Fix Housing 8: Five Ways the Federal Government Can Move the Needle on Housing

An unprecedented housing crisis call for an unprecedented response

This is the eighth in a series of common sense solutions for achieving housing affordability for all.

We applaud recent actions by the federal government on housing: removing the HST/GST on purpose-built rentals, and pressuring municipalities to upzone through the Housing Accelerator Fund. 

But the federal government could, and should, do so much more to restore housing affordability. 

Our starting point is that housing is a system. It’s hard to fix ownership affordability without fixing the rental market, without fixing social housing, without fixing homelessness. The pressures created in each of these market segments spillover and create new pressures in the adjacent market segments. 

We have five proposals. They are highly ambitious, but we are living through an unprecedented crisis that calls for an unprecedented response.  

1. Come up with a credible national plan to build 5.8 million homes by 2030

The Canada Mortgage and Housing Corporation has calculated that we need to build 5.8 million homes by 2030 in order to restore affordability – about 3.5 million more than we are on track to build. 

At this point, we need the feds to coordinate a credible plan for how we as a country do that. A good starting point would be to convene a roundtable with provinces and territories, cities, national Indigenous organizations, home builders, non-profit housing providers and other relevant parties, designed to come up with a consensus plan for how we get these 5.8 million homes built.

2. Get 1 million new community housing units built by 2030

About 5% of Canadian homes are community (or social) housing – lower than the OECD average, and much lower than we had in Canada in the 1970s and 80s. Community housing is essential for helping those families in core housing need, as well as for helping people move out of homelessness.

The federal government could establish a tripartite plan for building 1 million new community housing units by 2030 – effectively doubling our current stock. Municipalities could contribute surplus land, provincial governments could reimburse municipalities for development charges with those savings passed on to affordable housing providers, and the federal government could create a credit facility that lowers the costs of financing for non-profit builders. We estimate 1 million new community housing units could be built by 2030 for as little as $2 billion a year in federal funding.

3. Create a new annual Canada Housing Transfer to get cities building

To get housing built, cities need to move on three fronts: fix zoning, make more surplus lands available for affordable housing, and lower the soft costs of building.

The federal Housing Accelerator Fund has proved effective in getting several municipalities to implement the necessary reforms. Cities are cash starved and the federal government has used its leverage to full advantage. But what happens when the Accelerator money runs out?

We propose creating a new annual Canada Housing Transfer from the federal government directly to cities, that provides cities with cash for each housing unit built (with bonus money for housing that is affordable, in-fill, transit-oriented and/or sustainable) and helps cities better manage their challenging financial predicaments. The 2023 federal budget called for a refocusing of government spending and realigning of previously announced spending to free up $6 billion annually; we suggest scooping that money and allocating it to a new Canada Housing Transfer.

4. Start building homes again

The federal government should get back into the business of building homes. Specifically, they should be building affordable, sustainable and accessible rental units on surplus federal lands. The feds started building homes after the Second World War and stayed involved in community housing for about half a century.

Public sector accounting standards allow the government to build and own housing assets at a low fiscal cost. Between the accounting treatment and the government’s favourable access to capital markets, a strong case can be made for the feds to start building homes again. (Construction and operation can be outsourced; we don’t need to create a new bureaucracy).

5. Get fully behind municipalities to end homelessness

Cities, better than any other level of government, understand the pattern of homelessness in their community. Cities also can see what would be required to break that pattern.

But municipalities don’t have the resources to solve homelessness on their own. Cities should be putting together ambitious master plans that can be regularly measured and publicly reported back on, that federal and provincial governments can support.

Ending homelessness is an immense task, but not a particularly difficult one to solve. It will be an ongoing challenge, and emergency shelters will continue to help those experiencing shocks in their lives, such as illness or loss of income. 

Ending homelessness requires action on two fronts, in addition to an increase in the stock of community housing as described earlier.

• First, stop more people falling into homelessness – through acquisition funds to prevent the loss of existing affordable market rental units to private interests, by providing those in core housing need with housing allowances to stay where they are, and by rapidly rehousing those who fall into homelessness. 

• Second, end chronic homelessness – anyone spending more than 180 days a year without a home – through a Housing First approach, a recovery-based strategy that recognizes the necessary role a home and wrap-around support plays for individuals in overcoming health, social and economic challenges.

Providing a home and support is cheaper than supplying the health care, emergency, police, justice and other services associated with homelessness. A 2017 study found that, on average in Canada, the annual total costs of homelessness are about $53,000 per person compared to providing a home and support services for about $22,000 per person.

We have laid out five suggestions for how the federal government can move the needle on housing. Certainly there are other areas to consider (such as labour markets) and high borrowing costs will remain the elephant in the room. 

But let us end where we started: this is an unprecedented housing crisis and we need an unprecedented response.