Canada's Economic Action Plan: A Short-Term Band-Aid for a Long-Term Housing Crisis

I recently had the opportunity to present this new piece of work at the Canadian Association of Geographers (CAG) annual meeting in Regina, SK. Much of the news I report on this site focuses on the new funding available over the past two years for social housing through Canada's Economic Action Plan. Social housing landlords and developers that are awarded this funding are understandably ecstatic at the news, and the reports focus almost exclusively on these happy moments. What is lacking in these reports however is a real discussion about the long-term impacts of this 'action plan', and whether it is a genuinely good solution to Canada's social housing crisis.

Canada's Economic Action Plan

Canada's Economic Action Plan was developed as a direct response to the global recession in late 2008. Reckless lending practices by US mortgage firms translated into significant foreclosure rates in late 2007 and early 2008 as a result of rising interest rates. This in turn led to the bust housing markets across the US, seriously impacting local economies as many members turned to bankruptcy. Investment firms and commercial banks faced huge losses as these risky, sub-prime mortgages, fell into foreclosure. The recession hit almost all developed countries across the globe, particularly the US and the EU. Canada, with almost 80% of its trade tied to US markets, suffered significantly and experienced a sharp increase in unemployment.

To help get some of the unemployed workers back into the job market, the federally funded and administered 'Canada's Economic Action Plan' focused on creating construction jobs. It was hoped that the prosperity would trickle down from these construction jobs into local economies, helping to counteract some of the economic havoc created by the recession. These workers would be able to keep their homes, continue shopping in local stores, and eat at local restaurants, in turn keeping others in the community employed. The Action Plan committed approximately $40 billion in federal aid to help stimulate the Canadian economy. Specifically, around $4 billion of these funds was earmarked to go directly to social and affordable housing providers across the country through two distinct programs: the Social Housing Renovation & Retrofit Program, and Federal-Provincial Housing Agreements: The former providing much-needed financial relief to housing providers that needed to renovate and upgrade their infrastructure to ensure its ongoing physical stability, and the latter distributing funding to groups looking to develop new social and affordable housing projects.

A Short-Term Band-Aid for a Long-Term Housing Crisis

The key goal of Canada's Economic Action Plan was to create jobs and kick start the economy. It is a limited, two-year initiative that will begin to wind down later this year. By February 2010, 92% of all funding had already been committed to projects that will use them by January 2011. Once this program is finished, social housing providers will again be left with the few, meagre funding avenues they had before the Action Plan was put into place two years ago. Without an official housing plan that brings federal, provincial, and municipal funding agencies together, affordable housing landlords will be left scrambling to find ever diminishing amounts of funding to make their projects a reality day-to-day. As it stands in Ontario today, the only viable avenue for funding for new affordable housing projects is the Canada-Ontario Affordable Housing Program, that awards a limited number of developers a limited amount of funding on an annual basis. This funding is typically one-off and does not cover ongoing operating costs once the project is up and running. The 'Social Housing Renovation & Retrofit Program' component of Canada's Economic Action Plan was specifically designed to target the so-called 'backlog' of repairs required to maintain the country's social housing stock. Only a lack of sufficient on-going operating costs could have created this backlog in the first place, and without addressing this error in the funding formula for social housing providers, the Action Plan makes very little real progress in improving social housing across Canada.

Limited Funds, for a Limited Time

Perhaps the biggest issue with Canada's Economic Action Plan is that it only provides funding for a two year period, and only to a limited number of social housing providers. Landlords had to compete with others in the area for this limited amount of funding, which put smaller providers at a significant disadvantage, particularly in larger cities where there is greater competition to begin with. Many providers applied both in 2008-09 and 2009-10 and failed to receive funding. With Canada's Economic Action Plan now winding down, it is unlikely they will be able to take advantage of this funding. Moreover these providers, whose social housing buildings are still in dire need of repairs and renovations, will find it difficult, if not impossible, to find funding to actually carry out these repairs. While the funding from Canada's Economic Action Plan will disappear after two years, the need for repairs and the backlog, will not.

Where does this leave us?

So where are social housing providers left now once Canada's Economic Action Plan wraps up its final financial obligations in early 2011? The short answer is that they will return to a situation where their annual operating expenses are increasing, and the funding they receive from provincial and municipal agencies for this purpose is decreasing. They will return to a situation where their operating funding is so low that they cannot afford to undertake necessary maintainance to keep their buildings in fit condition. And they will return to a situation where government funding agencies are unwilling to provide funding to allow them to undertake this maintenance to ensure that the buildings remain in an inhabitable condition. Last year a Toronto social housing project was deemed 'uninhabitable' due to mould, and tenants had to move out. How long will it be until the federal government realizes that it needs to protect the valuable public investments it, and other levels of government, have made in social housing rather than underfund them and let them slowly decay?

As I have stressed, Canada's Economic Action Plan may be winding down, but the ongoing need for new social housing, and the backlog of repairs necessary for the existing social housing stock to remain inhabitable stay with us. Ultimately, the Action Plan is a short-term band-aid for a long term housing crisis. To avoid the growing waiting lists for social housing, and the ever increasing backlog of repairs required on the existing social housing stock, the federal government needs to take back financial responsibility for funding the program. Only strong, stable funding for social housing will ultimately put an end to waiting lists and repair backlogs. It remains a relatively small element in the broader national budget and would make a huge difference not only in the lives of social housing residents, but of entire communities as we see thousands of lives stabilized.