin to the shift to non-profit housing in the 1970s, or devolution in the 1990s. It re-establishes federal strategic leadership. It sets a foundation to sustain existing social housing for years to come; re-claims a federal lead in new supply; and the Canada Housing Benefit is a bold innovation. The Strategy reinforces federal-provincial cost-sharing of housing programs.
Sustaining public and non-profit housing: The Strategy rescues almost 500,000 units of social housing from a crisis. Federal baseline funding under twentieth-century programs has been rapidly phasing out. This was putting huge pressure on provinces and municipalities to pay more, and putting the future of the non-profit and co-op sector at risk. The new Canada Community Housing Initiative will sustain about the existing level of federal funding over the next decade.
Federal lead in new affordable housing: The National Housing Co-Investment Fund puts the federal government in the driver’s seat for new affordable rental – setting the rules, selecting proposals, entering agreements, flowing funds, and monitoring. Since the 1950s this has normally been a provincial role, except in 1974-1985.
It is easy to see why the federal government wants to cut the ribbons on new housing, but can it implement without hiccups? When Canada Mortgage and Housing Corporation (CMHC) delivered such programs in the past it had about 20 local offices, and it was expanding the social housing stock by 10 percent each year. Today it has no local presence and will add only 1 percent a year; provinces and municipalities run the system and have the expertise. CMHC many need them to help with delivery.
Federal loans: CMHC has a new role providing mortgage loans for new affordable housing and repair/retrofit. This was absent in the 2002-2015 new supply programs, but is a vital element in any effective affordable housing program. As well as new projects, this could help housing providers to carry out more repair and retrofit, and help turn the Tower Renewal into a much larger-scale program.
New supply but how affordable? Similar to recent programs, the key criterion in new supply appears to be rents at 80 percent of average market levels. In Greater Toronto this means about $1,000 a month – a good starting point because a project can break even and be self-sustaining, but not affordable to low-income tenants. Much will depend on the details of program design.
Supportive housing and homelessness: The Strategy is almost silent on supportive housing – non-profit housing with extra staff to ensure that people exiting chronic homelessness or living with a serious mental illness can have affordable, stable housing. Canada needs better synergies between housing and homelessness programs, but it may be up to provincial and local partners to make these connections.
The housing benefit: Most affluent countries with social safety nets have a housing benefit –monthly assistance to low-income renters, living either in social or private rental. The Canada Housing Benefit is an important change because most low-income people live private rental, with big affordability problems. They need better options than waiting lists, basement apartments, and food banks. It will take complex federal-provincial negotiations to put the benefit is in place, as it must dovetail with provincial housing benefits in four provinces, and with social assistance.
Assessing the scale of activity: How big is 60,000 new affordable units in a decade, and 300,000 with a housing benefit? Canada has 1.1 million renter households in Core Housing Need (2016), including 400,000 in severe need who pay at least half of income on rent. Canada will grow by about 1½ million households in the next decade (medium growth scenario), and this would normally include about 200,000 more low-income renters.
A housing benefit of $200 monthly will not make rents affordable for many low-income people. A benefit of $400 a month – if provinces cost-match the federal dollars – would do that for many recipients, or close to it. If 300,000 households receive it, this takes a big bite out of Core Housing Need.
The new supply is less ambitious. 6,000 units a year is better than Canada’s 4,000 annual average in 2003-2015, but it’s only one-third of annual social housing production in the 1970s and 1980s. It’s small compared to growth at the low end of the income spectrum. 6,000 units a year doesn’t do much to create affordable rental options outside downmarket areas or build mixed communities.
In sum, the National Housing Strategy includes some bold moves and puts affordable housing in Canada on a much better foundation that it has had for two decades. The scale of programs could take a bite out of affordability problems, but won’t widen the options for people looking an affordable place to live.