Liberal leader Mark Carney unveiled his housing policy Monday morning, hoping to woo increasingly desperate Canadians who are either struggling to make rent or save for a downpayment on a home. Refreshingly, Carney and the Liberals are explicitly building a bridge to the mid-20th century, framing the current housing crisis as a problem that can be addressed in much the same way that we addressed the housing crisis after World War II.
If you’re familiar with TVO’s Nerds on Politics series, you’ll know that this is music to my ears:
Carney is, in at least one respect, proposing something more ambitious than what the federal government did after the Second World War. The Liberals would, if they form government, create a federal Crown agency that would build affordable homes directly and also help private developers with financing. This was in fact largely lacking at the federal level after the war, aside from some measures targeted directly at returning servicemen and their families. By and large, there was a consensus among both federal Liberals and Ontario Progressive Conservatives that they did not want to build homes directly. The Ontario Housing Corporation, which did build social housing in the province, wasn’t created until 1964.
Given the way housing starts have plummeted in Ontario in the last year there’s undeniably demand for a government (any government, but the feds will do) to step in and jump-start the housing sector. There are certainly some opportunities for the feds to work quickly with shovel-ready projects that have been approved at the municipal level but where developers have either struggled to get financing or failed to pre-sell sufficient condo units to start breaking ground. That’s just one of a number of blinking red warning lights for the housing sector, but the good news is that in theory, an activist federal government could rack up a few highly visible PR wins while also doing good policy, which are not always the same thing.
The Liberals are also pledging to bring back an important policy from the 1970s, the multi-unit residential building allowance, an extremely generous form of tax treatment for rental apartments that helped contribute to the boom in rental construction in that decade (a level of rental construction Canada has never seen since). The MURB allowance was introduced at a time when there was a perceived housing shortage much milder than today’s crisis and was repealed in 1981 when the shortage was perceived to have receded.
Those are arguably the two most substantial parts of the Carney housing plan released Monday, and they happen to be commitments the federal government can implement within its jurisdiction, which can’t be said for some of the other promises in the Liberal policy document.
For example, the Liberals assert, “We will cut municipal development charges in half for multi-unit residential housing and work with provinces and territories to make up the lost revenue for municipalities for a period of five years.” But the federal government absolutely will not cut development charges in half; development charges and the much wider universe of taxes and fees on homebuilding are almost all set by municipal by-laws empowered by provincial legislation. What the Liberals mean is they’ll use their power of persuasion (including substantial financial pressure, presumably) to urge municipalities and provinces to do the right thing.
The Liberals have been trying to do this with their Housing Accelerator Fund, and it’s had some real successes and more mixed results. Toronto accepted nearly half a billion dollars from the HAF; its actual progress in changing policy is less impressive than the dollar amount. One criticism of this policy might be that not all provinces allow municipalities to levy the kinds of extreme fees on new homes the Liberals are targeting here. According to the most recent study by the Canadian Home Builders Association, high municipal fees are overwhelmingly an Ontario and British Columbia problem. This has nothing to do with the relative costs of new infrastructure in these provinces and everything to do with the political choices provincial legislatures and municipal councils have made.
Promising to replace lost revenues from municipal fees amounts to a pretty direct reward for noxious behaviour on the part of a relative handful of city councils. Put another way, taxpayers in Quebec and other lower-cost provinces are going to be paying Toronto, Vancouver, and other high-cost cities to undo harms they shouldn’t have caused in the first place. That Liberal Mark Carney is, if we take him seriously, promising a substantial windfall to Progressive Conservative Doug Ford’s Ontario and New Democrat David Eby in B.C. is just an additional punchline to all this.
And yet, if it can actually cut the thicket of development charges on new homes, it may be worthwhile. A broader question will be how much the next prime minister (Carney or otherwise) is willing to use the powers of the federal government not just to encourage but compel provincial and municipal action. The spread of nearly identical planning laws across the 10 provinces after World War II wasn’t an accident: in order to access CMHC subsidies for new homes, provinces were required to pass bills that enabled municipalities to create the first generation of planned communities. This was federal compulsion at work, not persuasion.
Those planning laws are now part of the problem we face today, something the Liberals acknowledge as they promise to reduce duplicative red tape and irrational zoning restrictions. What Ottawa created in the years after 1945 it can un-create, if it’s willing to have a real fight with the provinces and large municipalities. Former Prime Minister Justin Trudeau largely was not; 2025 might reveal whether his successor is willing to, in so many words, get his elbows up.