Conservative Leader Pierre Poilievre speaks at a press conference in Ottawa on Oct. 28.PATRICK DOYLE/The Canadian Press
The Conservatives promised buyers of newly built homes that they’d save thousands of dollars on their mortgage payments. The Liberals complained the Tory plan would cut funding for municipalities.
One of these parties understands who votes. The other doesn’t seem to.
It’s pretty clear the key political issue in Canada is affordability. The housing crisis is a big, looming, social problem but a 34-year-old who can’t even think about buying a house understands it in terms of dollars.
That’s why Conservative Leader Pierre Poilievre’s promise to cut the GST on newly built homes is good politics: It’s an easy-to-understand proposal to cut costs for buyers and stimulate home-building.
The Liberals objected because the Tories plan to pay for the tax cut by eliminating their Housing Accelerator Program and the planned Housing Infrastructure Fund – which provide funding to municipalities that ease their permitting and other regulations, and pay for local infrastructure – so more homes can be built.
But guess who wins when voters are thinking first and foremost of the money in their pockets: Is it the party that promises cheaper houses, or the party that pledges funding for municipalities?
The answer to that question is revealing about many of the Liberals’ current political problems. Sometimes it seems like they don’t understand what the game is now.
It’s no longer 2015, when Justin Trudeau’s Liberals won power promising to boost economic growth with infrastructure spending. It’s 2024, when people are recovering from the loss of real buying power that came with two years of inflation. They want to be able to afford things, starting with a home.
On Monday, Conservative House Leader Andrew Scheer stood up in the Commons to call on the Liberal government to adopt the Conservative proposal.
“On an $800,000 home, this would save a homebuyer $40,000, so why not provide some much-needed relief and axe the tax off of new homes?” he said.
Housing Minister Sean Fraser shot back that it’s the way that the Conservatives would pay for that break that is the problem, saying, “their plan [is] to cut the supports for cities that are going to build homes.”
Both sides are indulging in spin, but it’s already pretty clear who is winning the politics. When voters are offered a choice between cheaper homes and more adequately funded municipal deregulation, many will prefer the former. We’re in a moment when making ends meet and paying for a home are at the top of the list of Canadians’ concerns.
The Conservative proposal is a big housing tax cut that will cost the treasury a lot of money, but it will save some homebuyers a lot – and stimulate the building of more homes.
It isn’t just a pure effort to buy off voters, such as the $200 cheques Premier Doug Ford’s Ontario government is reportedly planning to send to Ontarians. It will create an incentive to build new homes – and that is needed given the shortage of supply.
It’s a good idea. But it’s not enough.
The things the Housing Accelerator was supposed to do – provide incentives for municipalities to change obstacles to home-building – are needed, too. Ottawa funded municipalities that agree to change regulations, for example, by allowing builders to build quadruplexes “by right,” meaning it did not require special approval.
Economist Mike Moffatt, the founding director of the PLACE Centre at the Smart Prosperity Institute, thinks the program has flaws that need to be fixed, but the idea behind it is right – and he thinks the federal government should stick with it, and adopt the Conservative tax break.
“I actually think they complement each other really well.”
Given the scale of Canada’s housing-supply shortfall, the cost of both would be justified, he argues.
It’s not a minor cost. The Conservative proposal would cost the treasury roughly $4.5-billion per year, Mr. Moffatt estimates.
The Conservatives propose to pay for it by cutting funding for those Liberal housing programs, but that would only be enough to pay for the break for a couple of years. That’s one fuzzy detail in a vague picture, since Mr. Poilievre hasn’t explained much about how he intends to make the cost of his plans add up.
Yet it still allowed Mr. Poilievre to score a win on the politics of housing, while the Liberals are still trying to figure out how the game works.