by Alannah McBride and Randall Bartlett
You don’t have to be a builder to appreciate the importance of a sturdy foundation. When it comes to houses, a solid foundation keeps the house dry and warm, and protects it against the natural movements of the earth around it.
The foundation for a national housing strategy should do the same for the people it’s meant to protect. Without a solid foundation, the initiative is sunk. And with the release of the National Housing Strategy (NHS) in November 2017, one wonders if its foundation will allow for its goals to be reached.
The NHS is an exciting initiative for Canadians, and a centrepiece among the federal government’s recent policy initiatives. Until now, Canada was the only G8 country without a national housing plan. The federal government has finally risen to the occasion and committed to working towards a coordinated solution to homelessness and a lack of affordable housing. The NHS proposed to spend $40 billion over 10 years (Table 1) on housing and homelessness initiatives, while committing the Government of Canada to take a rights-based approach in increasing the affordability of housing and tackling homelessness.
Since the NHS was published last fall, details have slowly been hashed out, agreements are being made, and progress seems to be occurring. But the NHS has left many questions unanswered, with the most recent federal budget doing little to counter this uncertainty. Going back in time to look at previous federal budgets helps in providing context to better understand the entire picture. Current programs will be evolving in the coming years, and looking to the past can help decipher their possible future. Some recent developments like the release of the final report from the Advisory Committee on Homelessness will also help shape the final form of the NHS. But for now, how much of the NHS is new money and how much was already in the pipe?
The Devil’s in the Details of the National Housing Strategy
To answer this question and others, the various proposed programs outlined in the NHS are compared to funding previously announced by the federal government. Indeed, past federal budgets and other fiscal documents have proven useful sources in fully contextualizing the NHS. Budget 2017 outlined $11.2 billion over 11 years for housing and homelessness initiatives. Of this amount, $3.2 billion was to be delivered through the Investment in Affordable Housing (IAH). The IAH is a partnership between the federal government and each of the provincial-territorial governments intended to improve access to affordable housing through various programs.
The NHS and Budget 2017 make it clear that the IAH will wrap up at the end of the 2018-19 fiscal year and the various aspects of the IAH will be covered by several of the new NHS programs. The NHS proposes three new streams of funding that similarly require cost-matching by the provinces and territories:
- The Canada Community Housing Initiative ($4.3 billion over 10 years) - The Canada Community Housing Initiative is intended to “protect and build a sustainable community-based housing sector” and many of the aspects mirror the IAH, including the expansion and reparation of the supply of affordable housing.
- Canada Housing Benefit ($2 billion over 10 years) - The Canada Housing Benefit aims to provide income support to Canadians in need of housing or in core housing need. However, the rest of the details are to be “co-developed” with the provinces.
- An unnamed stream for “distinct housing priorities” which will focus on affordability, repair and construction ($1.1 billion over 10 years).
All three of these streams are in partnership with the provinces and territories, and seem to fit the mould of the IAH replacement referenced in Budget 2017. Table 2 outlines the characteristics of the three new programs as well as the other NHS programs that will cover the components of the IAH once it comes to a close at the end of the 2018-19 fiscal year.
Recently, the federal government reached an agreement with the provinces and territories (with the exception of Quebec), cost-matching these initiatives to the tune of $7.7 billion over 10 years. However, there is a lack of available detail surrounding the agreement with the exception of the dollar amount, making an evaluation of their content impossible.
Beyond the NHS initiatives that will require provincial/territorial cost-matching, the largest component of the NHS is the National Housing Co-Investment Fund (Table 3). The fund is divided into two streams: a new construction stream ($7.45 billion) and a repair and renewal stream ($5.72 billion). The fund also encompasses the previously announced Rental Construction Financing Initiative ($2.5 billion) and the Affordable Rental Innovation Fund ($200 million). The entire fund totals $15.9 billion over 10 years, according to the published NHS, and will “attract partnerships with and investments from the provinces and territories, municipalities, non-profits and co-operatives, and the private sector.” This fund has many elements. Specifically, $4.7 billion is destined for the development of “new, high-performing affordable housing”, reparations of existing rental housing, housing accessibility improvements for people with disabilities, and the creation of shelter spaces for survivors of family violence. A further $11.2 billion in low interest loans will be made available. As well, there will be $200 million in federal lands transferred to housing providers as part of the National Housing Co-Investment Fund, though not included in the $15.9 billion.
There is one concerning tidbit around the National Housing Co-Investment Fund, specifically regarding the back-end-loaded nature of the federal funding. The full 10-year plan outlines $15.9 billion for the National Housing Co-Investment Fund, yet only $1.3 billion is budgeted for the first 5 years. And by the end of the 10 years, only $5.1 billion has been budgeted for so far out of the entire $15.9 billion (Chart 1). This means the planned spending on the largest component of the NHS is projected to be $10.8 billion lower in Budget 2018 than proposed spending in the NHS. However, it’s possible that the budget only includes the $4.7 billion in financial contributions in the National Housing Co-Investment Fund and excludes the $11.2 billion in loans which will come later, but this is unclear. The Institute of Fiscal Studies and Democracy (IFSD) has reached out to the federal Department of Finance in order to clarify how these loans are being accounted for in the fiscal framework, e.g. are the loans provisioned for as a non-budgetary transaction. However, we have yet to receive a response.
Taking account of this discrepancy, the money outlined in Budget 2018 concerning the entire NHS adds up to $16.1 billion over 10 years, nowhere near the $40 billion proposed in the NHS (Chart 1). Indeed, the only difference between the 2017 and 2018 budgets concerning housing and homelessness is $4.8 billion in “new” money (Table 4). This appears to be almost entirely captured by the increase in funding for federal-provincial/territorial partnerships mentioned earlier, which increased from $3.2 billion in Budget 2017 to $7.7 billion in Budget 2018. Indeed, Budget 2017 outlined $5.0 billion for a National Housing Fund, which means the National Housing Co-Investment Fund added only $134 million in new money over 10 years.
Looking more closely at the federal government’s planned spending on capital investments, Budget 2017 had seven lines under the Social Infrastructure table concerning housing and homelessness, adding up to $11.3 billion over 11 years (Table 4). Budget 2018 cut down the number of comparable lines to three, and the total increased to $16.1 billion over 10 years. Four lines, totaling $3.1 billion, from Budget 2017 were amalgamated into one line in Budget 2018, titled “Other National Housing Strategy Initiatives”. This includes the “Tackling Homelessness” line in Budget 2017. In total, the new spending line has a 10-year total budget of $3.2 billion, only $0.1 billion more than in Budget 2017.
This all begs the question: Where is the proposed $40 billion National Housing Strategy funding? By following the funding throughout the years and tracking what is “new” money, we have painted a picture of what the NHS looks like apart from the glossy document that accompanied its announcement. And unfortunately, for now, the NHS is virtually nowhere to be seen in the federal fiscal framework. Going forward, we hope that more clarity will be provided on how planned spending is converging toward the ambitious announcements made in November 2017. Only then will Canadians be able to assess how stable the foundation of the National Housing Strategy really is.