A Home to Call Our Own: a Federal Strategy for Affordable and Responsible Homeownership
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A Macdonald-Laurier Institute Publication NOVEMBER 2017 A Home to Call Our Own: A Federal Strategy for Affordable and Responsible Homeownership Sean Speer and Jane Londerville Board of Directors CHAIR Brian Flemming Rob Wildeboer International lawyer, writer, and policy advisor, Halifax Executive Chairman, Martinrea International Inc., Robert Fulford Vaughan Former Editor of Saturday Night magazine, VICE CHAIR columnist with the National Post, Ottawa Pierre Casgrain Wayne Gudbranson Director and Corporate Secretary, CEO, Branham Group Inc., Ottawa Casgrain & Company Limited, Montreal Stanley Hartt MANAGING DIRECTOR Counsel, Norton Rose Fulbright LLP, Toronto Brian Lee Crowley, Ottawa Calvin Helin SECRETARY Aboriginal author and entrepreneur, Vancouver Vaughn MacLellan DLA Piper (Canada) LLP, Toronto Peter John Nicholson Inaugural President, Council of Canadian Academies, TREASURER Annapolis Royal Martin MacKinnon CFO, Black Bull Resources Inc., Halifax Hon. Jim Peterson Former federal cabinet minister, DIRECTORS Counsel at Fasken Martineau, Toronto Blaine Favel Executive Chairman, One Earth Oil and Gas, Calgary Barry Sookman Senior Partner, McCarthy Tétrault, Toronto Laura Jones Executive Vice-President of the Canadian Federation Jacquelyn Thayer Scott of Independent Business, Vancouver Past President and Professor, Cape Breton University, Sydney Jayson Myers Chief Executive Officer, Jayson Myers Public Affairs Inc., Aberfoyle Dan Nowlan Research Advisory Board Vice Chair, Investment Banking, National Bank Financial, Toronto Janet Ajzenstat, Vijay Sappani Professor Emeritus of Politics, McMaster University Co-Founder and Chief Strategy Officer, Brian Ferguson, TerrAscend, Mississauga Professor, Health Care Economics, University of Guelph Jack Granatstein, Historian and former head of the Advisory Council Canadian War Museum Patrick James, John Beck Dornsife Dean’s Professor, President and CEO, Aecon Enterprises Inc., Toronto University of Southern California Erin Chutter Rainer Knopff, Executive Chair, Global Energy Metals Corporation Professor Emeritus of Politics, University of Calgary Vancouver Larry Martin, Navjeet (Bob) Dhillon Prinicipal, Dr. Larry Martin and Associates and Partner, President and CEO, Mainstreet Equity Corp., Calgary Agri-Food Management Excellence, Inc. Jim Dinning Christopher Sands, Former Treasurer of Alberta, Calgary Senior Research Professor, Johns Hopkins University David Emerson William Watson, Corporate Director, Vancouver Associate Professor of Economics, McGill University Richard Fadden Former National Security Advisor to the Prime Minister, Ottawa For more information visit: www.MacdonaldLaurier.ca MLI-StandardPages11-17.indd 1 2017-11-13 1:54 PM Table of Contents EXECUTIVE SUMMARY ............................................................................................................................. 4 SOMMAIRE ................................................................................................................................................... 5 INTRODUCTION ......................................................................................................................................... 7 GROWING CoNCERNS ABOUT RISING HOUSING PRICES .............................................................. 9 HOMEOWNERSHIP, HOUSING, AFFORDABILITY, AND THE ROLE OF PUBLIC POLICY .........12 FEDERAL ROLE IN HOUSING POLICY .................................................................................................17 NATIONAL HOUSING STRATEGY .........................................................................................................29 RECOMMENDATIONS FOR A CoheRENT, PRO-OWNERSHIP NATIONAL HOUSING STRATEGY ........................................................................................................30 CoNCLUSION ............................................................................................................................................34 ABOUT THE AUTHORS ........................................................................................................................... 35 REFERENCES .............................................................................................................................................36 ENDNOTES .................................................................................................................................................42 Executive Summary he federal government is soon expected to release its much-awaited National Housing Strategy. It comes at a key moment for Canadian housing policy given serious housing affordability chal- T lenges in key centres such as Toronto and Vancouver. The details of Ottawa’s strategy can either help to improve the conditions for affordable and respon- sible homeownership or put homeownership further out of reach for Canadians. This study seeks to put forward ideas and recommendations with the latter outcome in mind. Remember policy-makers and the public have been debating the sources of our housing affordability challenges and what governments ought to do about them for several months. There have been var- ious provincial and local policy responses thus far with a particular focus on “demand-side” factors such as foreign investment. Ottawa has generally been removed from this debate. There is some basis for this. Most of these is- sues are localized and outside of federal control. But it is wrong to assume that there is no federal role in enabling the conditions for affordable and responsible homeownership. Ottawa touches on the housing file in several ways – including monetary policy, mortgage insurance, financial regulations, tax policy, and social housing spending. Federal housing policy lacks coherence. Policy changes are regularly enacted with little focus on their consistency or compatibility with oth- er housing-related policies. One example: suc- cessive cases of mortgage rule tightening have Policy-makers and taken place while Ottawa has concurrently ex- “the public have panded incentives and subsidies for first-time home buyers. It often seems like the left hand been debating and the right hand are not speaking. the sources of our A National Housing Strategy that looks holisti- housing affordability cally at federal housing policy can address this challenges and what incoherence problem. Federal housing policy should start to look like it was purposefully de- governments ought signed rather than a mishmash of disparate ini- to do about them tiatives and measures. Policy-makers should aim to replace the bride of Frankenstein with a care- for several months. fully conceived strategy. This could be a major step in the direction of enabling the conditions for affordable and responsible homeownership in Canada. To this end, this study has set out some clear principles and recommendations to inform the govern- ment’s thinking and policy development. These include: 4 November 2017 • The National Housing Strategy must be rooted in a clear understanding of the difference between affordable housing and housing affordability and ensure that it is placing equal focus on the latter. • The federal government should actively promote affordable and responsible homeownership given its broad-based benefits, including its key link to inclusive growth. • Ottawa should put new or pending changes to mortgage and financing rules on hold until the impact of recent changes on the housing market can be determined. • The government should rethink how it delivers mortgage insurance – including lowering mortgage insurance fees. • The government should consolidate and augment existing tax policies to promote and sup- port homeownership – including reconfiguring current housing-related tax expenditures into a new, single pro-homeownership tax credit and creating a new matching funds mech- anism in Tax-Free Savings Accounts (similar to Registered Education Savings Plans or Regis- tered Disability Savings Plans) for the purposes of supporting higher down payments Affordable and responsible homeownership carries with it considerable economic and social ben- efits and ought to be a major part of the federal government’s vision of inclusive growth. Adopting the principles and recommendations set out in this paper would help to ensure that the National Housing Strategy can be a key plank in such an agenda. SOMMAIRE Le gouvernement fédéral devrait prochainement lancer sa très attendue Stratégie nationale sur le logement. Elle vient à point pour la politique canadienne du logement puisque le pays continue tou- jours de faire face à de graves problèmes d’abordabilité dans les centres urbains clés comme Toronto et Vancouver. Les détails de la stratégie d’Ottawa peuvent ou bien contribuer à favoriser la propriété abordable et responsable pour les Canadiens ou bien rendre l’accession à la propriété encore plus hors de leur portée. Des idées et des recommandations sont proposées dans cette étude en ce qui concerne ce dernier point. Il convient de rappeler que les décideurs politiques et le grand public discutent depuis des mois des sources du problème d’abordabilité et des mesures gouvernementales à adopter. Jusqu’à maintenant, les interventions politiques se sont tenues aux paliers provincial et local et se sont attachées tout particulièrement aux enjeux liés à la demande, notamment l’investissement étranger. Ottawa a généralement été exclu de ce débat. Cela s’explique. La plupart de ces questions sont locales et ne font donc pas partie des champs de compétence fédérale. Toutefois,