Prime Minister Justin Trudeau responds to a question during question period in the House of Commons on Parliament Hill in Ottawa on Oct. 4. Four major developers said they plan to build more than 10,000 rental units between them because of the federal government’s September move to remove the GST on purpose-built rental housing.Sean Kilpatrick/The Canadian Press
Don’t look now, but the Liberals are starting to win some policy debates on the housing crisis. It just might be too late for the politics.
Justin Trudeau’s Liberals spent much of 2023 getting hammered about the high price of houses, skyrocketing rents and mortgage spikes. Conservative Leader Pierre Poilievre was making hay, and gaining ground, lambasting Mr. Trudeau by channelling the resentment about 30-year-olds living in their parents’ homes and families struggling to afford one.
For most of the year, the Liberals hemmed and hawed and declared that all the things they had already done were the greatest ever – as if they couldn’t see the problem nearly everyone was feeling.
But if you tuned into Question Period on Monday, there was Housing Minister Sean Fraser knocking back Conservative attacks with shots of his own, claiming, albeit apocryphally, that the Tories plan to raise taxes on rental units.
Liberals could, and did, claim that private-sector actors have endorsed some of their new housing measures. Four major developers said they plan to build more than 10,000 rental units between them because of the federal government’s September move to remove the GST on purpose-built rental housing. Mortgage lenders have said the expansion of the Canada Mortgage Bond Program by 50 per cent will make a significant difference for builders.
Where the Tories were landing blows at will a few months ago, now Mr. Fraser was jousting gamely, responding to a Peterborough Conservative MP’s arguments that Liberal “inflationary spending” forced interest rates higher by pointing to a multimillion-dollar housing announcement in her riding. Though the Tories kept picking the fight, the Liberals were starting to win some of the rounds.
But if the Liberals are starting to get a grip on the issue in Question Period, it comes at a time when no one is watching. Not many people watch Commons debates, and this week, the public attention paid to Parliament was devoted almost entirely to speeches about events in the Middle East.
It’s not clear, anyway, if the Liberals can still rebuild credibility after letting the housing debate get away from them.
Their late-summer epiphany came when the public outcry was rising high and Liberal poll numbers were falling low. Their biggest new measure – that GST break – was something the Liberals promised to do in 2015 but didn’t.
Even so, the Liberals suddenly boosted housing policy on a bigger scale, with real potential. The deals Mr. Fraser is signing with cities and towns for money from Ottawa’s Housing Accelerator Fund could move the dials, too, if municipalities make rule changes that, for example, allow more triplexes to be built.
Mr. Fraser now likes to point out that the Liberal bill provides more extensive housing tax breaks than a bill Mr. Poilievre tabled in September – hence the minister’s disingenuous claim that the Conservatives would raise taxes on housing.
The Liberals now have better policy that will make a difference. But it might not change the politics for Mr. Trudeau’s government.
For starters, Mr. Poilievre’s Conservatives have had some success in making people believe that government deficit spending – and big Liberal spending, during the pandemic’s peak and now – is the cause of inflation, and therefore the cause of high interest rates.
Finance Minister Chrystia Freeland can argue that inflation is global and declining, and Canada’s deficits and debt are lower than most industrialized countries. And while the Liberals have been profligate spenders who showed little regard for controlling costs, there’s no reason to believe a Conservative government would take office and bring in spending cuts that would make interest rates rapidly tumble.
But those are arguments. People feel inflation. And they keep feeling it even when the pace of price increases starts to slow. Many felt the struggle of paying a high cost of housing exacerbated by a shortage of supply, and now are feeling the pinch of higher interest rates through mortgage bills or higher rents. The Bank of Canada’s rate increases seemed to park declines in Liberal poll numbers.
The new Liberal measures to increase building and alleviate the shortage, meanwhile, aren’t likely to have a palpable impact on the supply of housing for years – and not before the scheduled 2025 election.
So now the Liberals have regained their footing in the fight over who can address the housing crisis but it is still a government eight years into power hoping to win a political argument over who has the best solutions for years in the future. Mr. Fraser is starting to win debates in the Commons on housing policy, but it might be too late to make Canadians feel things will change.