Community housing is more than a social good. It’s also an economic necessity and it is the key to tackling Canada’s productivity problem.
If Canada were to match our global peers by ensuring that community housing makes up at least seven per cent of total housing supply, national productivity would rise by 5.7 to 9.3 per cent and GDP – now more than $3 trillion a year — would increase by $67 billion to $136 billion, according to a new report from Deloitte Canada commissioned by the Canadian Housing and Renewal Association (CHRA) and Housing Partnership Canada.
To accomplish this, the federal government should lead a collaborative effort with other levels of government as well as the private and nonprofit sectors, to construct 371,600 additional units of community housing.
Canada is facing a productivity deficit – lagging significantly behind our peers and continuing to decline – as well as high borrowing costs, a cooling labour market and an environment where Canadians can expect more and more of their disposable income to be needed for basic necessities.
Housing costs are a large driver of these challenges, with low- and moderate-income Canadians the most impacted.
With fewer and fewer attainable housing options to offset other rising costs for more and more of these families, community housing is often the best option to get out of this core housing need and maintain a good standard of living.
However, there isn’t enough community housing to go around. There are 200,000+ households on community housing waiting lists.
The net benefit of increasing Canada’s community housing supply
Having community housing make up seven per cent of total stock is a widely recognized benchmark for affordability in Western or other wealthy countries and has become the go-to average in the OECD. Countries including Australia and the U.K., and cities in the U.S. such as San Francisco have adopted this target.
With its roots in the UN report The Global Strategy for Shelter to the Year 2000, the seven-per-cent benchmark has emerged as the achievable sweet spot.
Community housing is also important from both an economic and social standpoint.
When we build it, we create jobs. When it’s available, it keeps its residents healthier, happier, safer and less reliant on Canada’s other social safety nets – $10 spent on community housing can save $20 in other areas such as justice, health and social services.
It creates the conditions for people to find a sense of community or pride of place as well as to access the other financial or social support they need because community housing providers and local support agencies are invested in collaboration.
Tackling our housing and productivity problems
Investments in community housing boost our productivity and therefore our potential output growth. Given that, investments in community housing can be made without worrying about increasing inflation.
There are four key courses of action where the federal government should lead a collaborative approach with other levels of government to scale up investments in community housing:
1. Generate a stable pipeline of community housing projects. Creating housing takes time – making consistent funding, financing and tax incentives necessary to build a stable pipeline of development projects. Public policy gaps lead to delays that move Canada further away from restoring housing affordability. The federal government should recapitalize and restructure existing programs, particularly the Affordable Housing Fund (formerly the National Housing Co-Investment Fund), seed funding, the Rapid Housing Initiative, and support an affordable housing preservation trust to support community housing providers in acquiring existing rental units. Other orders of government should put complementary funding measures in place, while all jurisdictions should explore tax measures to incentivize the creation of new community housing units.
2. Provide dedicated funding for Indigenous communities living in (off–reserve) urban, rural and northern (URN) areas. Indigenous Peoples face some of the highest core housing needs in the country. Their unique challenges should be solved through for-Indigenous-by-Indigenous solutions, complete with dedicated funding. The federal government identified the National Indigenous Collaborative Housing Inc. (NICHI) as its delivery partner for $281.5 million in URN Indigenous funding. It should take its commitment a step further and sufficiently fund NICHI to address all housing needs for these communities. Other orders of government should also consider complementary funding and financing for URN Indigenous communities.
3. Improve collaboration on tackling the housing crisis. Investments in community housing could address two of the biggest challenges facing Canada right now: affordability and weak productivity. That said, the scale of the challenge urgently requires improved co-ordination and alignment between different levels of government, industry stakeholders and advocates. The federal government should call a national housing summit with other levels of government to set shared targets for builds, labour strategies related to housing, and leveraging underutilized land to build new units. This includes setting explicit targets that would incentivize and direct key players and decision-makers to reach that seven-per-cent “sweet spot” nationally.
4. Promote innovation to tackle supply challenges. Policy measures should be put in place to support the scale-up and market penetration of innovative approaches to building housing more quickly, sustainably and affordably. By reducing the per-unit cost of housing, we could go further than the Deloitte results suggest – which are based on constant real costs per unit – and more quickly tackle the supply gap. These approaches could include the government providing impact investments to scale up novel construction technologies through the Canada Mortgage and Housing Corp’s innovation fund or through Innovation, Science and Economic Development’s strategic innovation fund. Similar to what the B.C. government announced on Nov. 16, all levels of government should pre-approve a set of housing designs to be fast-tracked when applying for government funding, and should provide opportunities beyond the Federal Lands Initiative for use of underutilized land and properties for community housing.
The Deloitte report proves we can tackle two problems for the price of one: the housing crisis and Canada’s lagging productivity. It’s time for the government to recognize that community housing is an economic necessity – and scale up our supply to meet our productive potential.
This article is part of a series called How does Canada fix the housing crisis?