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Few new homes, few new provincial dollars:

One year after Affordable Housing Framework Agreement,
low-income Canadians still looking for affordable housing

One year after federal, provincial and territorial housing ministers agreed “there is an urgent requirement for short-term measures to increase the availability of affordable housing across Canada” and signed the Affordable Housing Framework Agreement, progress has been painfully slow in building the new homes that are so desperately needed.

A new review by the National Housing and Homelessness Network, released on the first anniversary of the signing of the housing deal, reveals that: 

·        outside of Quebec, less than 200 new housing units have actually been built since the signing of the November, 2001, housing deal.

·        three provinces still haven’t signed a bilateral housing deal with the federal government, despite promising to do so 12 months ago.

·        the two richest provinces, Ontario and Alberta, cut $618 million from provincial housing spending in the current year despite their promise “to increase the supply of affordable housing.” Four other provinces also cut housing spending in 2002-2003.

·        only Quebec and the three territories are taking seriously the commitment made by all the provinces and territories to match the $680 million over five years promised by the federal government in the framework agreement.

·        the definition of “affordable housing” has been seriously weakened in the bilateral housing deals, which means that low and moderate-income households may not be able to afford the rents in many of the new units.

Only Quebec, territories, keeping their commitments

Only Quebec and the three territories are keeping the commitment that every housing minister made last November “to create more affordable housing throughout the country as quickly as possible”, in the words of the official communiqué released at the end of the two-day housing summit. Quebec says that it will fund the development of 2,900 new housing units this year. Other than Quebec, only 100 new units have been built in Saskatchewan and 40 new units in B.C. with funding from the framework agreement over the past 12 months.

One year ago, the federal government agreed to spend $680 million over five years for new affordable housing. All the provincial and territorial housing ministers signed the framework agreement, which states “Provinces and Territories will be required to match Federal contributions overall.” However, a couple of major loopholes in the housing deal allow the provinces to claim credit for spending by others, including municipalities. And provinces can also get credit for money that they have already spent on previous housing programs.

Provinces using accounting tricks

“In Ontario, the provincial government is supposed to match the $245 million that the federal government will spend on new housing over the next five years,” says Michael Shapcott, Co-Chair of the National Housing and Homelessness Network. “But Ontario is only offering a meagre $20 million in new provincial dollars. The rest of the so-called provincial contribution is coming from deferred property taxes from municipalities, funds already spent by the province and other accounting tricks. But financial sleight of hand won’t fund new housing, which is so desperately needed in Ontario and across Canada.”

Ontario, Alberta cut more than half a billion dollars

In fact, far from matching the new federal dollars, Ontario has cut its provincial housing spending by 42% this year, slashing more than half a billion dollars from its 2002-2003 budget. Alberta’s 2002-2003 spending estimates call for a 50% cut in 2002-2003. A seniors’ supportive housing program and the Alberta Social Housing Corporation are taking the biggest hit – losing about $80 million.

Nova Scotia, Manitoba, Saskatchewan and Prince Edward Island have also cut their provincial housing spending this year, despite promising last November that they would provide new provincial housing dollars to match the federal funds.

Provinces use federal dollars to replace provincial cuts

In those provinces, and in British Columbia, the new federal money will simply be used to replace provincial spending that has been slashed. British Columbia recently cancelled 1,700 provincially-funded social housing units that had been approved for development. B.C. is planning to replace them with 697 units funded by the federal government under the Affordable Housing Framework Agreement.

“As provinces cut their own housing spending, they’re hoping to replace it with the new federal money,” says Shapcott. “But the promise of last November’s housing deal was that the people of Canada would get more housing, not that the provinces would get federal dollars to replace cuts in provincial spending.”

Newfoundland, New Brunswick, PEI still haven’t signed

Meanwhile, Newfoundland and Labrador, New Brunswick and Prince Edward Island still haven’t even signed a bilateral housing deal with the federal government, even though they promised that they would 12 months ago. The bilateral deals are required before the federal housing dollars can flow to a province or territory.

Many renters can’t afford “average market rents”

Last November’s housing deal requires the provinces and territories “to create affordable housing for low to moderate income households”. However, the bilateral housing deals weaken that requirement by using “average market rents” to define “affordable housing”.

There are more than 1.6 million renter households (one-third of Canada’s 4.8 million renter households) with annual incomes of less than $14,410, according to Statistics Canada. That means that they can only afford to pay about $360 a month in rent. Yet average market rents in Toronto are now over $1,000 a month. In fact, the latest rental market survey from Canada Mortgage and Housing Corporation, there is no place in Canada – not even some of the historically less expensive communities in Atlantic Canada or Quebec – where market rents are less than $400 per month.

The chart below shows average rents in Toronto, Vancouver and Ontario, along with the affordable rent based on the median income of renter households in those areas. Only in Montreal is the affordable rent of $490 per month close to the average rent of $529.

Source: CMHC, Statistics Canada

In Vancouver, the median renter household income is $21,897. That means that half the 390,000 renter households in that city can afford to pay $547 or less each month. The average rent for a two-bedroom apartment in Vancouver is $919. In Toronto, the median income is $27,039. Half the 780,000 renter households in that city can afford a monthly rent of $676, yet the average rent for a two-bedroom apartment is $1,027.

While the numbers are different in other parts of the country, the pattern is much the same. Low, moderate and middle-income renter households saw their household income fall by 3% (adjusted for inflation) from 1984 to 1999 and have faced rapidly increasing average rents in recent years. Current average rents do not reflect the amount tenants can afford to pay, but are squeezing a growing number into desperate conditions.

In addition to the capital funds that the federal government is providing, under the terms of the Affordable Housing Framework Agreement, to get the units built, the provinces and territories need to provide rent supplements or other rent-geared-to-income subsidies to low-income households so that they can afford to move into the new homes. Quebec is offering rental subsidies as part of its housing program and so is British Columbia.

Rent supplements required

But Ontario isn’t offering any new rent supplement money to go along with the 10,000 new units that are supposed to be built in that province over the next five years. In August of 2002, the province announced plans for 1,000 “new” shelter allowances, but there was nothing new about the announcement. It was the same units that had already been announced several times since the first announcement in 1999. And the funding for these shelter allowances isn’t even provincial money. It comes from surplus federal housing dollars.

One Percent Solution - $2 billion annually for new social housing

The National Housing and Homelessness Network is calling on the federal government to adopt the One Percent Solution, which calls for $2 billion annually in new spending on social housing. The federal commitment of $680 million over five years amounts to $136 million annually – or less than 7% of the One Percent Solution.

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