Budget 2009: Lost Opportunity for Affordable Housing

While our full response to the federal budget can be found on our main website, over the next week we will be posting more detailed analysis of our response to specific investments and policies outlined in the budget. Please check back over our website in the next few days as they are posted.

WIth regards to funding for housing, CPJ applauds the federal government for including investments in affordable housing in its economic stimulus package. $1 billion in funding has been committed towards renovating existing social housing in Canada, as well as $600 million for on-reserve aboriginal housing, $400 million for seniors’ housing, and $75 million for housing for people with disabilities.

While this funding announcement is a positive step, it also represents a lost opportunity to help the one in four Canadians are in need of adequate, affordable housing. While the government has committed funds for renovating existing social housing, it has not revealed any intention to create new affordable housing units.
Doing so would address the high demand for social housing, as well as further stimulate the economy through construction, development and related sectors.

The Wellesley Institute has recommended national affordable housing investments of $2.5 billion, including the rapid construction of 10,000 new housing units. In allocating these funds, it is also important that the government distribute the funds quickly in order to have a greater impact where it is needed most.

Last September, it was announced during the election campaign that the government would renew funding – $1.9 billion over five years – for three national affordable housing and homelessness programs. While this renewal was welcomed by housing groups in Canada, it was also criticized for not having been adjusted for inflation, or taking into account the rapidly growing need for affordable housing across the country.

Investing in social housing is one example of how the federal government can stimulate the economy through spending on projects and programs that create jobs, increase demand for goods and services within Canada, and support the low-income and marginalized.

Studies have shown that direct government investments through spending have a much greater stimulus effect than do tax cuts. A study released in December by Informetrica, an Ottawa economic research firm, projected that a “$1 billion reduction in personal taxes would create 5,600 jobs and increase national output by 0.08 per cent. The same $1 billion used to build infrastructure would produce 15,800 jobs and boost output by 0.23 per cent. A $1 billion investment in health care would yield 18,100 jobs and raise output by 0.11 per cent”.

The $20 billion in tax cuts over the next five years announced in the federal budget would have been more efficiently spent by investments in projects such as social housing.

The fact that we are one of the only OECD countries that lacks a national housing strategy is reflective of Canada’s lack of commitment towards affordable is housing. We hope that the federal government will to commit to long-term, strategic planning with appropriate funding for affordable housing to ensure that every Canadian has an adequate home in which to live.