This backgrounder provides a first glimpse at housing in federal budget 2009. Additional housing analysis, and analysis of other key issues and concerns, will be released in the coming days by the Wellesley Institute.
BILLIONS IN NEW HOUSING DOLLARS, BUT WHO REALLY BENEFITS: Federal budget 2009 promises to deliver billions upon billions of dollars over the next two years in new housing investments – the single biggest amount of new housing spending in more than two decades. This is a solid victory for housing advocates, who created a powerful national campaign to convince the federal government to include housing in their economic stimulus plans. But most of the new dollars will flow quickly to people who already own their home and want to re-pave their driveway, or cottagers who want to add a new sun deck. The hundreds of thousands who will experience homelessness this year won’t get a single penny in desperately needed new programs and services; and the three million Canadian households who are precariously housed (a modern-day record) will have to wait to see if the much smaller dollars being offered to them will actually make it through a complicated set of federal-provincial-territorial negotiations including a cost-sharing requirement.
WHO’S LEFT OUT: Hundreds of thousands of Aboriginal people living in urban, rural and remote parts of Canada who bear a major burden of homelessness and housing insecurity won’t get a single penny in new housing help. People with physical or mental health concerns who require supportive housing have been offered a mere $75 million for the entire country – an amount that will fund only a handful of new homes. The bottom line: The biggest dollars will go to those who need the least help; and the people who are facing the biggest housing challenges are left to wait for a small share of the overall spending. The federal government needs to make big investments in affordable housing to make up for years of spending cuts and neglect, but it has to shift the programs and spending set out in federal budget 2009 to make sure that those who have the greatest housing needs are at the front of the line.
THE DRIVEWAYS AND DECKS TAX CREDIT: The federal budget puts the two-year cost of this tax credit at $3 billion. But their numbers don’t add up. The budget documents say a tax credit of up to $1,350 will be offered to an estimated 4.6 million households. That puts the cost of the tax credit as high as $6.2 billion. But whether it’s $3b or $6b or somewhere in between, the tax credit is designed to help homeowners renovate their kitchen or bathroom or basement; add new carpeting or hardwood floors; build a deck or a fence or an addition to their home; add a new furnace or water heater; paint the interior or exterior of the house; resurface the driveway; or lay new sod. Some of the improvements may have an energy or environmental benefit (the feds set up a separate $300 million fund for energy efficiency), but most of the list are cosmetic improvements. Great for the renovation business, but at a time when a record number of Canadians are precariously housed, is this the smartest use of federal tax dollars? Homeowners make up about two-thirds of Canadian households, and their annual incomes are about double those of renters, on average. Homeowners already receive generous tax subsidies from the federal government. Federal Finance Minister Jim Flaherty reported earlier in January that the annual tax break to homeowners is more than $11.5 billion – that’s five and one-half times more than the less than $2 billion in current federal housing support for lower income Canadians.
LESS HELP FOR THOSE THAT NEED IT THE MOST: The driveways and decks tax credit is up to three times bigger than the entire investment set aside for lower-income Canadians who are suffering the most. An even bigger concern – virtually the entire $2 billion in affordable housing investments will have to be cost-shared with the provinces and territories following negotiations. Canada has a poor record when it comes to delivering housing dollars through complicated agreements. It took the federal, provincial and territorial governments months to negotiate the general terms of the Affordable Housing Framework Agreement that was signed in November of 2001. And it took three years and three months (until April of 2005) for the last province to finally sign on (Ontario was the laggard) to the 2001 deal. Almost eight years after the original deal was signed, Canadians are still waiting for a full and public accounting of the $2 billion dollars that were supposed to have been spent. A Wellesley Institute national housing report card in February of 2008 found that there was far too much dexterous financing: The feds had promised to increase housing investments in 2001, but housing spending per capita was at its lowest level in two decades; meanwhile, some provinces had cut their own housing spending and replaced it with federal dollars, a clear breech of the 2001 national housing deal.
MOST WHO NEED HOUSING HELP WON’T BE ABLE TO GET IT: Half the $2 billion in new affordable housing investments will go to fix up rundown social housing units. The spending is needed, but social housing makes up only 5% of the overall housing in Canada. Most households who are insecurely housed live in privately-owned rental housing, and there’s nothing in federal budget 2009 for them. Seniors will get some housing help, and that’s good; but millions of non-senior households in substandard, unaffordable, overcrowded housing or out on the streets also require housing help. The majority of Aboriginal people live away from reserves in urban, rural and remote areas, according to Statistics Canada, and they bear among the heaviest burden of poor housing and poor health. But there is nothing for them in federal budget 2009. The federal government says that it is willing to provide some financial help to municipalities to help them build the infrastructure to support new housing, but only if cash-strapped municipalities are willing to go into debt.
BRIGHT NORTHERN LIGHTS: Federal budget 2009 is offering $200 million over two years in dedicated funding for renovation and construction of social housing in Canada’s three northern territories. The Yukon, Northwest Territories and Nunavut suffer some of the worst housing and homelessness problems in Canada, and they also face the biggest costs in terms of building and operating new homes. This money will bring some much-needed warmth to Canada’s north.
NO NEW HELP FOR PEOPLE WHO ARE HOMELESS: The federal government announced plans in September of 2008 to extend its national homelessness program for five years. The funding was frozen at $135 million annually for the entire country – basically the same level as the past decade. In federal budget 2009, the government re-announced this funding extension, and rolled the homelessness program dollars into the same pot as the extension of the federal housing rehabilitation program and the relatively tiny federal affordable housing initiative to create a grand total of $1.9 billion over five years. Reality check: 80% of the federal homeless dollars flow to ten large cities in Canada, with 20% flowing to another 51 communities. Most of the country doesn’t get any money for health and food programs or other vital services for the homeless, or for transitional housing to help people who are homeless move into housing. Most parts of Canada didn’t get any homeless support dollars before federal budget 2009, and they still won’t get any money. And the lucky few communities that do get some dollars will have to make do with frozen funding, even though the costs of the services, and the numbers of people who are homeless, are rising.
RE-PROFILING THE DOLLARS: The federal government was right to make a major increase in housing investments, but it’s not just the size of the investment that counts. The federal government needs to ensure that the big housing dollars are also smart dollars. The federal government should re-profile the spending plans to make sure the biggest dollars are directed at the greatest need. New decks and driveways are a lower priority for public investments than new homes for people who don’t have one.
HOUSING INVESTMENTS: GOOD FOR PEOPLE, COMMUNITIES, ECONOMY: Good quality, affordable housing is one of the most fundamental determinants of health. Research by the Wellesley Institute and others shows that poor housing and homelessness leads directly to increased illness and premature death. Increased investment in affordable homes is not only good for individual health, but it also strengthens communities and helps the economy by stimulating economic activity and generating jobs. TD Economics (the economics branch of one of Canada’s largest banks) said it best in its introduction to a major study on housing in Canada in 2003: “We are used to thinking of affordable housing as both a social and a health issue… However, working to find solutions to the problem of affordable housing is also smart economic policy.”
MORE ANALYSIS TO COME: Good housing and a good income are also closely linked. The Wellesley Institute will continue to publish backgrounders on federal budget 2009 including a detailed examination of the impact of the budget on the third sector, on the incomes of the poorest Canadians and on Canada’s much-loved and poorly-treated health care system.