There’s a foundation to ease the housing crisis – but Ottawa needs to do more

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The squeeze is on the federal Liberals, as higher interest rates drive up the cost of the country’s debt load. Last week’s fall economic statement was modest in its outlays and the promises on housing reflect the constrained fiscal reality.

But there is a lot of pressure to do more. Expensive housing is the reality across Canada. The wild surge in the cost of rent has intensified calls for Ottawa to take action. Yet the biggest amount of money for housing the Liberals included in last week’s budget update was cash that had been announced two months earlier: $4.6-billion over the next five years to encourage more rental housing construction by removing the GST on such projects.

And that money won’t instantly appear. It applies to construction that starts this fall and the fall economic statement showed that more than half the $4.6-billion would be booked from spring 2027 through spring 2029, as new buildings are completed.

It is an important investment – and it’s also reflective of what Ottawa realistically can do about a housing market that is largely, and properly, reliant on the private sector. There are a lot of government policies that help get new housing built, from loosened zoning rules to investments in much-needed homes for low-income people. But there’s no government, starting with Ottawa, that can single-handedly reverse the many problems that worsened over many years, or magically alleviate the price to rent or buy, or build new housing.

The fact is, even with housing challenges as bad as ever for many Canadians, a lot of change is finally happening. Governments that were too slow to act are now moving in the right direction. The $4.6-billion of federal tax breaks for new rental homes is a key plan, originally promised in 2015 but not acted on until this year.

Another important change is the Liberals $4-billion housing accelerator program, an example of how Ottawa’s money and policy can make a difference – but it can take a long time. Two years ago, during the federal election campaign, the Liberals promised the money to push cities to “tackle NIMBYism.” The Liberals saw a key political challenge to overcome, one this space and others had pointed to: local opposition to new housing. In January, this space criticized the program for being behind schedule. But after the first deal happened in September, in London, Ont., a spree followed. Last week, Saskatoon, Regina and Winnipeg joined a list of about 20 cities, along with the province of Quebec, that pledged to move on housing.

The changes are foundational. Positive benefits will unfurl over decades. Cities are in general agreeing to allow, without special approvals, four homes on lots previously reserved for one and small four-storey buildings near transit.

There’s still more work to turn promised changes into actual civic bylaws – Winnipeg expects to take several years – and cities have to ensure they don’t undercut the effort by adding new restrictions.

Those are crucial details but, stepping back, all these moves in cities across Canada need to be tallied as big wins: breakthroughs after years of stasis. Provinces such as British Columbia, with an array of new legislation to overhaul civic zoning this fall from the NDP, are also helping to speed change.

One immediate lever the federal Liberals could have pulled last week – but did not – is on the number of international students and temporary foreign workers coming to Canada, which has almost tripled since the mid-2010s. It has strained the tight rental market. For international students, this space has argued Ottawa should reinstate previous rules against off-campus work. This could reduce some short-term housing demand.

There are some positive signs in recent housing statistics. Housing starts in the Vancouver and Toronto regions, where demand and need are the highest, have climbed this year, even as factors such as interest rates have weighed on the market. Multiunit buildings are driving the increase. Further, the number of new homes under construction is at a record high, close to 380,000 at the end of 2022, up about 50 per cent from five years earlier.

The need for action on housing has never been more clear. After years of watching the problems get worse, governments are finally taking significant steps. They need to quickly build on that foundation.