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Op Ed: Government Action Can Help Spur More Home Building To Address Canada’s Housing Shortage

Sustainable Finance March 10, 2022
Sustainable Finance March 10, 2022

 

First published in The Globe and Mail, March 2022.
By Scott Brison and Michael Brooks

When it comes to Canada’s housing affordability crisis, provinces face many of the same problems and are increasingly arriving at the same solution.

Ontario’s Affordable Housing Task Force released a report in February that echoed the key conclusion also reached by British Columbia and Nova Scotia in similar reports: Dramatically increasing the housing supply is imperative to Canada’s growth and prosperity. The main obstacle to overcome is scarcity. Bank economists, builders and developers, real estate agents and social agencies have all raised the alarm about the low inventory of new homes at all price points and a lack of affordable rentals.

Governments now realize that stimulating demand through low interest rates or buyer tax breaks can work at cross purposes with affordability. Tax dollars toward more public and social housing can help, but the combined fiscal capacity of all levels of government won’t come close to meeting the current annual supply gap, let alone keep up with growing demand of the future. Direct government investment must target those who cannot afford market-based housing and market rentals.

Given these constraints, what is the best way to boost the quantity and pace of private home and apartment construction? Part of the answer lies with how new construction is approved in Canada, and the role of municipal policy. All three provincial reports agreed that municipal zoning policies need to embrace densification, while sclerotic permitting processes need to be modernized, streamlined and sped up. Meanwhile, hidden high development taxes and land costs are pushing prices up.

The challenge is finding political will in the municipal sphere, where officials are vulnerable to narrow local interests and NIMBYism that can become powerful adversaries to public good. Ottawa and the provinces and territories might hope that, left to their own devices, municipal governments will take these reports seriously, and urgently act to make approval processes faster, more transparent and accountable, without compromising rigorous inspection and standards.

But hope is not a strategy. Federal, provincial and territorial governments have a responsibility to encourage, reward and support municipal governments as they implement pro-growth housing policies. The federal government needs to leverage its policy reach and harness its fiscal levers to catalyze provincial policy consensus into specific actions at all levels of government.

The next federal budget is a watershed opportunity to tackle Canada’s housing shortage and position housing construction as a national strategic growth sector.

To that end, Canada Mortgage and Housing Corp. can help research global best practices for municipal housing permitting and densification policy, and bring the right private-sector partners to the table to deliver results.

The budget can provide municipal governments with a menu of pro-growth policies such as transferable development rights for homeowners and shot-clock approval deadlines. A new Housing Accelerator Fund, promised in the Speech from the Throne, can help turn words into actions by rewarding municipal governments that embrace densification. Federal transfers for housing can be conditioned to further increase the upside for municipalities approving new development.

Ottawa can also research and share digital solutions for issuing permits, ideally developing an app-based platform to manage, track and accelerate permitting processes from all levels of government – not just municipal.

Much progress has been made by policy makers in better understanding and agreeing on the problems: Canada’s housing shortage represents a direct threat and bottleneck to sustainable growth and prosperity. The next federal budget needs to prioritize housing construction as a national strategic growth sector with an action plan to unify all levels of government and business and meet the needs of all Canadians.

Read more
Hon. Scott Brison, P.C. Vice-Chair, BMO Wealth Management

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