A good home is vital to personal health and essential to improving the overall health of the entire population, as well as contributing to a strong and stable economy. Good housing is good for the economy, and it reduces government health and other spending. Despite all these benefits, federal housing investments have been eroding over the past two decades. The Wellesley Institute’s 2012 federal pre-budget submission calls for housing investments to be maintained at 2010 level of $3 billion.
Federal housing investments have been eroding for more than two decades:
- Falling behind inflation and GDP growth: Federal housing investments of $1.6 billion in 1989 rose by 39% to $2.2 billion in 2009, but inflation grew by 54%. Federal housing spending as a percentage of GDP confirms eroding investments.
- Shrinking federal funds authorized under National Housing Act: In non-budgetary and budgetary envelopes, federal funding from 2005 to 2008 dropped for many programs.
- Declining housing investments by Canada Mortgage and Housing Corporation: CMHC (Canada’s federal housing agency) is planning a cut of 43% in its affordable housing program to $1.7 billion in 2015.
- Latest spending estimates record cuts to federal housing investments: The federal government’s 2011-12 Spending Estimates set out a 39% cut in housing investments.
- Short-term federal housing and homelessness initiatives set to expire in 2014: By 2014, all the short-term funding will expire, including the July 2011 federal-provincial-territorial affordable housing agreement.
In the Wellesley Institute’s Precarious Housing in Canada 2010 report, we noted that the erosion of federal funding in recent years has put pressure on provincial, territorial and municipal governments. We noted that there is a large, unmet need for additional affordable investments to meet the needs of Canadians who are precariously housed.
We recommended a ten-year affordable housing plan funded with contributions from federal, provincial, territorial and municipal governments, along with the community and private sectors. As a key part of this ten-year plan, we called on the federal government to sustain its housing investments, instead of allowing them to erode with inflation and the termination of programs.
Here are some options for sustainable housing investments:
- Create a new national housing fund – incorporating features from the US national housing trust fund and Infrastructure Ontario’s affordable housing loan fund – using government-backed bonds or other innovative financing mechanisms.
- Allocate a portion of the housing-generated income from Canada Mortgage and Housing Corporation to housing and homelessness investments.
- Support new housing investments with traditional, tax-based revenues.