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Is affordable housing really affordable?

Affordable housing is an issue gaining critical attention at municipal, provincial and federal levels of government.

Ontario’s Auditor General criticized Ontario’s affordable housing initiatives in his report, released December 7, 2009. The report called for an effective strategy to assess the risks, costs and potential contributions of investing in affordable housing in Ontario.

One of the Auditor General’s most significant concerns was that the costs of housing and the wages of those most in need for housing did not match up. For example, the average income for a household on the 2008 waiting list was $15,000. However, the average income required for new housing units was just under $30,000.

The provincial initiatives were also criticized for being understaffed and unable to manage the workload. Over 137,000 households are still waiting to find housing in Ontario and the waiting time for many is up to 21 years! There is clearly a need for a more effective strategy.

These criticisms and statistics reminded me of a meeting of the Ottawa City Council’s Community and Protective Services Committee on December 3. Much of the meeting was dominated by the issue of housing in Ottawa as city representatives gave an evaluation of their progress in 2009.

It was clear from the interaction between the presenters and city councillors that most people were in favour of efforts to expand affordable housing initiatives. But the actual progress compared to the amount of work that still needs to be done is somewhat disheartening.

During the time for discussion Councilor Diane Holmes called for a clearer definition of what is considered affordable housing, especially taking into account the rates of rent in comparison with low income levels and wage rates in Ottawa. She also called attention to the 9,500 families and individuals still on the waiting list in comparison with just 200 new units opened this past year. Finally Holmes reflected on the urgent need for the provincial and federal governments to intervene with a strong and effective strategy.

The City of Ottawa is not alone in this uphill battle, and neither is the Government of Ontario. Municipal and provincial governments across the country are struggling with affordable housing needs. Many are calling for federal leadership and assistance on this issue.

Before the recent prorogation of Parliament, Bill C-304 which calls for the federal government to develop a plan that will ensure adequate housing for all Canadians was before a parliamentary committee. The bill will have to be reintroduced in the next session beginning in March. Even if it does eventually pass, how much longer will Canadians have to wait for federal action on this issue affecting so many across the country?

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About author

Rebekah Sears is former CPJ’s policy intern.

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Comments:

1. Canada Mortgage and Housing Corporation (CMHC) has been insuring 0% down 40 year mortgages in recent years pouring gasoline on a housing market that was already on fire. Vancouver has become one of the most unaffordable cities in the world as a result of CMHC’s leadership in insuring speculative mortgages.

2. Economic fundamental do not justify house price increases in the last ten years. House prices have gone up an average of 9% a year which is far in excess of 3% growth in incomes and 2% increase in employment.

3. Mortgage debt ballooned from $431 billion in 2000 to $871 billion in 2008. This means in 2008 every man, women, and child in this country owed over $27,000 in residential mortgages. This is 60% more than the national debt for which each Canadian is on the hook.

4. As an Agent of Her Majesty in Right of Canada, CMHC’s debt obligations and guarantees are direct obligations of the Government of Canada. This means taxpayers will foot the bill for up to $340 billion if CMHC tumbles.

5. CMHC has been able to meet the minimum capital requirement by OSFI since 2005 but it still fails to meet the minimum international capital requirement set out in Basel Capital Accord II.

6. Not only the government has failed to rein CMHC’s reckless risk taking behaviour, it has rewarded its management with hefty pay increases of 55% to 70% between 2001 and 2008 leading to a salary and bonus of $514,000 for its president in 2008 (See CN News, March 13, 2009, Top bureaucrat wages 'obscene' , By KATHLEEN HARRIS AND PETER ZIMONJIC, NATIONAL BUREAU) which is more than double that of any other deputy minister in the government of Canada. It is even more than the salary of Prime Minister for goodness sake. It is time to trim the hefty salaries of CMHC managers and pour that money into affordable housing..

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