September 22, 2014
The Case for Federal Investment in Social and Affordable Housing in Ontario
For one in seven Ontarians at any given time, finding appropriate housing that they can afford is a serious challenge. Over 200,000 households in the province live in publicly-funded social and affordable housing units, however these buildings are aging and funding is drying up. This study, commissioned by the Ontario government, looks at the social and economic benefits of investments in social and affordable housing, and makes the case for a new long-term partnership for housing in Ontario that includes the federal government.
For almost one in seven Ontarians at any given time, finding appropriate housing that they can afford is a serious challenge. Driven by long-standing supply- and demand-side pressures, there is simply a gap between what these households need, what they can afford, and what housing is available. When individuals are in housing need, it creates challenges that ripple throughout other aspects of their lives, creating obstacles to financial security, good health, educational success, and employment prospects.
This problem is not new and for eight decades the federal government—later joined by provincial and local governments—has played a key role in addressing these challenges for Canadians. These initiatives have taken a number of forms, but the most concrete assistance has been the development of the government-supported social housing stock that provides rental housing to around five per cent of Ontarians.
With very little purpose-built rental housing constructed in Ontario in the past two decades, it is unlikely the affordability gap will narrow. In spite of this persistent challenge, federal support for social and affordable housing in Ontario has waned. Federal funding for new social housing stopped in 1993. At the same time, ongoing federal funding for existing social housing projects is decreasing every year and will fully expire in 2033, with the result that many of these projects will no longer be viable. Recent federal announcements renewing funding for the Investment in Affordable Housing (IAH) program until 2018-19 are welcome but insufficient. Funding through the IAH is a modest expenditure and accounts for only 12 per cent of current federal spending on social and affordable housing and is targeted at lower- and modest-income households. It is not directed toward the most vulnerable—the 250,000 households living in existing social housing, who are in need of deeper, rent-geared-to-income supports.
The continued focus on new, modestly priced units while ignoring the social housing stock that houses well over 200,000 households in Ontario is akin to fixing a leaky faucet in your home while ignoring a burst pipe. The risk to the social and affordable housing sector is a risk to Ontario’s prosperity and social cohesion. Today we are at a crossroads, with an opportunity either to make productive investments or to let this foundational pillar of the social safety net weaken and languish.
In this regard, Ontario faces a more acute situation than other provinces and territories. Despite having higher than average housing need, the amount that the federal government allocates towards Ontario’s housing challenges falls well below the province’s share of the national population or its share of national need. This gap was worth $150M in missing federal housing funding in Ontario—over one fifth of Ontario’s 2011-12 share of federal spending in this area.
The business case for federal reinvestment in social and affordable housing is strong. At the request of the Ontario Ministry of Municipal Affairs and Housing, the Mowat Centre analyzed the public return on federal investments in social and affordable housing. This study synthesized findings from a broad body of evidence which shows that these returns extend far beyond the walls of the homes that they support.
- Investments in housing are effective at stimulating economic growth and employment. Each $1 increase in residential building construction investment generates an increase in overall GDP of $1.52 as the investment continues to cycle through the economy. Each $1M in investment also generates about 8.5
- Looking at economic multipliers alone captures only a small slice of the public benefit gained from these investments. Housing supports are an essential complement to other policies and programs that promote a prosperous economy and healthy communities. Investments that address housing need lead to stronger labour markets, better educational performance, healthier populations, and safer communities.
There is also a strong case that the federal government in particular should come to the table to renew these investments.
- The federal government set the precedent for government involvement in the housing sector and is largely responsible for the development of Canada’s existing affordable and social housing stock. To withdraw federal funding for social housing despite ongoing need is an abrogation of responsibility and a form of downloading by stealth to the province and municipalities.
- Social and affordable housing investments complement other federal programs and policy objectives. Housing need undermines economic growth and income security. Investing in housing supports represents sound program spending by the federal government to efficiently and effectively address other policy priorities within federal jurisdiction.
- The federal government continues to play the largest government role in housing more broadly. Through CMHC mortgage regulation and insurance, building codes, and billions of dollars worth of tax expenditure (almost exclusively aimed at assisting homeowners), the federal government actively intervenes in the housing sector on behalf of many Canadians. Many of these interventions shape the policy environment that generates housing need for low-income renters.
- The devolution of the social housing stock was not accompanied by adequate ongoing funding. This has left a significant fiscal burden to provinces and municipalities, reducing their ability to fund core programs. The federal Parliamentary Budget Office has demonstrated that the federal government has fewer open-ended cost pressures than provincial and territorial governments relative to the share of tax dollars they collect from Canadians. By leaving the long-term social housing cost pressures with the provinces, the federal government further constrains the ability of provincial and territorial governments to deliver other essential public services.
- Recent polling indicates that Canadians are in favour of a federal role in the social housing sector. A survey of Ontarians commissioned for this report found that 57 per cent of respondents said that the federal government does not provide enough support today, and 67 per cent said that the federal government should provide long-term financial support for social and affordable housing.
There is a need for a new partnership for housing in Ontario that includes the federal government. There was strong agreement among the experts interviewed for this project that addressing Ontarians’ housing needs required the expertise and commitment of federal, provincial, and municipal governments together, along with not-for-profit and private sector actors. The relative primacy of provincial and local governments in affordable housing policy and delivery still leaves an important role to be played by the federal government.
Moving forward, this new partnership should be established based on clear principles and a long-term commitment to adequate federal funding. Embedding equity, transparency, accountability, predictability, and adequacy into a framework for future federal-provincial cooperation will help to ensure a partnership that serves Canadians well and ends discriminatory treatment of those in Ontario with housing need. A new framework should also invest in better information to inform decision-making and make room for new delivery approaches to be introduced to the housing program toolkit.
September 22, 2014