We can’t leave Canada’s housing crisis up to the provinces

Some topics are just too big to be covered in one column. That’s why, over the next two weeks, Max Fawcett will tackle the housing crisis and the ways we could address it in a series of them. First up: The need for more federal leadership. For more on this series, read the second, third, fourth and fifth instalments.

At a time when governments are still facing the challenges presented by the ongoing global pandemic, to say nothing of the financial repercussions associated with efforts to address it, you can understand why something like soaring housing prices would tumble down their list of priorities.

After all, more than two-thirds of Canadians own homes, and they aren’t particularly interested in entertaining the idea of the value of their single biggest asset going down. That makes it hard to have a meaningful conversation about the negative impact of rising prices on the lives of millions of Canadians, never mind talking about ways to reverse it. Mix in the reality that housing policy falls mostly under provincial and municipal jurisdiction and it’s easy to see why the federal government — and, to be clear, many successive federal governments — hasn’t put housing at the top of its political to-do list.

But after COVID-19 dumped a fresh load of gasoline on the fire that is Canada’s housing market, it should be clear to all but the most myopically self-interested homeowner that we have an uncontrollable crisis on our hands.

Housing prices have increased 50 per cent nationwide over just the last five years, and it’s no longer just places like Vancouver, Toronto and Montreal driving that surge. The latest leg up has seen the suburbs and exurbs of those overheated markets posting equally ludicrous price gains as potential homeowners get priced out of the big cities and try to find a foothold in the surrounding communities.

After dipping below $500,000 during the early stages of the pandemic, the average home price in Canada hit $720,850 in November — a new high.

Municipal and provincial governments have key roles to play here, whether it’s on zoning issues or supporting the development of more supply. But the federal government has the biggest and best arrows in its quiver, and it’s long past time it started using more of them.

The recently announced one per cent tax on vacant or underused housing owned by non-residents is a start, but it’s only expected to raise $200 million in its first year — a rounding error on a rounding error when it comes to the size of Canada’s housing market. Chrystia Freeland’s new mandate letter as finance minister also directs her to impose an anti-flipping tax on properties that aren’t held for at least 12 months.

These are mere branches when much heavier sticks are required, and every day the federal government nibbles at the edges of this problem is another day that it gets bigger and more difficult to deal with.

Yes, Canada has its first federal minister of housing ever in Ahmed Hussen, but he’s still without his own department and is responsible for other duties in his role (his title includes “Diversity and Inclusion”). That’s why it’s time to reconstitute the Department of Urban Affairs, one that existed briefly in the 1970s before getting phased out by the Liberal government of the time. And while we’re at it, let’s give it real teeth — and the ability to actually take a bite out of the housing crisis.

There are lots of ways it could do that, from investing more heavily in public housing (more on that later) to elevating the importance of renting and renters (we’ll get to that too). But regardless of which policy paths it chooses to follow, it has to stop habitually passing the buck to other jurisdictions.

Ironically, it was more than 50 years ago, under the leadership of the first Prime Minister Trudeau, that Canada initially tried to address a brewing national housing crisis. After winning party leadership in 1968 and forming a majority government later that year, Trudeau appointed his former rival Paul Hellyer to chair a Task Force on Housing and Urban Development.

But Hellyer resigned from cabinet after his report, which meant his series of ambitious recommendations — including far more federal involvement in the housing file — fell on deaf Liberal ears. The prime minister himself didn’t believe it was appropriate for the federal government to intrude on provincial jurisdiction. In time, and with pressure from the right places, he relented — and a brief golden age of federal involvement in Canada’s housing market was born, one whose legacy can still be seen today in some of our aging co-operative housing projects.

We need a much longer golden age now. As Hellyer wrote in his report, it was “illogical, if not inconceivable, that the Government of Canada could have ministries dealing with fisheries, forestry, veterans affairs, and other matters which involve a minority of the population, but none to deal on a full-time basis with the urban problems which involve more than 70 per cent of the population, not to mention housing which involves virtually everyone.”

Those urban problems have become more intractable in the decades since Hellyer tabled his report and now involve much more than 70 per cent of the population. History may not have repeated itself in 2021, but it’s hard not to hear it rhyming here.

Would potential federal intrusion on their jurisdiction bother the provinces? Almost certainly. But we’re long past the point where that can be used as a justification for inaction. Our biggest cities are in the process of committing a form of economic suicide, one in which the young people and new residents who create and sustain their vitality are being priced out of existence.

It may well be too late to reverse all the damage caused by the surge in house prices. But the federal government must step in before more is done — and more ground is lost in the process.

Next up: Why it’s time to stop the speculators, and how that could help fund investments in affordable housing.