Canadian cities warn financial update ‘does not reflect’ scale of housing need

Ottawa’s housing plan in its fall economic statement “does not reflect” the extent of the needs to resolve the housing crisis, Canadian cities say.

Scott Pearce, president of the Federation of Canadian Municipalities (FCM), said the federal government’s fiscal update takes “some steps to improve housing affordability” but lacks and fails to invest in infrastructure. not doing enough to meet the current needs of the population.

“While FCM recognizes the federal investments announced today to support new housing construction, the reality is that we cannot rapidly accelerate new housing construction without also investing in the municipal infrastructure that supports it. In May 2023, the federal government committed to making a historic investment in infrastructure across the country this fall,” he said in a statement Tuesday.

“We are concerned that the fall economic statement does not reflect the scale of infrastructure investments needed to close the national housing supply gap, and FCM will look to the 2024 budget for investment comprehensive and ambitious in community infrastructure that will match the record population. growth currently underway in Canada.

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Finance Minister Chrystia Freeland tabled her financial update on Tuesday, emphasizing in the days leading up to it that Ottawa was focused on measures to address housing and affordability challenges.

The housing measures announced on Tuesday for new construction would be implemented in two years. Ottawa is committing $15 billion in loan financing, starting in the 2025-2026 fiscal year, to build more than 30,000 homes, as well as $1 billion for new affordable housing in the same fiscal year to help to build 7,000 new homes.

Additionally, Ottawa is spending $309 million on a new co-op housing development program, which it says will go toward a co-developed program it plans to launch in early 2024.

In addition, the government plans to spend $50 million over three years, starting next year, to help municipalities crack down on short-term rentals. Ottawa also plans to deny income tax deductions when short-term rental operators do not follow provincial and municipal rules.

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Housing cooperatives that provide long-term rental housing will be eligible for the removal of the GST on new rental housing. Finally, Ottawa said it would update its mortgage charter to ensure financial institutions provide personalized relief and reasonable payments to borrowers. .

The charter is, however, not obligatory.

“Housing is a pressing concern for Canadians. Housing is so tied to affordability for Canadians. And that’s why our focus is supply, supply, supply,” Freeland told reporters in a closed session Tuesday.

However, Pearce and other industry experts suggest Tuesday’s fall economic statement won’t change much in the short term.

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“In the last year alone, Canada’s population increased by more than 1.1 million. For every house built, there is a corresponding infrastructure need that must be met. New housing depends on new municipal infrastructure: from water to roads, wastewater treatment facilities, community amenities and transit facilities. This is what makes the difference between laying bricks and mortar and ensuring vibrant, thriving communities in the future,” Pearce said.

“As our country grows, the need for municipalities to confidently respond to this growth is clearer than ever. Municipalities are on the front lines of challenges related to homelessness, mental health, climate change and much more. As Budget 2024 approaches, we will continue, as a local level of government, to collaborate with our federal counterparts, presenting detailed, forward-looking recommendations that will empower Canadians by empowering communities.

Tim Richter, president and CEO of the Canadian Alliance to End Homelessness, said while the measures are welcomed, they are not enough.

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“As affordability deteriorates, homelessness increases, and the dream of homeownership continues to fade away for many, the federal government must act more aggressively to solve the housing crisis,” Richter said in an email.

“I am particularly concerned about the notable lack of action to tackle homelessness as we enter another harsh and dangerous winter.

RBC economists Rachel Battaglia and Carrie Freestone said in an a**lysis that the measures announced Tuesday will be helpful in solving the housing affordability crisis, but won’t make an immediate difference.

“We believe that concerted efforts focused on increasing the supply of housing that Canadians can afford is the best way to improve the situation in a sustainable way,” they said.

“But these will not be miracle solutions. Building the number of homes needed is a long-term effort that requires investment, greater efficiency in the development process and time.

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Canada’s housing crisis has been fueled by a years-long surge in demand and a shortage of inventory, leading to rising prices in many markets.

Minority liberals recently touted the Housing Acceleration Fund, a program designed to incentivize cities to submit applications for federal funding tied to zoning changes.

They promised a $4 billion fund during the 2021 election campaign. The money was allocated to the Canada Mortgage and Housing Corporation in the 2022 federal budget, with the aim of adding at least 100 000 new homes across the country over five years.

However, the first deal was not announced until September, with London, Ontario, the beneficiary.

Other Ontario cities, Brampton, London, Vaughan and Hamilton, as well as Halifax and Kelowna, have all signed agreements with the federal government.

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Ottawa faces pressure to avoid spending, which could make it harder to continue reducing inflation. The Liberals are trying to tackle both the housing crisis and significant affordability issues, and halt the current decline in polls, while trailing the Conservatives in many regions from the country.

The Bank of Canada helped ease some pressure on Oct. 25 by holding its benchmark interest rate for a second straight decision, but with the economy still showing signs of weakening, Ottawa will be under pressure to show officials that they seize the moment and have a plan. go forward.

Bank of Canada Governor Tiff Macklem expressed his own concerns late last month about the pace of government spending. After holding rates steady on Oct. 25, he said projected fiscal spending plans at all levels of government “are not helpful” in controlling inflation.

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– with files from Craig Lord of PKBNEWS

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