By Alex Cosh
This election, party leaders are pitching their plans to make life more affordable for Canadians. Amid a national crisis, unaffordability continues to squeeze low-income and working people especially hard in the housing market.
This month, the parliamentary budget officer found that Prime Minister Justin Trudeau’s national housing strategy is having only a “limited” impact on addressing housing needs. As well, the PBO said, the affordability gap – or the difference between the cost of a housing unit and the price a low-income Canadian can afford – is projected to rise by 24 per cent over the next five years.
All this, while rents across the country continue to rise.
But does the NDP's housing plan go far enough to address this crisis? We asked NDP Leader Jagmeet Singh what truly "affordable" housing means, whether 500,000 affordable housing units is enough to address the current shortfall and whether his proposal for a $5,000 renter subsidy is just a bailout for landlords.
Alex Cosh, managing editor at The Maple:
In housing discussions, the word "affordable" gets thrown around a lot. The CMHC defines affordable rent as costing no more than 30 percent of median household income. But in practice that can work out to thousands of dollars per month. So my question is, what do you consider to be affordable rent, and how will the NDP ensure that truly affordable rent is achieved for low income people?
NDP Leader Jagmeet Singh:
Well, affordable, I can tell you what it's certainly not. What a lot of people right now are spending is half of their income on their homes, whether it's on mortgage or rent. That's certainly not affordable, and so much a smaller percentage of their income.
People need to have enough money left over so they can pay their bills, they can put food on the table, they can live their lives. And so housing shouldn't take up so much of someone's income that they can't afford to do everything else they need to do. And that's something that we need to be very aware of that housing should not consume so much of someone's income that they can't afford to do the rest of the things that they need.
Some of the cornerstone housing proposals in your 2021 platform — such as the promise to build half a million affordable homes, the 20 percent foreign buyers' tax and the $5,000 renter's subsidy — these are virtually identical to what you were offering in 2019. But as your platform notes, the pandemic has only worsened the housing crisis. So what specific measures will the NDP take to address the additional problems that have emerged during the pandemic?
I think it's important to note that we saw that this was a crisis back in 2019. And it's only gotten worse. And I feel like people are ready now for a lot of things that maybe at the time seemed to be too bold of measures.
But we believe very strongly people are right now competing with big money when they're trying to buy a home. And we want to get big money out of housing. So we want to tackle not just the foreign investment, but we also want to tackle money laundering and other criminal activity, which is driving up the cost of housing.
An article came out a couple of months ago that talks about a U.S. firm that plans to buy a billion dollars of Canadian real estate, because they saw it as such a profitable market. That should not be the case. A family in Canada shouldn't have to compete against a U.S. firm with the capacity to buy a billion dollars of property, they should not be competing with regular families who need a home.
So that's why we want the foreign buyers' tax and we want to be very aggressive with it. We're talking about a 20 percent tax. But we also know that there's a lot of things we can do right now to stop some of the renoviction that's happening. And so right now, we looked at the CMHC. And the fact that it approved loans for companies that turn around, buy property and renovict their tenants and the residents. So we want to put in place strict rules around CMHC, and that it cannot be used in cases where there will be renoviction. And it should only be used in cases where homes are being built that are affordable, where units are being built that are affordable.
Getting back to the half a million homes that you're proposing to build. Back in 2019, (Canadian Centre for Policy Alternatives) economist Marc Lee found that Vancouver alone needs 10,000 new affordable units per year to meet housing needs. That figure alone amounts to about one-fifth of what you're proposing over 10 years. So half a million affordable units sounds like a lot, but is it really enough?
It's it's a bold step forward. And what we need to do is we need to respond to this crisis with some some real serious, with a really serious response. The crisis has only gotten worse with six years of Justin Trudeau being in power. And it's sad to look at that to see that when he took power in 2015.
Since then to now, the overall average amount of rent someone pays has gone up by $4,200. It's become more expensive to buy a home, to rent a home, and the increase in costs has outstripped similar nations, other OECD countries. We have become far more unaffordable or the cost of housing has gone up much more than in other countries.
So this is a serious problem and we want to respond to it with that seriousness. So we've got a multi-pronged approach. We're looking at how we can incentivize building affordable homes, how we can discourage the renovictions that happen, how we can build places that are raised within people's budgets. And we also are looking at a rental subsidy to help families that are currently renting with up to $5,000 of rental subsidy to support them.
About the subsidy. Do you think this is an adequate substitute for provincial rent control measures? And is it ultimately just a federal subsidy for exploitative landlords?
It's an immediate step to help people now. And that's really what it is; we need to do a lot. And we need to do a lot of long-term and sustainable changes. But people are hurting right now. And because Justin Trudeau let rent prices and housing get so bad, we need to provide that immediate relief for families, and it would make a big difference in their lives. So it's an immediate step to help people now. And we'll need to consider long-term solutions aswell.
You talked about the importance of incentivizing the construction of affordable housing, and the platform mentions starting the construction of co-op, social and non-profit housing with fast-start funds. Of the affordable units that you're promising to build, how many of those will be non market? And how would an NDP government rein in profit making in the real estate sector more generally?
Well, our approach is to look at at this crisis and look at it and how serious it is, and respond with that same level of seriousness. So it's a multi-pronged approach. We're looking at lots of different things. We're going to be very nimble and adapt to the changing needs.
But we know we're going to need every option possible on the table. We need not-for-profit housing; we need cooperative housing; we're going to need to incentivize developers so that they build homes that are actually within people's budget.
So one of our measures to incentivize the building of affordable homes is if builders meet the criteria of affordability, then we're prepared to waive the GST on those projects, which is a significant amount of money in a project if it's in the millions of dollars. Waiving GST could mean the difference between making that project affordable for the builder or not. And that's an incentive that we're prepared to do, so we can incentivize the production of homes that are in people's budgets. We're going to look at every option possible because this is so serious, we need to be looking at every resource, every tool being deployed to deal with a problem.
We saw an example of one of the weaknesses of Trudeau's housing plan last month. He was in Brampton, Ontario, announcing a $120 million loan to a private developer to construct what he said was 300 "affordable" rental units. But as it turned out, the developer is actually only building 72, and the supposedly affordable units could end up costing as much as $2,000 per month. So under your plan, are profitable real estate corporations just going to receive millions of dollars in public funds like they are now under Trudeau?
Not at all. That's what we're going to be very vigilant about. That's why we're saying that the CMHC loans even cannot be used for companies like REITs or other private developers that are just using that to purchase buildings that they end up renovicting the tenants from. We want to have strict rules around making sure every single cent that we spend of public dollars, and all the loans that we guarantee, have to be geared towards our goals of affordability, and a strict sense of that it cannot be that we are in any way allowing the existing crisis to worsen. We want to invest in the solutions only.
I think one of the really important lines in the NDP platform is noting that "working people should be able to live close to their workplaces, including in the heart of our biggest cities." Of course, that's where the kind of epicenter of the affordability crisis has been. But another issue that has emerged during the pandemic is landlords in rural areas cashing out their rental properties, and then displacing working-class tenants who then cannot find an affordable place to live. How will the NDP platform address the situation for rural renters?
I think it's one of those things that we used to think of the housing crisis as an urban problem. And more and more as I've traveled across Canada and heard stories from people, this is truly a Canada-wide problem.
In all communities, we're seeing an increase in housing, and a very rapid increase over the past couple of years so that communities that we considered affordable are actually becoming more and more out of reach for people because money that's in urban communities is — homes are being sold and then they're shifting into more rural. So this is truly a Canada-wide concern. And we'll respond with the investments when we talk about affordable units that we want to build, homes that we want to build, we want to make sure that they're also available in rural communities as well. It's not just our plan to invest in urban centers, but we want to make sure there's affordability across Canada.
Going back to the foreign buyers' tax. Christy Clark's B.C. Liberal government introduced quite a similar tax back in 2016. At the time, it did cool the market slightly, but of course rents and property prices in the province have continued to rise, helped in no small part by Christy Clark's poor record on the housing file. What makes your tax different in terms of actually bringing down housing costs?
Well, it's Canada wide. And it's significant. It's 20 percent. So there's two factors there. Our goal is not to raise revenue from this, this is actually to discourage foreign investment. And so someone asked, do you know how much money you expect to raise? Ideally, I don't want to raise any money; I want this tax to be so high that it discourages companies from trying to use Canada as a stock market for housing.
And I mentioned the example of a U.S. firm that really boldly declared that they're going to look to purchase a billion dollars of property. I don't want that to be affordable, or profitable for a foreign company. So that's really the goal. And my goal isn't just to tick off a box, which kind of sounds like when Justin Trudeau introduced a measure, it was so mild, and it just seemed like he wanted to say that he did it, show that he did it, but not actually do something about the problem.
I really want to take this on. I understand how much of a struggle this is. I remember when my family was struggling with housing. And I know that for someone trying to start a life, you're trying to grow their family, you can't do any of those things if you don't have a place to call home. And that's why I'm really committed to making sure we solve this problem.
If we do end up with another minority parliament — if it's another Liberal minority government, let's say — what will you be really pushing hard for on housing?
Well, I've learned in this pandemic that people need more New Democrats. So I'm ready to become Prime Minister. And so in a New Democrat government, whether it's majority or minority, we'll be saying we've got to build housing, we've got to tackle the speculative forces that are driving up the cost of housing, and we've got to be prepared to tax the ultra rich, and make sure they pay their fair share so we can invest more into people.
That's really what this election is about, I think, when it comes down to it. We've seen Justin Trudeau let the super rich get a free ride, whether it's foreign companies investing in our housing market, or companies like Amazon that make record profits, but pay virtually no taxes here. We want to end that free ride and make sure billionaires are paying their fair share. And we invest that back into people.