Social Housing in Canada
For a period of about three decades, between the mid-1960s and mid-1990s, the Canadian government made significant and regular investments that developed programs and infrastructure to provide individuals with low income, as well as other marginalized and specific groups of people with access to affordable and decent houses. However, in the current time when the pressures on the affordability of housing are worsening, the government is at a standstill. There are major challenges of affordability affecting a large portion of Canadian population coming from different but complex origins. The problem of inadequate and unaffordable housing also needs to be totally wiped out of the country so as to ensure all Canadians can have a decent life.The government must ensure that all Canadians have decent houses by providing this service even when this industry fails to become profitable. In fact, just like managers are accountable to make profits for their shareholders, governments are tasked with the duty of providing social services, even if it is at a loss, to their citizens.
Background of Information
The importance of the adequate supply of housing facilities at affordable prices cannot be overlooked. Research, as well as Healthy Cities Movements, has established that there is a strong relationship between housing and productivity and that of good health and socio-economic growth (Gaetz, Gulliver& Richter, 2014). The inherent right of individuals to have shelter is a basic need that no one should be denied. Provision of decent housing and other related infrastructure at affordable prices and in suitable environments to all individuals needing them is the hallmark of a civilized society and one criterion in which development can be gauged. Despite the importance of housing and the emergence of technologies that can be used to establish decent homes, the provision of adequate housing for all remains one of the biggest problems facing humankind. Although there have been numerous innovations in this industry, the challenge has always been in the development of affordable houses.
Currently, housing is still a very expensive item in the budget of most households and a major bisector that divides the Canadian Society (Gaetz, Scott &Gulliver, 2013). The situation at the moment has been made worse by the fiscal crisis that has hit the state resulting in cuts to social services, including the investment by the government in social housing. Social housing in Canada remains a major challenge with most people remaining un-accommodated. Recently, activists for affordable housing have applauded the United Nations after an evaluation that demanded an improvement from Canada since it was failing to meet the international obligations and requirements for protecting vulnerable Canadians. In a report by UN Committee on Social, Economic and Cultural Rights, there is organization raised concern over the persistence of housing crisis in Canada, calling on the state to establish a strategy of National Housing that recognizes individuals’ rights to housing. According to the report, which is a correct assessment of the situation at the moment, Canada faces various challenges that limit their ability to provide homeless people, immigrants and other disadvantaged groups with affordable housing. In light of this, adequate measures need to be taken to address the problem of housing in the state and the government must work to ensure that all people have access to decent homes.
Social housing or public housing are types of rental houses that are let at very low rents to individuals who are mostly in need or struggling to meet their housing costs (Jacobs, Atkinson, Spinney, Colic Peisker, Berry & Dalton, 2010). The key function of social housing is to offer affordable accommodation to people with low income. Therefore, social housing is also referred to as affordable housing. These houses are known as are referred to government housing and are owned and managed by the local or central government. In some instances, the houses are owned and managed by housing associations that are independent. These types of houses are referred to as non-profit housing since such owners do not build the houses for commercial purposes (Jacobs et al., 2010). In fact, the term Co-op housing originates from housing cooperatives where legal entities, in most cases a corporation, own a real estate consisting of many residential buildings. The people who live in such houses are in most instances the members of the corporation and they pay ng relatively low rents.
Social housing benefits different categories of individuals. To begin with, those whose income are very low and are unable to pay their rents benefit the most. Moreover, refugees who flee from warring nations to Canada are major beneficiaries. When immigrants move from their countries to Canada, they have little income that is able to pay for their housing costs, making them depend on social housing. In addition, the homeless, the elderly and the disabled, who in most cases earn zero income are major beneficiaries of social housing programs.
The federal government is in charge of making budget allocations for investing in social housing in Canada. It is also charged with the responsibility of making policies that govern management in public housing sector. The provincial and municipal governments are directly responsible for the construction of such houses, management, and maintenance. It is the municipal government that collects rent in the place of the government. Moreover, both governments can also make investments in public housing as they deem necessary, from the revenues they collect from them (Forrest, & Murie, 2014).
Problems facing Public Housing in Canada
The housing sector is experiencing major challenges that have persisted in the last decades (Wayland, 2010). To begin with, there is a severe shortage of decent affordable houses for people with low income and the disadvantaged due to low government investments (Bolton, 2014). While the federal government is still making investments in the social housing sector, its expenses on affordable housing have dropped over the years. The initial spending in 1993 was $98 per capita. However, the spending dropped to $63 per capita in 2013, indicating a 36% drop. Recent provincial and federal social housing programs are less ambitious in terms of depth (subsidy levels) and breadth (number of housing units constructed per year) compared to the efforts made in the 1990s and 1980s. According to Bolton (2014), the provincial-federal Affordable Housing initiative, which was in operation between 2001 and 2012, only funded the construction of 52,200 units of affordable housing. This development constituted to only one-third of the housing units that were constructed in the preceding four decades. The housing program that was in place during war time created almost a similar number of housing units at a time when the population of the Canadian people was only a third of the current population. The government has not only constructed fewer houses, but it has also provided less generous subsidies for the households in need. The prominent component of Affordable Housing programs has been an up-front capital subsidy for rental houses that are new at 80% of the market rent on average, for twenty years. However, the program is nowhere to the scale needed to address the housing need for the low-income people and other groups in need of social housing units. This variation is just a reflection of the broader trend of Canadian governments falling short of the investments that are needed to address the problem of housing in the context of growing urbanization.
Moreover, the condition of the existing houses is very poor. Both the federal government and the provincial governments have neglected to make investments to repair the stock of housing that currently exists. For social housing operators, the amount raised in the form of rental income is not enough for repair and maintenance costs. The governments prefer to concentrate on making new structures and overlooked maintenance of the old houses (Bacher, 1986). As a result, most of the houses are already in the poor state. Most of them are experiencing serious infrastructural problems due to poor sewerage, water shortages, amongst other challenges that come as a result of poor maintenance.
In addition, the demand for social housing has increased over the years. The level of the Canadian population has grown over the years increasing the demand for social housing. Moreover, high unemployment levels have led to an increase in the number of the low-income groups demanding public housing. Due to the crisis facing countries surrounding Canada, there has been an increase in the number of refugees and immigrants entering the country. This situation has further increased the demand for public housing higher.
Finally, the government has established tax and regulatory environments that have led to the evaporation of new building constructions for rental housing. For example, the rental ceilings established by the government policies have made it hard for rental house builders to cover the costs of construction and maintenance. As a result, condominiums are slowly replacing rental house construction as the major source of rental housing in Canada (Leone & Carroll, 2010). For instance, in the GTA in 2014, half of the newly constructed condominiums were rented out. However, condominiums are more expensive rental options. According to Balchin, (2013), by October 2014, the rent for a one bedroom rented condominium apartment was 48% higher compared to the average rent of a one-bedroom in the rental apartments. The effect of poor policing in social housing have led to less participation of private investors in rental housing further making the situation worse.
The recommendations focus on expanding the supply of affordable housing for Canadians who earn low income and people who are at the risk of homelessness. To begin with, there is need to retain and maintain the existing affordable social housing stock. Most of the Canadians who are low-income earners live in social housing and get by since they pay rent that is based on their income. The 620,000 social housing units that were built across Canada in the 1970’s were established through an investment made by the federal government. The housing units were covered by 25-40 years’ operating agreements, which supported capital costs and operating as well as maintenance expenses. In 1993, when administrative responsibilities were devolved to the provinces, the Canadian Government agreed to continue funding the housing units until the expiry of the agreement periods. Considering the time when these agreements began, it is unfortunate that the 25-40 years’ operating agreements are all coming to an end. When the investments were being made, the initial intention of the model was to be self-sustaining. Once the mortgages were paid off, the houses were expected to sustain themselves through income from rents. However, the conditions for the self-sustenance did not materialize. The operators in the social housing sectors still collect low rents compared to the average high costs of sustaining these units. By the year 2020, the majority of the agreements will have expired. In addition, there is no indication at the moment, that the agreements will be renewed, neither by Canada Mortgage and Housing Corporation or the government. In the budget allocations for 2016/2017, there exists an allocation to support the agreements in the next two years, which is an important investment especially for the poor. Due to the seriousness of this problem, there is a need for the government to consider increasing the coverage for operating costs and maintenance of the existing stock beyond the contractual time. Re-investing to preserve the already existing assets is most likely cheaper than having them replaced. If the government were to drop the responsibility, the problem of housing is going to escalate leaving even the currently housed individuals being homeless.
There is a dire need for new investments to increase the existing stock of affordable housing. The demand for social housing has increased over the years (Smith, 1995). Consequently, the housing units that have already been constructed are not able to meet the existing demand. Due to the aforementioned factors, the government needs to consider new investments in social housing to meet the housing demand levels in the country. Moreover, some of the original housing stock constructions were poorly designed, and fail to meet the needs of the residents, as well as the broader community. Therefore, new investments need to be made to take into consideration such growing needs. In addition, new constructions that take into consideration the growth of knowledge in the housing sector is important. Such knowledge has led to the designing of houses that are sustainable, walkable and accessible, and require low maintenance costs. These designs enable the houses to improve their environmental performance and to be resilient to the changes in the climatic conditions of the country. New investments not only meet the needs of the increase in demand for affordable houses.
In addition, the government needs to make policies that promote additional market housing development, especially rental. Local, provincial and federal governments control policies that influence location, cost, and type of development that occur. The existing policy conditions have resulted in a decade of very low-level development of purpose built rental houses. The cumulative shortfall in supply of housing options available and affordable for lower income households and other groups has resulted in the existing housing affordability pressures. Therefore, the government needs to establish a policy environment that matches their objective of affordable housing. Income taxes, property taxes, and capital gains taxes shape the economics of building new rental houses, and thus should be formulated with care. Building codes, development charges, and land use planning regulations increase the costs of building, and they should be lowered or otherwise abolished. Transit services, infrastructure investments, and community resources determine the marketability of a project, and should also be carefully considered. All levels of government need to use these tools both passively and actively in order to encourage investment in affordable rental housing (Konadu-Agyemang, Noonan, & McCord, 1994). This could involve changes to fees and taxes or to land use planning rules, which improves incentives to develop a purpose-built rental house. Considering that Canadian government controls a significant amount of urban land that is not in use, the government should create partnerships and initiatives to ensure that the land is available. This can help to spur development of affordable housing as well as raise the additional capital needed for investing in social housing stock. All these tools shape the economics of social housing in Canada. Aligning such policies will mean that more households will be able to find options that meet their needs.
Additionally, the government needs to integrate housing supports with other social and economic programs. Having an affordable and decent housing is essential to making other economic and social policies work. In most instances, housing is often disconnected from the two objectives. Provincial and federal governments provide significant income support programs to low-income earners, seniors and people with disabilities. Most of these people find housing in the private market taking up the majority of such income, and in the process undermining the effectiveness of such income policies. An integrated approach could put in place an income support system that delivers rent supplements bridging the gap between what people are able to afford and the market cost. The At Home/Chez Soi project indicates the value of the integrated project. While the federal government may find it a challenge tapping significant funds for new houses, budgets for community safety or health could be leveraged to support housing investments for vulnerable clients. This eases the pressure on the market, while at the same time addressing policy goals and adding to net savings. This requires a change in how the government structures their spending decisions and budget for them. The lesson behind it is that investments made in one sector may lead to savings in another sector, or on the government’s budget. The project demonstrates the importance of investment in research and data collection to determine such sector investments that would result in savings for or in the social housing sector.
Finally, the current system can be replaced with a new approach to housing altogether. A transformative approach could see the government move over a period of time to adopt a new system that would replace the social housing system. The new system includes would include both supply-side interventions which would address failures in the market, and a housing benefit or a housing voucher model to bridge the income gaps between the various groups in the community (Gaetz, 2010). The system has worked in several European jurisdictions. The approach offers greater choice for households and greater flexibility in delivery. The existing assets could be sold and proceeds invested in other forms of social infrastructure or they would be transferred to nonprofits. Rent supplements involve contracts with landlords to offer affordable rental units. Housing benefits are income support programs that allow individuals overcome affordability challenges. However, such a program needs to be put on the table for serious cost-benefit analysis in order to establish the best way in which Canadian citizens access decent housing at a cost that fits their budget. Such a shift to an income based approach allows policymakers to turn the current issue on its head, assisting all individuals’ access decent housing.
In conclusion, the government should make new investments in the public housing sector in partnership with private and community help sector. It also needs to ensure that the existing housing units are maintained in good conditions. Policy makers should make laws that encourage private investments in rental housing. Moreover, they must be prepared to carry a cost-benefit analysis of the entire system. In particular, Canada must come to the realization that investors only operate in the housing business to make profits. Therefore, it is the government’s responsibility to ensure that even when essential services, such as low-income housing business become unprofitable, the individuals in these markets are properly served.
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