Introduction
This research report covers Government Spending on Social Housing Programs in Canada. Canada Mortgage and Housing Corporation (CMHC) acknowledges that the private housing market can meet housing needs of nearly 80% of Canadians without government involvement (Canada Mortgage and Housing Corporation 1). However, the private market leaves about 20% of Canadians without any alternatives. In this regard, various organizations, including the Federal Government of Canada, not-for-profit organizations, cooperative societies, private entities and community organizations, are working together to offer affordable housing alternatives.
Pakeman observed that the issue of housing shortage in Canada became worse when the Federal Government developed poor policies in the 1980s to address the issue. For instance, between 1980s and 1990s, the Federal Government cut funding and abolished several initiatives and programs that were introduced to help low-income families and individuals to secure affordable housing (Pakeman 1).
As Canada moves into the 21st century, Pakeman insists that there is no indication that the federal government, provinces and territories will seriously address the challenge of housing in Canada. The author maintains that the current state of investment in affordable housing reflects the status quo, and it is anticipated that by the year 2040, the contributions of the federal government toward affordable social housing for poverty-stricken households will aggregate to nothing.
Affordability Issue
According to the last census done in 2011, data collected showed that 12.5 percent (1.6 million) from the 10.9 million families in Canada were considered in the category of ‘Core Housing Need’ by the CMHC (Pakeman 1). The Core Housing Need reflects households that require a significant renovation or live in unsuitable/overcrowded or unaffordable rentals consuming over 30 percent of their incomes before tax. It is observed that about 73% of these households usually experience financial stress. Thus, it is fundamental to focus on housing crisis with reference to affordability and the noted government interventions (Doberstein and Smith 268).
The current patterns noted in housing costs across Ontario, Vancouver, and Toronto among other cities have indicated that housing has become too costly for even middleclass households. Canada Mortgage and Housing Corporation showed that in the year 2004, for instance, average housing prices were about $320,000 in Vancouver and Toronto. After nine years, however, the average cost increased to more than $500,000, representing over 60%. The increment was more dramatic in Vancouver. It exceeded $750,000 by the year 2013, showing an increment of more than 200% (Canadian Housing Observer 2014 A-10).
Canadian Government Intervention
Through CMHC, the Government of Canada spends about $2 billion every year to provide affordable housing. A wide of affordable housing programs and efforts available in Canada include temporary shelter assistance, supportive housing, transitional homes, affordable rental housing, emergency shelters, and affordable home ownership among other arrangements for low-income households. Given the nature of social issues and inclusion, it is difficult to assess housing affordability in Canada.
The dramatic increments in housing pricing and costs of construction have increased the number of Canadians vulnerable to housing shortage. While incomes for ultra-rich have increased exponentially, the poor have sunk deeper into poverty. The growing inequality gap is a source of a critical social issue for Canadian households who cannot afford housing in the private markets because of high prices.
The Government of Canada has used various initiatives and programs to provide affordable housing across Canadian provinces and territories. These programs and initiatives include Investment in Housing Assistance, Investment in Affordable Housing, Affordable Housing Initiative (AHI), Existing Social Housing, First Nation Housing, and Affordable Housing Center.
Investments in Housing Assistance
Considered the newest and largest territory of Canada, Nunavut has a critical housing shortage (Nunavut Department of Economic Development & Transportation 1-2). The region is expansive and sparsely populated and its population is projected to grow rapidly. About 3,000 additional housing units are required immediately and further 300 new housing units every year for the next ten years. Moreover, nearly 350 homes require significant renovations to eliminate obsolescence.
On this realization, the Federal Government of Canada offered to help the territory to meets its housing needs and lessen the housing crisis. The Government allocated $200 million for more than a period of three years.
Further, the Government has acknowledged the unique housing needs in the territory and provided $100 million for the fiscal years 2013 – 2015 to drive affordable housing initiative. CMHC now facilitates the extension of the initiative to 2019.
Investment in Affordable Housing (IAH)
The Federal Government also focuses on the Investment in Affordable Housing (IAH). This investment program provides an opportunity for the Government to engage Canadian territories and provinces with the aim of improving living standards through enhancing access to comprehensive, appropriate, and sustainable housing.
Funding
The Government offers about $2 billion for a period of eight years until March 31, 2019.
Specifically for Nunavut, there is a cost-match decision that provides $15 million for the next five years to facilitate the development of new affordable housing. This fund supplements $100 million allocated through Economic Action Plan of 2013.
Under this program, Canadian provinces and territories are responsible for the program design and delivery, and they provide the same contributions toward projects. The IAH offers a flexible opportunity for stakeholders to invest in a diverse range of affordable housing efforts to cater for the housing needs of the locals and priorities.
These housing programs may include development of new housing units, renovation of old structures, rent supplements, homeownership aid, allowances for shelters, and accommodation for the homeless and victims of violence. Through the IAH, over 217,000 families have been assisted since 2011.
Impacts
Under the IAH programs, many Canadians under the categories of senior citizens and persons with disabilities have benefited. Between April 2011 and March 2014, almost 14,500 families benefited from the program and continued to live independently. During this period, the program also offered housing support to 1,422 families that suffered family violence.
The Federal Government funding through the IAH was over $716 million between April 2011 and March 2014. Over $782 million was obtained from provinces and territories under the IAH. These contributions also addressed the issue of affordability housing over the above-mentioned period. For accountability to Canadians, provinces and territories must report their performance against the goal of delivering affordable housing units under the IAH. The report contains all investments, including contributions from the Federal Government.
Affordable Housing Initiative (AHI) (2001 – 2011)
The Federal Government of Canada adopted the Affordable Housing Initiative (AHI) in the year 2001. Since then, the Government had invested over $1.2 billion that was cost-matched and offered by territories under this program. The Initiative had funded nearly 52,400 housing units. The Federal Government has continued to ride on the success of the AHI to promote the development of affordable housing today.
Based on a specific multifaceted housing approach, the AHI has been touted as a model that transformed the provision of affordable housing units in Canada. The approach focused on the following issues. First, it aimed to create a wider scope for mutual engagement between the provinces and territories and the CMHC to enhance the development of affordable housing. Second, the framework introduced the role of provinces and territories as designing and delivering new affordable housing units for home ownership and rental. Finally, the model introduced cost matching between the investment from the Federal Government and contributions from territories and provinces.
The Role of Canada’s Economic Action Plan
In the year 2008, the Federal Government committed funding of $1.9 billion for over five years to develop housing units for the homeless. To facilitate the program, the Economic Action Plan offered a single federal investment of over $2 billion between 2009 and 2011. This investment focused on the development of new affordable housing, renovation of old houses and modification of social housing. Provinces and territories handled more than $1.5 billion under the AHI provisions.
The investment in the housing project was responsible for mass job creation across Canada. At the same time, they also helped to improve the living standards of many marginalized individuals, including persons with disabilities, seniors, low-income individuals, and people located in northern parts the country.
Existing Social Housing
Social housing (housing units constructed between 1946 and 1993) has attracted funding from the Federal Government. Through the CMHC, the Government funds social housing on a long-term basis arrangement of between 25 and 50 years. This initiative started in the 1940s. Provinces and territories also make their yearly contributions to support existing housing units.
It is estimated that the Government of Canada spent more than $2 billion between 2012 and 2013 across all provinces and territories.
Once these arrangements have ended, the federal government ends its financial support as scheduled. It is expected that mortgage will all be repaid on the housing units. At the same time, housing providers will provide low-cost housing units because of low operating costs while maintain valuable assets that could be used to develop new affordable housing.
About 600,000 families have benefited from this agreement every year. Provinces and territories usually administer most of the off-reserve social housing units under different long-term agreements. The agreements contain various terms and conditions for federal funding programs. At the local levels, the administration is left to local officials who understand local needs. Other housing units are under the CMHC. The government has introduced subsidies to ensure that poor households occupying these housing units do not pay a significant part of their income on accommodation.
For individuals who require additional help after the maturity of the agreement, the CMHC must engage them in advance for further arrangements at the end of the agreement.
Based on the recently reviewed Investment in Affordable Housing funds aimed at projects with expired agreements, provinces and territories may opt to fund them.
First Nation Housing
This housing program is an initiative of the Federal Government injunction with the CMHC and the Aboriginal Affairs and Northern Development Canada (AANDC). In the fiscal year 2013/2014, the Federal Government offered nearly $298 million to cater for affordable housing needs on-reserve. The AANDC and the CMHC have diverse approaches to housing on-reserve. The AANDC, for instance, focuses on community housing needs. It offers fiscal support to First Nations to support various initiatives, including capacity development to address local issues and lot servicing to improve service provision.
On the other hand, the CMHC approach involves funding of on-reserve housing. It has constructed some 500 new houses, renovated some 1,000 houses, offers continuing subsidies to 27,750 social housing units, and finally offers financial support to First Nations to improve the local capacities to construct, control, and sustain housing on-reserve.
In the year 2007, the Federal Government introduced the First Nations Marketing Housing Fund with $300 million. The funding was meant to facilitate acquisition of loans from private mortgage lenders on-reserve and settlement land.
Affordable Housing Center
The CMHC introduced Affordable Housing Center to collaborate with other stakeholders such as private, public, and not-for-profit organizations to enhance the development of new affordable housing units without dependence on long-term government assistance.
Since the launch of the Center, it has accelerated the creation of over 69,000 new low-cost housing units by focusing on empowering the locals through knowledge, technical skills, and a wide range of financial services such as startup funds and proposal development and mortgage loan insurance opportunities.
Overall Government Funding
Since the 1940s, the Canadian Government has funded more than 600,000 homes under social housing scheme. The First Nation Housing program is not included in this figure. Some 544,000 housing units still generate funding under the operating agreement. The most funding level has reached $2 billion yearly on social housing programs.
Today, however, the funding has declined to about $1.6 billion annually. The Government hopes to meet funding obligations under the operating agreement. This amount also includes ($1.2 billion) funds for projects and initiatives for cost-sharing with provinces and territories.
These investments from the Government are used to subsidize rents for poor households, cater for mortgage, or they could be used for both purposes.
Municipalities, provinces, and territories spend another $1.5 billion every year to meet costs associated with cost-shared housing projects. Overall, the Federal Government pays a critical role in social housing programs and initiatives and, therefore, few of these projects would be realized without funding from the Federal Government.
The Issue of Underfunding
From these various programs and initiatives, it is estimated that the Government of Canada spends approximately $1.6 billion on affordable housing programs. Critics however assert that this funding is relatively low to meet housing need. Over $322 billion was spent in the Canadian housing market in 2013. This implies that the government only spent about 0.5 percent the total spending.
While its efforts are recognized, the amount spent is hardly enough because of the ‘Core Housing Need’ that reflects a significant percent requires housing assistance (Zon 19). Hence, homelessness in Canada is most likely to increase particularly in the major cities such as Toronto, Calgary, and Vancouver, which also have sustained rates of homelessness.
The housing initiatives and programs under Harper government were critically underfunded. The government focused on the Investment in Affordable Housing initiative, but ignored efforts of local governments through Homeless Partnering Strategy. In fact, these programs were not classified under the ‘National Housing Strategy’ (Doberstein and Smith 275). They received some $250 million each year, which was about 0.09% of the $279 billion noted in the Federal Government budget of 2014 (Doberstein and Smith 275).
The End of Agreements
The current social housing operating program is expected to end. Nearly two-third of all social housing programs and initiatives will to provide adequate revenues to cater for their operating expenses if the Government ends its funding. Likewise, several social housing programs and initiatives currently experience significant funding crisis due to pending repair and replacement. This situation is most likely to escalate as social housing units become old. It also recognized that territories and provinces, which are willing to meet their own social housing funding costs lack adequate financial capabilities (Canadian Housing and Renewal Association 1-25).
This implies that the Federal Government should renew its commitment to social housing funding to support local governments to meet their needs without fiscal constraints on their budgets.
About 365,000 poor families under social housing initiatives and programs that depend on subsidized rents may face the risk of losing their homes if they government terminates its funding. Among these, there are specific families that face greater risks. Specifically, the socially marginalized households such as off-reserve Aboriginal families are under the programs. Most of these families and other single families are under the Federal Government jurisdiction.
Their housing units are designed as low cost, cheap to own and manage. At the same time, in some Canadian territories, particularly in the North, the operating costs and the resulting annual costs are higher relative to South whereas they have limited financial capabilities. Lastly, individuals or groups who offer supportive housing units to persons with physical or mental disabilities and other conditions may also experience increased costs because they must adapt homes to meet the needs of such occupants.
Previously, the CHRA had noted that nearly 200,000 households under social housing programs and initiatives would be affected if the federal supports were withdrawn. This figure was based on the notion that territorial and provincial government funding would continue and, therefore, would cater for some of the costs associated with social housing. They were also expected to cushion more of the ‘at risk’ families. Indeed, most territories and provinces have expressed their desire and commitment to continue with social housing programs and initiatives after the end of the operating agreement to the extent they can.
However, the CHRA had used the total figure of 365,000 household because it believed that territories and provinces do not have fiscal capabilities to bear the full costs associated with social housing initiatives and programs (Canadian Housing and Renewal Association 2). From 544,000, the remaining 179,000 families under social housing units covered with the current operating agreements. They rent from these families can ensure self-sustaining housing projects even if the federal government ends its operating agreements.
Apart from operational feasibility, nearly all social housing units require substantial “capital renewal – repairs, retrofits and replacements – in order to maintain their safety, quality, and usefulness” (Canadian Housing and Renewal Association 2). Obviously, these social housing units should retain their value even after decades. Thus, social housing providers should look for alternative sources of funds to replace their depleting capital sources. To avoid possible eviction of poor families from their homes, alternative funding solutions should be provided to replace the operating agreements.
Federal Government Funding Dropping to Zero
It has been observed that the need for affordable housing in Canada continues to increase sharply. However, once the operating agreements end, the supply of social housing will decline significantly. It is expected that the Federal Government would end its support in less than 24 years. This implies that the funding will be zero. However, after this, it is not clear how social housing programs and initiatives will be funded in provinces and territories.
The decline in Federal Government funding is not attributed to any reduction in the needs for social housing across provinces and territories. In Ontario, for instance, over 160,000 households expect social housing solutions. This number continues to increase as the country’s real estate sector continues to cater for the rich only. This implies that the Canadian Government support is vital for provinces and territories if the country wishes to tackle social housing crisis. It is noted that most provinces and territories have been able to meet some social housing demands, including repairs and rental payments because of the partnership with the Federal Government.
Most provinces and territories would not able to meet social housing needs without support from the Federal Government. According to some observers, the Federal Government continues to isolate itself from affordable housing programs and initiatives by introducing different housing policies over time. That said, it has made some sort of funding arrangements with provinces and territories to supplement the housing budget, but the current funding provided by the government can hardly cater for the growing demands for social housing across the country. While there is no expected major increment in provincial and territorial funding, federal government funding is most likely to decline further. The projected decline in the federal funding will cause fiscal stress on provincial and territorial governments.
Overall, it is imperative to recognize that effective long-term programs and initiatives to provide affordable housing and eventually end homeless without enough funding will be impossible to achieve. Hence, the Canadian Federal Government should review its housing policy and work with other stakeholders to provide the most viable means of supporting social housing programs and initiatives to end homelessness (Gaetz, Gulliver and Richter 50). Termination of funding will result into further housing crisis in Canada.
Conclusion
Housing crisis and affordability issues have presented critical challenges to Canadians and the government. High costs of owning house and low incomes of most Canadians have forced majorities to experience severe housing shortage. As such, the government of Canada and other stakeholders work together through various initiatives and programs to address the problem. Initiatives and programs such as Investment in Housing Assistance, Investment in Affordable Housing, Affordable Housing Initiative (AHI), Existing Social Housing, First Nation Housing, and Affordable Housing Center have been adopted to address housing affordability issues.
While these efforts are recognized and appreciated, many critics have argued that the investment is minimal and cannot meet the current and future housing shortage. Hence, the current approach may not be effective to address Social Housing Programs in Canada.
It is expected that the Government will withdraw its support once the agreements end. Once this happens, it remains unclear how the country will meet costs of affordable housing and reduce homelessness.
Works Cited
Canada Mortgage and Housing Corporation. Canadian Housing Observer 2014. Canada: CMHC, 2014. Print.
—. Federal Government Spending on Housing. 2016. Web.
Canadian Housing and Renewal Association. Housing For All: Sustaining and Renewing Social Housing for Low-Income Households. 2014. Web.
Doberstein, Carey and Alison Smith. “Housing first, but affordable housing last: The Harper government and homelessness.” Social Policy (2015): 265-278. Print.
Gaetz, Stephen, Tanya Gulliver and Tim Richter. The State of Homelessness in Canada 2014. Toronto: The Homeless Hub Press, 2014. Print.
Nunavut Department of Economic Development & Transportation. Housing Investment Opportunities. n.d. Web.
Pakeman, Kyle. Canada is failing those in housing need. 2015. Web.
Zon, Noah. Renewing Canada’s Social Architecture. Toronto, ON: Mowat Center, 2015. Print.