Canada’s first ministers have had a preliminary meeting and they’ve agreed to work towards a massive investment in infrastructure to help respond to the current global economic crisis and also to improve bridges, transit and other necessary public works. The planned investments will generate jobs, other economic activity and will deliver real benefits to communities. It’s a great first step.
Canada should follow the lead of China, which announced on Sunday that affordable housing investments will be a key part of the four trillion yuan ($586 billion) infrastructure investments by that government over the next two years. Chinese leaders know that, in terms of economic multipliers, public investment in housing delivers just about the biggest bang for the buck in terms of direct and induced jobs, other economic activity, and increased taxes back to government.
Here are five good reasons for Canada’s first ministers to ramp up public investments in affordable housing as part of an overall economic stimulus package:
HOUSING IS GOOD FOR THE ECONOMY: Every dollar invested in housing creates two dollars in additional economic activity, and induces as much as seven additional dollars in economic activity. A 2007 study of nine U.S. cities found that every dollar invested in affordable housing had a multiplier effect of 1.93. A detailed study of three housing projects in Oregon put the multiplier at 2.1, and noted that the housing also leveraged as much as seven additional dollars for every dollar invested. An Ontario study in the early 1990s found that every 1,000 new co-op homes generated 2,210 person-years of employment.
HOUSING IS GOOD FOR THE GOVERNMENT: The latest annual report from Toronto Community Housing Company (the biggest landlord in Canada and largest provider of affordable housing) reports that its single biggest expense in fiscal 2007 was $111 million in municipal property taxes – almost 20% of the entire budget. TCHC’s annual tax bill is 10% larger than the entire amount that it spends annually on building operations, maintenance, community support and community safety. An Ontario study in the early 1990s found that every 1,000 new co-op homes generated $45 million in tax revenues.
HOMELESSNESS IS BAD FOR THE GOVERNMENT: The Government of British Columbia says that the annual public cost of homelessness is $30,000 to $40,000 per person annually. This is the most-often cited official estimate and includes social services, health and policing costs. Based on estimates of up to 300,000 homeless people in Canada, the public cost of homelessness is $12 billion annually.
HOUSING INSECURITY IS BAD FOR PEOPLE: Numerous research studies at the international (World Health Organization), national (Public Health Agency of Canada, Canadian Institute for Health Information) and local levels all draw the direct link between poor housing and increased morbidity (illness) and premature mortality (early death). Toronto Public Health reports that men living in that city’s poorest neighbourhoods have a standardized mortality rate that is 53% higher than men in the city’s richest neighbourhoods. Canadian Public Health Officer (2008): “Health outcomes related to housing are complex, as housing can directly and indirectly impact health. Inadequate housing may produce direct effects in extreme climates. Respiratory disease/ poor lung function and allergies related to moulds from cold, damp or poorly ventilated houses may develop… Overcrowding and poorly ventilated houses can also increase susceptibility to disease. The number of people per dwelling has been known to greatly impact the physical and mental health of inhabitants, including raising the risk of acquiring tuberculosis… Homelessness is also a health issue.”
HOUSING INSECURITY IS BAD FOR THE ECONOMY: TD Economics (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. An inadequate supply of housing can be a major impediment to business investment and growth, and can influence immigrants’ choices of where to locate.” Toronto Board of Trade (2003): “The severe shortage of affordable housing is one of the major issues facing the city. It is a longstanding concern of the Toronto Board of Trade and a key component of the Board’s call for a new deal for Toronto. In June 2000, the Board released Building Solutions to Homelessness: A Business Perspective on Homelessness and Toronto’s Housing Crisis, a report containing recommendations directed at the federal, provincial and municipal governments.”
In global rankings by The Economist, China is the world’s fourth largest economy and Canada is number nine, so our political leaders would be wise to look closely at the economic actions of China.